EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYNAGRO TECHNOLOGIES, INC.,
APA ACQUISITION CORP.,
ANTI-POLLUTION ASSOCIATES, INC.,
D&D PUMPING, INC.
AND
XXX XXXXX
APRIL 23, 1999
EXHIBIT 1 - Page 1
TABLE OF CONTENTS
ARTICLE I
THE MERGER.............................................................1
Section 1.1. The Merger......................................1
Section 1.2. Effective Time of the Merger....................1
ARTICLE II
THE SURVIVING CORPORATION..............................................2
Section 2.1. Certificate of Incorporation....................2
Section 2.2. Bylaws..........................................2
Section 2.3. Directors.......................................2
Section 2.4. Officers........................................2
ARTICLE III
CONVERSION OF SHARES...................................................2
Section 3.1. Effect on Capital Stock.........................2
Section 3.2. Exchange of Certificates........................4
Section 3.3. Stock Transfer Books............................5
Section 3.4. No Further Ownership Rights in Company Common
Stock...........................................5
Section 3.5. Tax Consequences................................5
Section 3.6. Taking of Necessary Action; Further Action......5
Section 3.7. Closing.........................................5
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB....................................6
Section 4.1. Organization and Qualification..................6
Section 4.2. Capitalization..................................6
Section 4.3. Authority; Non-Contravention; Approvals.........7
Section 4.4. Registration Statement and Proxy Statement......8
Section 4.5. Reports and Financial Statements................8
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER.....................................9
Section 5.1. Organization and Qualification..................9
Section 5.2. Capitalization..................................9
Section 5.3. Subsidiaries...................................10
Section 5.4. Authority; Non-Contravention; Approvals........10
Section 5.5. Financial Statements...........................10
Section 5.6. Absence of Undisclosed Liabilities.............11
Section 5.7. Absence of Certain Changes or Events...........11
Section 5.8. Litigation.....................................11
EXHIBIT 1 - Page i
Section 5.9. Accounts Receivable...........................11
Section 5.10. No Violation of Law; Compliance with
Agreements....................................11
Section 5.11. Insurance.....................................12
Section 5.12. Taxes.........................................12
Section 5.13. Employee Benefit Plans........................13
Section 5.14. Employee and Labor Matters....................15
Section 5.15. Environmental Matters.........................15
Section 5.16. Non-competition Agreements....................18
Section 5.17. Title to Assets...............................18
Section 5.18. Contracts, Agreements, Plans and Commitments..18
Section 5.19. Registration Statement........................19
Section 5.20. Brokers and Finders...........................19
Section 5.21. Intellectual Property.........................20
Section 5.22. Relationships.................................20
Section 5.23. Certain Payments..............................20
Section 5.24. Books and Records.............................20
Section 5.25. Condition and Sufficiency of Assets...........21
Section 5.26. Investment Representations....................21
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER................................22
Section 6.1. Conduct of Business by the Company Pending the
Merger.........................................22
Section 6.2. Control of the Company's Operations............24
Section 6.3. Other Offers...................................24
ARTICLE VII
ADDITIONAL AGREEMENTS.................................................24
Section 7.1. Access to Information..........................24
Section 7.2. Registration Statement.........................25
Section 7.3. Synagro Liquidity Program......................26
Section 7.4. Exchange Listing...............................26
Section 7.5. Expenses and Fees..............................26
Section 7.6. Agreement to Cooperate.........................26
Section 7.7. Public Statements..............................26
Section 7.8. ...............................................27
ARTICLE VIII
CONDITIONS TO CLOSING.................................................27
Section 8.1. Conditions to Each Party's Obligation to Effect
the Merger.....................................27
Section 8.2. Conditions to Obligation of the Company to
Effect the Merger..............................27
Section 8.3. Conditions to Obligations of Parent and Merger
Sub to Effect the Merger.......................28
EXHIBIT 1 - Page ii
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.....................................29
Section 9.1. Termination....................................29
