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PLAN AND AGREEMENT OF MERGER
AMONG
SYNAGRO TECHNOLOGIES, INC.,
SYNAGRO SUB CORP. MICHIGAN, INC.,
MICHIGAN ORGANIC RESOURCES, INC.,
XXXXX X. XXXXXXX
AND
XXXXXX X. XXXXXXXX
DATED AS OF JUNE 23, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 MERGER...............................................................................................2
1.1 Surviving Corporation....................................................................................2
1.2 Stockholder Approval.....................................................................................2
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 MORI Common Stock. ..........................................................4
1.9.2.1 Post-Closing Adjustment to Exchange Value.....................................4
1.9.3 Exchange of MORI 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...................................................................................6
1.10.1 Assets and Liabilities of Merging Corporations Become Those of
Surviving Corporation.......................................................................6
1.10.2 Conveyances to Surviving Corporation........................................................7
1.10.3 Accounting Treatment........................................................................7
1.11 Other Closing Deliveries.................................................................................7
1.11.1 Opinion of Synagro Counsel..................................................................8
1.11.2 Opinion of Counsel..........................................................................8
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND MORI..........................................9
2.1 Representations and Warranties of the Shareholders and MORI..............................................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 MORI......................................................................9
2.1.4 Ownership of MORI Shares...................................................................10
2.1.5 No Subsidiaries............................................................................10
2.1.6 Financial Statements.......................................................................10
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TABLE OF CONTENTS
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.....................................................................11
2.1.8.5 Insurance....................................................................11
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.............................................................12
2.1.8.14 Guaranties...................................................................12
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...............................................................13
2.1.10.6 Other Material Changes.......................................................13
2.1.11 Taxes......................................................................................14
2.1.11.1 General......................................................................14
2.1.11.2 Subchapter S Matters.........................................................14
2.1.12 Intellectual Property......................................................................14
2.1.13 Title to and Condition of Assets...........................................................15
2.1.14 Contracts..................................................................................15
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.................................................................16
2.1.17.3 Compliance...................................................................17
2.1.17.4 Past Compliance..............................................................17
2.1.17.5 Environmental Claims.........................................................17
2.1.17.6 Renewals.....................................................................17
2.1.17.7 Asbestos and PCBs............................................................18
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TABLE OF CONTENTS
2.1.18 Compliance with Other Laws.................................................................18
2.1.19 ERISA Plans or Labor Issues................................................................18
2.1.20 Investigations; Litigation.................................................................19
2.1.21 Absence of Certain Business Practices......................................................19
2.1.22 Consents and Approvals.....................................................................20
2.1.23 Finder's Fee...............................................................................20
2.2 Investment Representations..............................................................................20
2.2.1 Shareholders Investment Suitability and Related Matters....................................20
2.2.2 Synagro Shares Not Registered..............................................................20
2.2.3 Reliance on Representations................................................................20
2.2.4 Investment Intent..........................................................................20
2.2.5 Permitted Resale...........................................................................21
2.2.6 Investor Sophistication....................................................................21
2.2.7 Availability of Information................................................................21
2.2.8 Restrictive Legends........................................................................21
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..........................................................................................22
3.4 Reports and Financial Statements........................................................................23
3.5 Absence of Certain Changes and Events in Synagro........................................................23
3.5.1 Financial Change...........................................................................23
3.5.2 Other Material Changes.....................................................................23
3.6 Synagro's Compliance with Other Laws....................................................................23
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....................................................................24
4.1 Agreements of Synagro and MORI..........................................................................24
4.1.1 Maintenance of Present Business............................................................24
4.1.2 Maintenance of Properties..................................................................24
4.1.3 Maintenance of Books and Records...........................................................24
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 MORI and the Shareholders......................................................26
4.2.1 Prohibition of Certain Employment Contracts................................................26
4.2.2 Prohibition of Certain Loans...............................................................26
4.2.3 Prohibition of Certain Commitments.........................................................26
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4.2.4 Disposal of Assets.........................................................................26
4.2.5 Maintenance of Insurance...................................................................26
4.2.6 Acquisition Proposals......................................................................26