Section 9.2. Effect of Termination..........................30
Section 9.3. Amendment......................................31
Section 9.4. Extensions; Waiver.............................31
ARTICLE X
INDEMNIFICATION.......................................................31
Section 10.1. The Shareholder's Indemnity Obligations.......31
Section 10.2. Parent's Indemnity Obligations................32
Section 10.3. Indemnification Procedures....................32
Section 10.4. Determination of Indemnified Amounts..........33
Section 10.5. Limitation of Shareholder's Liability.........34
Section 10.6. Limitation of Parent's Liability..............34
Section 10.7. Limitation on Indemnified Amounts.............34
ARTICLE XI
GENERAL PROVISIONS....................................................34
Section 11.1. Survival......................................34
Section 11.2. Notices.......................................35
Section 11.3. Interpretation................................36
Section 11.4. Miscellaneous.................................36
Section 11.5. Governing Law.................................36
Section 11.6. Binding Arbitration...........................36
Section 11.7. Counterparts..................................38
Section 11.8. Parties in Interest...........................38
Section 11.9. Enforcement of the Agreement..................38
Section 11.10. Validity......................................38
EXHIBIT 1 - Page iii
EXHIBITS:
Exhibit A Glossary
Exhibit B Employment and Confidentiality Agreements
SCHEDULES:
Schedule 2.3 Directors of the Surviving Corporation
Schedule 2.4 Officers of the Surviving Corporation
Schedule 5.2 Capitalization
Schedule 5.4 Authority; Non-Contravention; Approvals
Schedule 5.5 Financial Statements
Schedule 5.6 Absence of Undisclosed Liabilities
Schedule 5.8 Litigation
Schedule 5.11 Insurance Policies
Schedule 5.12 Taxes
Schedule 5.13 Employee Benefit Plans
Schedule 5.14 Employee and Labor Matters
Schedule 5.15 Environmental Matters
Schedule 5.17 Title to Assets
Schedule 5.18 Contracts, Agreements, Plans and Commitments
Schedule 5.21 Intellectual Property
Schedule 5.22 Relationships
Schedule 8.2(c) Personal Guaranties
EXHIBIT 1 - Page iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 23, 1999 (the
"AGREEMENT"), is by and among SYNAGRO TECHNOLOGIES, INC., a Delaware corporation
("PARENT"), APA Acquisition Corp., a Florida corporation and a wholly owned
subsidiary of Parent ("MERGER SUB"), ANTI-POLLUTION ASSOCIATES, INC., a Florida
corporation ("ANTI-POLLUTION"), D&D PUMPING, INC. (including the business known
as XXXXXX'X SEWAGE SERVICE NORTH), a Florida corporation ("D&D") (Anti-Pollution
and D&D are collectively referred to herein as the "COMPANY"), and XXX XXXXX
(the "SHAREHOLDER").
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub, Anti-Pollution, D&D and the Shareholder
desire that Anti-Pollution and D&D merge with and into the Merger Sub (the
"MERGER");
WHEREAS, Parent, Merger Sub and the Company intend the Merger to qualify
as a tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "CODE"), and the regulations thereunder;
WHEREAS, the Company and the Shareholder are making certain
representations, warranties and indemnities as an inducement to Parent and
Merger Sub to enter into this Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Glossary attached as EXHIBIT A.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in SECTION 1.2) in accordance
with the Florida Business Corporation Act, Anti-Pollution and D&D shall be
merged with and into Merger Sub and the separate existence of Anti-Pollution and
D&D shall thereupon cease. The Merger Sub shall be the surviving corporation in
the Merger and is hereinafter sometimes referred to as the "Surviving
Corporation."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "EFFECTIVE TIME") as a certificate of merger is
filed with the Secretary of State of the State of Florida in accordance with the
Florida Business Corporation Act (the "MERGER FILING"). The Merger Filing shall
be made simultaneously with or as soon as practicable after the Closing (as
defined in SECTION 3.7) in accordance with Article III. The parties acknowledge
that it is their mutual desire and intent to consummate the Merger as soon as
practicable after the date hereof, and in any event within
EXHIBIT 1 - Page 1
five (5) business days after the satisfaction, or waiver, of all conditions to
Closing set forth in Article VIII hereof, subject to the terms and conditions
hereof. Accordingly, subject to the provisions hereof, the parties shall use all
reasonable efforts to consummate, as soon as practicable, the transactions
contemplated by this Agreement in accordance with Article VIII.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1. CERTIFICATE OF INCORPORATION. The Articles of Incorporation
of Merger Sub as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time,
as the same may thereafter be amended in accordance with its terms and as
provided under the Florida Business Corporation Act.