4.2.7 No Amendment to Articles of Incorporation..................................................26
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 MORI and the Shareholders........................................27
5.1.1 Representations and Warranties of Synagro True at Effective Date...........................27
5.1.2 No Material Litigation.....................................................................27
5.1.3 Closing Documents..........................................................................28
5.1.4 Consent of Certain Parties in Privity With Synagro.........................................28
5.2 Conditions Precedent to Obligations of Synagro..........................................................28
5.2.1 Representations and Warranties of MORI and the Shareholders True at
Effective Date.............................................................................28
5.2.2 No Material Litigation.....................................................................28
5.2.3 Closing Documents..........................................................................29
5.2.4 Consent of Certain Parties in Privity with , MORI or the Shareholders......................29
ARTICLE 6 ADDITIONAL AGREEMENTS ..............................................................................29
6.1 Further Assurances......................................................................................29
6.2 Payment of Taxes........................................................................................29
ARTICLE 7 INDEMNIFICATION.....................................................................................29
7.1 Indemnification by the Shareholders.....................................................................29
7.2 Indemnification by Synagro..............................................................................30
7.3 Indemnification Procedures..............................................................................30
7.4 Termination of Indemnity, Representations and Warranties................................................31
ARTICLE 8 MISCELLANEOUS.......................................................................................31
8.1 Press Releases..........................................................................................31
8.2 Entirety; Conflict......................................................................................31
8.3 Counterparts and Facsimile Signature....................................................................31
8.4 Notices and Waivers.....................................................................................32
8.5 Table of Contents and Captions..........................................................................32
8.6 Successors and Assigns..................................................................................32
8.7 Severability............................................................................................32
8.8 Applicable Law..........................................................................................33
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PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement"), dated as June 23,
1998, is by and among Synagro Technologies, Inc., a Delaware corporation
("Synagro"), Synagro Sub Corp. Michigan, Inc., a Michigan corporation and a
wholly owned subsidiary of Synagro formed for the purpose of carrying out the
transactions contemplated hereby ("Sub Corp"), Michigan Organic Resources, Inc.,
a Michigan corporation ("MORI" or the "Surviving Corporation"), Xxxxx X. Xxxxxxx
("Xxxxxxx"), and Xxxxxx X. Xxxxxxxx ("Xxxxxxxx," and together with Xxxxxxx, the
"Shareholders"). Sub Corp and MORI 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; 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 Michigan, with its registered office at 00000
Xxxxxxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxxxxx 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, MORI is a corporation duly organized and validly existing
under the laws of the State of Michigan, with its registered office at and its
principal executive office at 0000 00xx Xxxxxx X.X., Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000.
WHEREAS, the authorized capital stock of MORI consists of 50,000 shares
(the "MORI Shares") of common stock, $1.00 par value per share ("MORI Stock"),
1,599 of which are issued and outstanding and 2,401 of which are held in
treasury;
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WHEREAS, the Shareholders own all of the issued and outstanding MORI
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 MORI 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 interests, that Sub Corp be merged with and into MORI, pursuant to
the applicable provisions of Sections 450, 1707, 450.1712 and 450.1701 of the
Michigan Business 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 MORI;
WHEREAS, Synagro, MORI 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 MORI, 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 MORI Stock, and (ii) the outstanding shares of MORI 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 MORI shall be, upon the
Effective Date (as defined in Section 1.3 hereof), merged into a single
surviving corporation, which shall be MORI, one of the Merging Corporations,
which shall continue its corporate existence and remain a Michigan corporation
governed by and subject to the laws of that state.
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 Michigan.
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1.3 Effective Date. The merger shall become effective upon the
filing by MORI of a Certificate of Merger with the State of the State of
Michigan 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 MORI (the "MORI 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 MORI, 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 MORI, and MORI 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 ss.
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 ss. 368(a)(2)(E) of the Code.
1.5 Governing Law and Articles of Incorporation of Surviving
Corporation. The laws of Michigan shall continue to govern the Surviving
Corporation. On the Effective Date, the MORI Articles shall be the articles of
incorporation of MORI until further amended in the manner provided by law.
1.6 Bylaws of Surviving Corporation. Effective as of the Effective
Date, the bylaws of MORI (the "MORI 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 MORI Articles and
the MORI 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:
NAME ADDRESS
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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
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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 MORI
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 MORI Articles and/or MORI 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 MORI 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 MORI and (B) MORI 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 MORI Common Stock. On the Effective
Date, the MORI 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 177,157 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 $154,566 (the "Cash Amount"), and (iii) a promissory note,
substantially in the form of Exhibit A hereto, in the principal amount
of $78,838 (plus all principal amounts payable under Section 1.9.2(iii)
of each of the Other Merger Agreement (as hereinafter defined)) (the
"Promissory Note"), upon surrender, in accordance with Section 1.9.3
hereof, of certificates theretofore evidencing the MORI Shares (the
Synagro Shares together with the Cash Amount and the Promissory Note
collectively, the "Exchange Value").
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), Shareholders shall
prepare and deliver to Synagro for its review in
accordance with this
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section a balance sheet (the "Closing Balance
Sheet") of MORI 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
Shareholders 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 Shareholders within such 30
day period in accordance with the foregoing, the
Closing Balance Sheet as prepared by Shareholders
shall become final and binding upon Synagro. If
Synagro does give notice of dispute to Shareholders
within such 30 day period, Shareholders 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 Shareholders 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
Shareholders 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 MORI's tangible assets net of
liabilities ("Net Assets") as shown on the 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 Shareholders, whereupon the
Shareholders shall have 10 days to refund to
Synagro a cash amount equal to the amount by which
the Net Assets on
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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 Shareholders a new promissory note, which shall
be in the same form and contain the same terms and
conditions as the Promissory Note, in the aggregate
principal amount of $78,838 (plus all amounts 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 made under Section
1.9.2.1 of each of the Other Merger Agreements.)
1.9.3 Exchange of MORI Stock Certificates. On the Effective
Date, the Shareholders shall surrender the certificates representing
the MORI Shares to Synagro, and Shareholders 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 MORI into
capital stock of Synagro and/or other consideration herein provided
for) shall automatically become and be converted into 1.599 fully paid
and nonassessable shares of issued and outstanding MORI Stock. On the
Effective Date, Synagro shall surrender the outstanding certificate
theretofore representing shares of Sub Corp Common Stock to MORI, MORI
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 MORI 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.
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
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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.
1.11 Other Closing Deliveries. Contemporaneously with the Exchange,
(i) Synagro shall execute and deliver to Shareholders the Promissory Note; (ii)
Synagro shall deliver to the Shareholders the certificate required by Section
5.1.1 hereof, and the Shareholders shall deliver to Synagro the certificate
required by Section 5.2.1 hereof; (iii) the Shareholders shall execute and
deliver to Synagro right of first refusal with respect to Prism Resource
Management, Ltd. in substantially the form of Exhibit B hereto (the "Right of
First Refusal") and (iv) Synagro and the Shareholders will deliver to one
another the opinions of counsel described below:
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1.11.1 Opinion of Synagro Counsel. Xxxxxx & Xxxxxx, L.L.P.,
counsel for Synagro, shall issue an opinion to the Shareholders, in
form and substance satisfactory to the Shareholders, 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 Ancillary Documents (as hereinafter defined) 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 MORI) 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 MORI 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 MORI, as to matters other than federal or
Texas law. As used herein, "Ancillary Documents" means the Promissory
Note and the Right of First Refusal.
1.11.2 Opinion of Counsel. Domnitz, Mawicke, Goisman &
Xxxxxxxxx, S. C. counsel to MORI and the Shareholders, shall issue an
opinion to Synagro in form and substance satisfactory to Synagro, to
the effect that (i) MORI has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan; (ii) all corporate proceedings required to be taken by or
on the part of the Shareholders to authorize the execution of this
Agreement and the implementation of the transactions contemplated
hereby have been taken; (iii) all outstanding shares of the MORI Stock
have been validly issued and are fully paid and nonassessable; (iv)
this Agreement and the Ancillary Documents to which each Shareholder is
a party have been duly executed and delivered by, and are the legal,
valid and binding obligation of such Shareholder, and are enforceable
against such Shareholder, in accordance with their respective terms,
except as the 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; 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
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MORI, its properties or businesses, or the Shareholders 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 MORI 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
Michigan law.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND MORI
2.1 Representations and Warranties of the Shareholders and MORI.
The Shareholders and MORI jointly and severally represent and warrant to Synagro
as follows:
2.1.1 Organization and Standing. MORI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Michigan, 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 MORI. This Agreement is a valid and binding obligation
of MORI and the Shareholders enforceable against MORI and the
Shareholders 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 MORI and
the Shareholders 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 MORI 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 MORI or either of the Shareholders, any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement
to which MORI or either of the Shareholders is a party or by which MORI
or either of the Shareholders or their respective properties are bound.