SECTION 2.2. BYLAWS. The Bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
after the Effective Time, as the same may thereafter be amended in accordance
with their terms and as provided by the Certificate of Incorporation of the
Surviving Corporation and the Florida Business Corporation Act.
SECTION 2.3. DIRECTORS. The directors of the Surviving Corporation shall
be as designated in SCHEDULE 2.3, and such directors shall serve in accordance
with the Bylaws of the Surviving Corporation until their respective successors
are duly elected or appointed and qualified.
SECTION 2.4. OFFICERS. The officers of the Surviving Corporation shall be
as designated in SCHEDULE 2.4, and such officers shall serve in accordance with
the Bylaws of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the Shareholder:
(a) CONVERSION OF SECURITIES. All of Anti-Pollution's common stock,
$1.00 par value per share, and D&D's common stock, $1.00 par value per share
(collectively, the "COMPANY COMMON STOCK"), issued and outstanding immediately
prior to the Effective Time (excluding any shares of the Company Common Stock to
be canceled pursuant to SECTION 3.1(B)) shall be converted, subject to SECTIONS
3.1(E), into the right to receive at Closing in the aggregate:
(i) the number of validly issued, fully paid and
nonassessable shares of common stock, par value $.002 per share, of Parent
("PARENT COMMON STOCK"), determined by dividing $651,230 by the Average
Parent Common Stock Price (such shares issued to the Shareholder being
referred to herein as the "PARENT SHARES"); and
(ii) subject to SECTION 3.1(D) of the Agreement, cash equal to
$651,230 LESS the aggregate long-term and short-term indebtedness of the
Company for borrowed
EXHIBIT 1 - Page 2
money as of Closing that was not used in calculating the Estimated Net
Working Capital (as defined in SECTION 3.1(D)).
The capitalized terms used in this Section shall have the following
meanings:
"AVERAGE PARENT COMMON STOCK PRICE" means the average of the Daily Per
Share Prices for the five (5) consecutive trading days beginning on the seventh
(7th) trading day prior to the Closing.
"DAILY PER SHARE PRICE" means the per share closing price on the NASDAQ
Small Cap Exchange (the "NASDAQ") of Parent Common Stock (as reported by THE
WALL STREET JOURNAL for that day).
(b) CANCELLATION. Each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock held by any
direct or indirect wholly owned Subsidiary of the Company, if any, immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding, be canceled
and retired without payment of any consideration therefor and cease to exist.
(c) ADJUSTMENTS TO MERGER CONSIDERATION. The Merger Consideration
(as defined in SECTION 3.2(A)) shall be appropriately adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend of securities convertible into Parent Common Stock), reorganization,
reclassification, recapitalization or other similar change with respect to
Parent Common Stock occurring (including the record date thereof) after the date
hereof and prior to the Effective Time.
(d) NET WORKING CAPITAL ADJUSTMENT.
(i) Prior to the Closing Date, Anti-Pollution and D&D shall
deliver to Parent a worksheet setting forth an estimate of the Net Working
Capital (which may be a positive or negative number) of Anti-Pollution and
D&D as of the Closing Date (the "ESTIMATED NET WORKING CAPITAL"). The
worksheet shall be prepared by Anti-Pollution and D&D in consultation with
Parent. If the Estimated Net Working Capital minus $39,450 (the
"DEVIATION") is a positive number, the Merger Consideration shall be
increased, pro-rata in cash and Parent Common Stock, in an amount equal to
the Deviation. If the Deviation is a negative number, the Merger
Consideration shall be decreased, pro-rata in cash and Parent Common
Stock, in an amount equal to the Deviation.