2.1.3 Capitalization of MORI. The authorized capitalization
of MORI consists of 50,000 shares of MORI Stock, 1,599 of which are
issued and outstanding, 799 of which
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are held beneficially and of record by Xxxxxxx, 800 of which are held
beneficially and of record by Xxxxxxxx, and 2,401 of which are held in
treasury. MORI does not have any outstanding options, warrants, calls
or commitments of any character relating to its capital stock. All
issued and outstanding shares of MORI Stock are validly issued, fully
paid and non-assessable. None of the outstanding shares of MORI 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 MORI Shares. The Shareholders hold good
and valid title to all of the MORI Shares free and clear of all
Encumbrances. The Shareholders possesses full authority and legal right
to sell, transfer and assign to Synagro the MORI Shares, free and clear
of all Encumbrances. Upon transfer to Synagro by the Shareholders of
the MORI Shares, Synagro will own the MORI Shares free and clear of all
Encumbrances. There are no claims pending or, to the knowledge of MORI,
and the Shareholders, threatened, against MORI or the Shareholders that
concern or affect title to the MORI Shares, or that seek to compel the
issuance of capital stock or other securities of MORI.
2.1.5 No Subsidiaries. As of the date hereof, MORI 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 MORI'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 MORI Financial Statements"), and
also has delivered to Synagro copies of MORI'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
MORI Financial Statements", and, together with the Audited MORI
Financial Statements" the "MORI Financial Statements"). Copies of the
MORI Financial Statements are attached hereto as Schedule 2.1.6. All of
the MORI Financial Statements are complete in all material respects
(except, with respect to the Unaudited MORI Financial Statements, for
the omission of notes and schedules), present fairly the financial
condition of MORI 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 the case of
the Unaudited MORI Financial Statements, to normal year-end adjustments
and other adjustments described therein; in addition, the Unaudited
MORI Financial Statements, though unaudited, include all adjustments
which MORI and the Shareholders consider necessary for a fair
presentation of MORI's results for that period. December 31, 1997 may
sometimes be hereinafter referred to as the "Balance Sheet Date".
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2.1.7 Liabilities. Except as disclosed on Schedule 2.1.7
hereto, MORI has no pending or, to MORI's and the Shareholders'
knowledge, threatened liabilities or obligations, either accrued,
absolute or contingent, nor does MORI or either of the Shareholders
have any knowledge of any potential liabilities or obligations, which
would materially adversely affect the value and conduct of the business
of MORI, other than those (i) reflected or reserved against in the
Unaudited MORI 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 MORI, with a description of the nature
and amount of any Encumbrances thereon created by MORI or
either of the Shareholders, or (ii) leased, or subject to a
lease commitment, by MORI, 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 MORI with a description
of the nature and amount of any Encumbrances thereon or (ii)
leased, or subject to a lease commitment, by MORI, with a
description of each lease and lease commitment;
2.1.8.3 Receivables. All accounts and notes
receivable of MORI, 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 MORI 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;
2.1.8.4 Payables. All accounts and notes payable of
MORI, together with an appropriate aging schedule;
2.1.8.5 Insurance. All insurance policies or bonds
currently maintained by MORI, including title insurance
policies, and those covering MORI'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;
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2.1.8.6 Contracts. All sludge contracts, bulking
agent contracts and all other material contracts to which
MORI 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 MORI, 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 MORI 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 MORI 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 MORI 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 MORI;
2.1.8.11 Intellectual Property. All patents,
trademarks, copyrights and other intellectual property rights
owned, licensed, or used by MORI;
2.1.8.12 Trade Names. All trade names, assumed names
and fictitious names used or held by MORI, whether and where
such names are registered, and where used;
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
MORI 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 MORI 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;
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2.1.8.15 Leases. All material leases to which MORI
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 MORI
(collectively, "Permits") and all environmental audits,
assessments, investigations and reviews conducted by or on
behalf of MORI 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,
MORI 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 MORI;
2.1.10.2 Property Damage. Any material damage,
destruction, or loss to the business or properties of MORI
(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 MORI Stock,
or any direct or indirect redemption, purchase or any other
acquisition by MORI 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 MORI as described
in Section 2.1.3 hereof;
2.1.10.5 Labor Disputes. Except as disclosed on
Schedule 2.1.16, any labor disputes involving MORI; 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 MORI or either of the Shareholders pertaining to and
adversely affecting the operations, assets or business of
MORI which could constitute a material adverse change in the
business, assets or financial condition of MORI, 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.