(ii) Within 45 days after the Closing Date, Parent shall cause
the Surviving Corporation to prepare a consolidated balance sheet (the
"CLOSING DATE BALANCE SHEET") of the Company as of the Closing Date,
including a computation of the actual Net Working Capital of the Company
as of such date (the "ACTUAL NET WORKING CAPITAL"). The Closing Date
Balance Sheet shall be prepared in accordance with GAAP. If within 15 days
following delivery of the Closing Date Balance Sheet the Shareholder shall
not object in writing thereto, then the Actual Net Working Capital shall
be computed using such Closing Date Balance Sheet. If the Shareholder
shall object in writing to the computation, then the
EXHIBIT 1 - Page 3
Shareholder and the Parent shall negotiate in good faith and attempt to
resolve their disagreement. Should such negotiations not result in an
agreement within 20 days, then the matter shall be submitted to an
independent accounting firm of national reputation mutually acceptable to
Shareholder and Parent (the "NEUTRAL AUDITORS"). If Shareholder and Parent
are unable to agree on the Neutral Auditors, then Shareholder and Parent
shall request the American Arbitration Association to appoint the Neutral
Auditors. All fees and expenses relating to appointment of the Neutral
Auditors and the work, if any, to be performed by the Neutral Auditors
will be borne equally by Shareholder and Parent. The Neutral Auditors will
deliver to Shareholder and Parent a written determination (such
determination to include a worksheet setting forth all material
calculations used in arriving at such determination and to be based solely
on information provided to the Neutral Auditors by Shareholder and Parent,
or their respective affiliates) of the disputed items within 30 days of
receipt of the disputed items, which determination will be final, binding
and conclusive on the parties.
(iii) Promptly following agreement on or delivery of the
final, binding and conclusive Closing Date Balance Sheet setting forth the
Actual Net Working Capital, the parties shall account to each other as
provided for in this SECTION 3.1(D)(III). If the Actual Net Working
Capital less the Estimated Net Working Capital is a positive number, the
Shareholder shall receive a cash payment equal to such excess. If the
Actual Net Working Capital less the Estimated Net Working Capital is a
negative number, the Parent shall receive a cash payment from the
Shareholder equal to such deficit. Any such excess or deficit payment
shall be due and payable within three (3) business days after such amount
is determined according to this SECTION 3.1(D)(III).
(e) FRACTIONAL SHARES. No certificates or scrip representing less
than one share of Parent Common Stock shall be issued upon the surrender for
exchange of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"CERTIFICATES"). In lieu of any such fractional share, each holder of shares of
Company Common Stock who would otherwise have been entitled to a fraction of a
share of Parent Common Stock upon surrender of Certificates for exchange shall
be paid upon such surrender cash (without interest) in an amount equal to such
fraction multiplied by the Daily Per Share Price on the Closing Date.
SECTION 3.2. EXCHANGE OF CERTIFICATES.
(a) Immediately after the Effective Time, Parent will deliver to the
Shareholder upon surrender of all the Certificates for cancellation together
with such other customary documents as may be required, and the Shareholder
shall be entitled to receive in exchange therefor, (A) certificates evidencing
the Parent Shares and cash in immediately available funds which such holder has
the right to receive in accordance with SECTION 3.1 hereof in respect of the
shares of Company Common Stock formerly evidenced by such Certificates, and (B)
cash in respect of fractional shares as provided in SECTION 3.1(E) (the shares
of Parent Common Stock and cash being, collectively, the "MERGER
CONSIDERATION"), and the Certificates so surrendered shall forthwith be
canceled.
EXHIBIT 1 - Page 4
(b) Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
SECTION 3.3. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 3.4. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled.
SECTION 3.5. TAX CONSEQUENCES. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
SECTION 3.6. TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Merger Sub and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub in office immediately prior to the Effective Time are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
SECTION 3.7. CLOSING. The closing (the "CLOSING") of the transactions
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company in Houston, Texas, as promptly as practicable (but in
any event within five (5) business days) following the date on which the last of
the conditions set forth in Article VIII is fulfilled or waived, or at such
other time and place as Parent and the Company shall agree. The date on which
the Closing occurs is referred to in this Agreement as the "CLOSING DATE."
EXHIBIT 1 - Page 5
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each represent and warrant to the Company as
follows, except as set forth in the Parent SEC Reports (defined in SECTION 4.5):
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Parent is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the properties owned, leased, or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not have, or could not
reasonably be anticipated to have, individually or in the aggregate, a Material
Adverse Effect (as defined in EXHIBIT A).
SECTION 4.2. CAPITALIZATION.
(a) As of March 31, 1999, the authorized capital stock of Parent
consisted of 100,000,000 shares of Parent Common Stock, of which 14,248,073
shares were issued and outstanding, and 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 Parent Common Stock, but no such shares are issued and outstanding.
All of the issued and outstanding shares of Parent Common Stock were validly
issued and are fully paid, nonassessable and free of preemptive rights.
(b) As of March 31, 1999, except for options granted pursuant to
Parent incentive or option plans (or to current or former employees of Parent),
warrants to acquire 770,000 shares of Parent Common Stock and shares issuable in
connection with proposed acquisitions, if any, there are no outstanding (i)
securities of Parent convertible into or exchangeable for shares of capital
stock or voting securities of Parent or (ii) options or other rights to acquire
from Parent or other obligations of Parent to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Parent.
(c) All of the shares of capital stock of Merger Sub are owned
beneficially and of record by Parent.
(d) The shares of Parent Common Stock to be issued as part of the
Merger Consideration have been duly authorized and when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and non-assessable, and the issuance thereof is not subject
to any preemptive or other similar right.
EXHIBIT 1 - Page 6
SECTION 4.3. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Parent and Merger Sub each have full corporate power and
authority to execute and deliver this Agreement and, subject to the Parent
Required Statutory Approvals (as defined in SECTION 4.3(C)), to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and legally
binding agreement of each of Parent and Merger Sub enforceable against each of
them in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) The execution and delivery of this Agreement by each of Parent
and Merger Sub and the consummation by each of Parent and Merger Sub of the
transactions contemplated hereby do not and will not violate or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under any of the terms, conditions
or provisions of (i) the respective charters or bylaws of Parent or any of its
Subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets (assuming compliance with the matters referred
to in SECTION 4.3(C)) or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of its
Subsidiaries is now a party or by which Parent or any of its Subsidiaries or any
of their respective properties or assets may be bound or affected except, in the
case of clauses (ii) and (iii), for matters as would not have, or could not
reasonably be anticipated to have, individually or in the aggregate, a Material
Adverse Effect or materially impair the ability of Parent and Merger Sub to
consummate the transactions contemplated by this Agreement.
(c) Except for (i) the filing of the Registration Statement (as
defined in SECTION 4.4) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
the declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities, and (ii) the making of the Merger Filing with the
Secretary of State of the State of Florida in connection with the Merger (the
filings and approvals referred to in clauses (i) and (ii) are collectively
referred to as the "PARENT REQUIRED STATUTORY APPROVALS"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Parent or Merger Sub or the
consummation by Parent or Merger Sub of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not, have, or could not reasonably be anticipated to have, individually or in
the aggregate, a Material Adverse Effect or materially impair the ability of
Parent or Merger Sub to consummate the transactions contemplated by this
Agreement.
EXHIBIT 1 - Page 7
SECTION 4.4. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or its Subsidiaries for inclusion in the
Registration Statement on Form S-3 (or the Form of Registration Statement used
in the case of its unavailability) to be filed under the Securities Act with the
SEC by Parent pursuant to SECTION 7.2 of this Agreement for the purpose of
registering the shares of Parent Shares (as amended or supplemented, the
"Registration Statement") will, at the time it becomes effective, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
SECTION 4.5. REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1998, Parent has filed with the SEC all
material forms, statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
thereunder, all of which complied in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder.
(b) Parent has previously made available or delivered to the Company
or the Shareholder copies of its (a) Annual Reports on Form 10-K for the fiscal
year ended December 31, 1997, and for the immediately preceding fiscal year, as
filed with the SEC, (b) proxy and information statements relating to (i) all
meetings of its shareholders (whether annual or special) and (ii) any actions by
written consent in lieu of a shareholder's meeting from January 1, 1998, until
the date hereof, and (c) all other reports, including quarterly reports, or
registration statements filed by Parent with the SEC since January 1, 1998
(other than Registration Statements filed on Form S-8) (the documents referred
to in clauses (a), (b) and (c), including the exhibits thereto, collectively
referred to as the "PARENT SEC REPORTS").
(c) As of their respective dates (as updated by any amendments
thereto), the Parent SEC Reports did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The audited consolidated financial statements and unaudited
interim consolidated financial statements of Parent included in such reports
(collectively, the "PARENT FINANCIAL STATEMENTS") have been prepared in
accordance with GAAP (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the consolidated financial
position of Parent and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, subject, in the case of the unaudited interim financial statements, to
normal year-end and audit adjustments and any other adjustments described
therein.