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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
MORI 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 MORI; and the tax
provisions reflected in the Unaudited MORI Balance Sheet are
adequate, in accordance with generally accepted accounting
principles, to cover liabilities of MORI at the date thereof
for all taxes, including any assessed interest, assessed
penalties and additions to taxes of any character whatsoever
applicable to MORI or its assets or business. No waiver of
any statute of limitations executed by MORI 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 MORI 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 MORI
except for taxes not yet currently due.
2.1.11.2 Subchapter S Matters. MORI (i) made an
effective, valid and binding S election pursuant to Section
1362 of the Code effective Xxxx 1, 1996, (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 MORI does business or is required to file
a tax return to the extent such states or jurisdictions
permit such elections. MORI 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 MORI by
any taxing authority. MORI (i) has not adopted or used LIFO
as a method of accounting for inventory, and (ii) has no
other tax item, election, agreement or adjustment which will
accelerate or trigger income or deferred deductions of MORI
as a result of termination of MORI's status as an S
Corporation.
2.1.12 Intellectual Property. MORI 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 MORI
is owned or licensed free and clear of any Encumbrance. MORI has not
granted to any other person any license to use any Intellectual
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Property. MORI 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. MORI has good,
indefeasible and marketable title to all its properties, interests in
properties and assets, real and personal, reflected in the Unaudited
MORI 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 MORI 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 MORI's and the
Shareholders' knowledge, any event which with notice or lapse of time,
or both, would constitute a default by MORI and in respect to which
MORI has not taken adequate steps to prevent a default from occurring.
The buildings and premises of MORI 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 MORI 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 MORI'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 MORI or either of the Shareholders, except
such as have been fully complied with.
2.1.14 Contracts. All material contracts, leases, plans or
other arrangements to which MORI is a party, by which it is bound or to
which MORI or the assets of MORI are subject are in full force and
effect and constitute valid and binding obligations of MORI. MORI is
not, and to the knowledge of MORI and the Shareholders, no other party
to any such contract, lease, plan or other arrangement, is in default
of any material obligation or provision thereunder, and, to MORI'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 MORI. Neither MORI nor the Shareholders have
received any information that would cause MORI or the Shareholders to
conclude that any customer of MORI will (or is likely to) cease doing
business with MORI (or any successors thereto) as a result of the
consummation of the transactions contemplated hereby.
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2.1.15 Licenses and Permits. Except as set forth on
Schedule 2.1.15, MORI 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 MORI 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 MORI subject to administrative powers of regulatory
agencies having jurisdiction. Except as set forth in Schedule 2.1.15
hereto, MORI is in compliance in all material respects with the terms
of such Permits and there is no pending, or to MORI's and the
Shareholders' knowledge, threatened claim that MORI 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 MORI and
the Shareholders, 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 MORI is a party or, to the knowledge of MORI and the
Shareholders, might become a party or which particularly affect MORI.
Neither MORI 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 MORI, nor, to the knowledge of MORI
and the Shareholders, 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
MORI and the Shareholders, there are no environmental
conditions or circumstances, including, without limitation,
the presence or release of any hazardous substance, on any
property presently or previously owned by MORI, or on any
property to which hazardous substances or waste generated by
the operations of MORI or by the use of the assets of MORI
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 MORI and the
Shareholders, MORI has in full force and effect all
environmental permits, licenses, approvals and other
authorizations required to
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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
MORI and the Shareholders, except as set forth on Schedule
2.1.17 hereto, neither the operations of MORI nor the use of
the assets of MORI 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 MORI;
2.1.17.4 Past Compliance. To the best knowledge
of MORI and the Shareholders, except as set forth in Schedule
2.1.17 hereto, none of the operations or assets of MORI 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 MORI;
2.1.17.5 Environmental Claims. Except as set
forth in Schedule 2.1.17 hereto, no notice has been served on
MORI or the Shareholders 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 MORI nor the Shareholders
knows of any reason MORI 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 MORI
for their current purposes and uses; and
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2.1.17.7 Asbestos and PCBs. Except as set forth
on Schedule 2.1.17 hereto, to the best knowledge of MORI and
the Shareholders, no material amounts of friable asbestos
currently exist on any property owned or operated by MORI,
nor do polychlorinated biphenyls exist in concentrations of
50 parts per million or more in electrical equipment owned or
being used by MORI in the operations or on the properties of
MORI.