EXHIBIT 1 - Page 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder, jointly and severally, represent and
warrant to Parent and Merger Sub as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. Each of Anti-Pollution and
D&D is a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of Anti-Pollution and D&D is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the properties owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would not have,
or could not reasonably be anticipated to have, individually or in the
aggregate, a Material Adverse Effect. True, accurate and complete copies of the
Company's Articles of Incorporation, as amended, and Bylaws, in each case as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to Parent.
SECTION 5.2. CAPITALIZATION.
(a) The authorized capital stock of Anti-Pollution consists of 500
shares of Anti-Pollution common stock and the authorized capital stock of D&D
consists of 2,000 shares of D&D common stock. As of the date of this Agreement
there are, and as of Closing there will be, 500 shares of Anti-Pollution common
stock and 2,000 shares of D&D common stock issued and outstanding and no other
shares of capital stock of Anti-Pollution or D&D issued and outstanding. All of
such issued and outstanding shares of Company Common Stock are validly issued
and are fully paid, nonassessable and free of preemptive rights and are owned
beneficially and of record by the Shareholder, free and clear of all
restrictions, liens, claims and encumbrances. No Subsidiary of the Company holds
any shares of the capital stock of the Company.
(b) There are no outstanding (i) subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, debenture, instrument or other agreement obligating the Company or the
Shareholder to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or obligating the Company
or the Shareholder to grant, extend or enter into any such agreement or
commitment or (ii) obligations of the Company or the Shareholder to repurchase,
redeem or otherwise acquire any securities referred to in clause (i) above.
There are no voting trusts, proxies or other agreements or understandings to
which the Company or the Shareholder is a party or is bound with respect to the
voting of any shares of capital stock of the Company.
EXHIBIT 1 - Page 9
SECTION 5.3. SUBSIDIARIES. Company does not have any Subsidiaries, nor
does the Company hold any equity interest in or control (directly or indirectly,
through the ownership of securities, by contract, by proxy, alone or in
combination with others, or otherwise) any corporation, limited liability
company, partnership, business organization or other Person.
SECTION 5.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) The Company has full corporate power and authority to execute
and deliver this Agreement and, subject to the Company Required Statutory
Approvals (as defined in SECTION 5.4(C)), to consummate the transactions
contemplated hereby. This Agreement has been approved by the Board of Directors
of the Company and the Shareholder, and no other corporate proceedings on the
part of the Company or the Shareholder are necessary to authorize the execution
and delivery of this Agreement or the consummation by the Company and the
Shareholder of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and the Shareholder, and, assuming
the due authorization, execution and delivery hereof by Parent and Merger Sub,
constitutes a valid and legally binding agreement of the Company and the
Shareholder, enforceable against the Company and the Shareholder in accordance
with its terms.
(b) Except as set forth in SCHEDULE 5.4, the execution and delivery
of this Agreement by the Company and the Shareholder and the consummation by the
Company and the Shareholder of the transactions contemplated hereby do not and
will not violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or the
Shareholder under any of the terms, conditions or provisions of (i) the charter
or bylaws of the Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to the Company or the Shareholder, or any of
their respective properties or assets (assuming compliance with the matters
referred to in SECTION 5.4(C)), or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or the
Shareholder is now a party or by which the Company or the Shareholder or any of
their respective properties or assets may be bound or affected.
(c) Except for the Merger Filing with the Secretary of State of the
State of Florida in connection with the Merger (the "COMPANY REQUIRED STATUTORY
APPROVALS"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by the
Company and the Shareholder or the consummation by the Company and the
Shareholder of the transactions contemplated hereby.