2.1.18 Compliance with Other Laws. Except as set forth on
Schedule 2.1.18, MORI 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 MORI.
2.1.19 ERISA Plans or Labor Issues. Schedule 2.1.8 sets
forth a brief description all Employee Compensation Plans which MORI
maintains, to which MORI contributes or has an obligation to
contribute, or with respect to which MORI 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. Except as set forth in Schedule 2.1.8, MORI does
not maintain any Plans. For purposes of this Section 2.1.19, all
references to MORI shall be deemed to refer to MORI and any trade or
business, whether or not incorporated, which together with MORI 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 MORI (other than as required for group
health plan continuation coverage under Code Section 4980B or similar
state law), (vi) obligates MORI 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 MORI and the Shareholders, neither MORI 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
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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 MORI, 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 MORI. None of the Plans
requires MORI to make any bonus, severance or other payment to or on
behalf of any current or former employee, officer or director of MORI
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, MORI 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). MORI 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 MORI. Except as described in Schedule 2.1.16 hereto, MORI has
no dispute with any of the existing or former employees of MORI. There
are no labor or employment disputes affecting MORI or, to the knowledge
of MORI and the Shareholders, any disputes threatened by current or
former employees of MORI. 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 MORI nor the Shareholders has received
notice of any investigation or review by any governmental entity with
respect to MORI or any of the transactions contemplated by this
Agreement nor, to the knowledge of MORI and the Shareholders, is any
such investigation or review threatened, nor has any governmental
entity indicated to MORI an intention to conduct the same, and there is
no action, suit or proceeding pending or, to the knowledge of MORI and
the Shareholders, threatened against or affecting MORI 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 MORI.
2.1.21 Absence of Certain Business Practices. Neither MORI,
the Shareholders nor any officer or director of MORI, nor, to the
knowledge of MORI and the Shareholders, any employee or agent of MORI
or any other person acting on behalf of MORI or the Shareholders, has,
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 MORI (or to assist MORI in
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connection with any actual or proposed transaction) which (i) might
subject MORI 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 MORI, or (iii) if not continued in the future, might
materially and adversely affect the assets, business operations or
prospects of MORI or which might result in liability to MORI 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 MORI 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 Shareholders or MORI.
2.1.23 Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by MORI and the Shareholders and their counsel directly with Synagro
and its counsel, without the intervention of any other person as the
result of any act of MORI or the Shareholders in such manner as to give
rise to any valid claim against Synagro, Sub Corp or MORI for a
brokerage commission, finder's fee or any similar payments.
2.2 Investment Representations. Each of MORI and the Shareholders
acknowledges, represents and agrees that:
2.2.1 Shareholders Investment Suitability and Related
Matters. (i) Synagro has made available to MORI and the Shareholders
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 Shareholders 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 its own account for investment, and
the Shareholders are not acquiring the Synagro
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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 Shareholders 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 he and
it 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 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.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SYNAGRO
Synagro represents and warrants to MORI and the Shareholders 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
Michigan.
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, 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,
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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 Shareholders 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.
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 Shareholders 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.
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3.7 Consents and Approvals. Except for the filing of the
Registration Statement (as hereinafter defined) pursuant to Section 7.3.1
hereof, 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 MORI and the Shareholders 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 Shareholders or MORI 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.
ARTICLE 4
OBLIGATIONS PENDING CLOSING DATE
4.1 Agreements of Synagro and MORI. Except as expressly
contemplated elsewhere in this Agreement, each of Synagro and MORI agree that
since April 30, 1998, it has:
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;
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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 MORI, 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 MORI or
Synagro, as applicable, that the benefits reasonably expected to be
obtained by Synagro, with respect to losses by MORI, and the
Shareholders, 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, 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 MORI or Synagro, as
applicable, from third parties and any insurance proceeds MORI 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.
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4.2 Additional Agreements of MORI and the Shareholders. Except as
expressly contemplated elsewhere in this Agreement, MORI and the Shareholders
agree that since the Balance Sheet Date, MORI 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;
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 MORI or
for the acquisition or purchase of any equity interest in, or a
material portion of the assets of, MORI, other than the transactions
with Synagro contemplated by this Agreement. MORI 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;
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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 MORI Stock, or subdivided or in any way
reclassified any shares of MORI Stock, or acquired, or agreed to
acquire, any shares of MORI Stock; and
4.2.9 Prohibition on Dividends. Declared or paid any
dividend on shares of MORI 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 Shareholders 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 MORI and the
Shareholders. The obligations of MORI and the Shareholders to consummate and
effect the transactions contemplated hereunder shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by the
Shareholders, on behalf of themselves and MORI, 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 Shareholders 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.
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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 Shareholders 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 Shareholders, 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. Wisconsin, Inc. ("Synagro
Wisconsin"), A&J Cartage, Inc. ("A&J"), and Xxxxxxx regarding the
merger of Synagro Wisconsin with and into A&J; and (ii) that certain
Plan and Agreement of Merger, of even date herewith, among Synagro,
Synagro Sub Florida, Inc. ("Synagro Florida"), A&J Cartage, Inc.
Southeast ("A&J Florida"), Xxxx X. Xxxxxxx and Xxxxxxx regarding the
merger of Synagro Florida with and into A&J Florida.
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 MORI and the
Shareholders True at Effective Date. The representations and warranties
of MORI and the Shareholders 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; MORI and the
Shareholders 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 MORI and the
Shareholders shall have delivered to Synagro a certificate, dated the
Effective Date and signed by an executive officer of MORI and by the
Shareholders 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
MORI.
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5.2.3 Closing Documents. The Shareholders and MORI 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, MORI or
the Shareholders. The holders of any material indebtedness of MORI or
the Shareholders, the lessors of any material property leased by MORI
or the Shareholders, the other parties to any other material agreements
to which MORI or the Shareholders 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.
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 agrees to pay timely all
Taxes assessed or assessable against him or MORI arising out of or in any way
related to the ownership, business or operations of MORI 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 is 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 Shareholders. After the Effective Date,
in addition to any other remedies available to Synagro under this Agreement, or
at law or in equity, the Shareholders shall indemnify, defend and hold harmless
Synagro, MORI 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,
MORI or the Shareholders to perform their respective representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished
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or delivered to Synagro by MORI, or the Shareholders under this Agreement; (ii)
the ownership or operations of MORI before the Closing Date, and (iii) all Taxes
arising out of or in any way related to the ownership, business or operations of
MORI 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 Shareholders under this
Agreement, or at law or in equity, Synagro shall indemnify, defend and hold
harmless and the Shareholders, against and with respect to any and all Damages
that the Shareholders 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 Shareholders by or on behalf of Synagro under this Agreement; and (ii) the
ownership or operations of MORI 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 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
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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 representations and warranties contained
in Articles 2 and 3 hereof shall terminate two years after the Effective 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 Shareholders 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 Shareholders 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
Shareholders.
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
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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 Rome Attention: T. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
IF TO MORI OR THE SHAREHOLDERS:
Addressed to: With a copy to:
Xxxxx X Xxxxxxx Domnitz, Mawicke, Goisman & Xxxxxxxxx, S.C.
c/o A&J Cartage, Inc. 0000 Xxxxx Xxxxxxxx Xxxxxx
0000 Xxxxx 0xx Xxxxx Xxxxxxxxx, Xxxxxxxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (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, MORI nor the
Shareholders 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
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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 Certificate of Merger and the consequences of
the filing thereof shall be governed by the Corporations Act, and the
Shareholders, MORI, Sub Corp and Synagro agree that the state and federal courts
situated in Xxxxxx, County, Texas shall have personal jurisdiction over the
Shareholders, MORI, 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 Shareholders,
MORI, 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 Shareholders, MORI, Sub Corp or Synagro is not able to effect service
of process upon the other with respect to such disputes, the Shareholders, MORI,
Sub Corp and Synagro expressly agree that the Secretary of State for the State
of Texas shall be an agent of the Shareholders, MORI, Sub Corp and/or the
Synagro, as applicable, to receive service of process on behalf of the
Shareholders, MORI, Sub Corp and/or Synagro, as applicable, with respect to such
disputes.
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IN WITNESS WHEREOF, the Shareholders has executed this Agreement, and
Synagro, Sub Corp. and MORI 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:
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Name:
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Title:
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SYNAGRO SUB CORP. MICHIGAN, INC.
By:
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Name:
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Title:
---------------------------------
MICHIGAN ORGANIC RESOURCES, INC.
By:
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Name:
----------------------------------
Title:
---------------------------------
SHAREHOLDERS
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XXXXX X. XXXXXXX
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XXXXXX X. XXXXXXXX
00