SECTION 5.5. FINANCIAL STATEMENTS. The unaudited financial statements and
unaudited interim financial statements of the Company attached as SCHEDULE 5.5
(collectively, the "COMPANY FINANCIAL STATEMENTS") have been prepared in
accordance with the cash basis of accounting and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
EXHIBIT 1 - Page 10
results of its operations and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
SCHEDULE 5.6, the Company has not incurred any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except
liabilities, obligations or contingencies (i) which are accrued or reserved
against the Company Financial Statements or reflected in the notes thereto or
(ii) which were incurred after December 31, 1998, and were incurred in the
ordinary course of business and consistent with past practices.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1998, the business of the Company has been conducted in the ordinary course of
business consistent with past practices, and there has not been any event,
occurrence, development or state of circumstances or facts which has had, or
could reasonably be anticipated to have, individually or in the aggregate, a
Material Adverse Effect, except for a dividend or distribution to the
Shareholder to reduce the Company's Net Working Capital at the time of Closing
to the Estimated Net Working Capital.
SECTION 5.8. LITIGATION. Except as described in SCHEDULE 5.8, there are no
claims, suits, actions, Environmental Claims, inspections, investigations or
proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company before any court, governmental department,
commission, agency, instrumentality, authority, or any mediator or arbitrator,
and there is no basis for the same. Except as described in SCHEDULE 5.8, the
Company is not subject to any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality, authority,
or any mediator or arbitrator.
SECTION 5.9. ACCOUNTS RECEIVABLE. All accounts receivable, if any,
reflected on the Company's books and records represent sales actually made in
the ordinary course of business and are collectible (within 60 days after the
applicable billing date) except as reflected in the reserve for doubtful
accounts in the Company Financial Statements.
SECTION 5.10. NO VIOLATION OF LAW; COMPLIANCE WITH AGREEMENTS.
(a) The Company is not in violation of and has not been given notice
or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
Environmental Law) of any governmental or regulatory body or authority. No
investigation or review by any governmental or regulatory body or authority is
pending or, to the knowledge of the Company and the Shareholder, threatened, nor
has any governmental or regulatory body or authority indicated an intention to
conduct the same. The Company has all permits (including without limitation
Environmental Permits), licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals required or necessary
to conduct its business as presently conducted (collectively, the "COMPANY
PERMITS"). The Company is not in violation of the terms of any Company Permit.
EXHIBIT 1 - Page 11
(b) The Company and the Shareholder are not in breach or violation
of or in default in the performance or observance of any term or provision of,
and no event has occurred which, with lapse of time or action by a third party,
could result in a default under, (a) the charter, bylaws or similar
organizational instruments of the Company or (b) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which the Company is a party or by which it is
bound or to which any of its property is subject.
SECTION 5.11. INSURANCE. SCHEDULE 5.11 hereto sets forth a list of all
insurance policies owned by the Company or by which the Company or any of its
properties or assets is covered against present losses, all of which are now in
full force and effect. No insurance has been refused with respect to any
operations, properties or assets of the Company nor has coverage of any
insurance been limited by any insurance carrier that has carried, or received
any application for, any such insurance during the last three years. No
insurance carrier has denied any claims made against any of the policies listed
on SCHEDULE 5.11 hereto.
SECTION 5.12. TAXES.
(a) Except as set forth on SCHEDULE 5.12, (i) the Company has (x)
duly filed (or there has been filed on its behalf) with the appropriate taxing
authorities all Tax Returns (as hereinafter defined) required to be filed by it
on or prior to the date hereof, and (y) duly paid in full or made adequate
provision therefor on its financial statements in accordance with the cash basis
of accounting (or there has been paid or adequate provision has been made on its
behalf) for the payment of all Taxes (as hereinafter defined) for all periods
ending through the date hereof; (ii) all such Tax Returns filed by or on behalf
of the Company are true, correct and complete in all material respects; (iii)
the Company is not the beneficiary of any extension of time within which to file
any Tax Return; (iv) no claim has ever been made by any authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction; (v) the liabilities and reserves for
Taxes, if any, reflected in the most recent balance sheet included in the
Company Financial Statements to cover all Taxes for all periods ending at or
prior to the date of such balance sheet have been determined in accordance with
the cash basis of accounting, and there is no material liability for Taxes for
any period beginning after such date other than Taxes arising in the ordinary
course of business; (vi) there are no liens for Taxes upon any property or
assets of the Company, except for liens for Taxes not yet due; (vii) the Company
has not made any change in accounting methods since December 31, 1998; (viii)
the Company has not received a ruling from any taxing authority or signed an
agreement with any taxing authority; (ix) the Company has complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code, as amended or similar provisions
under any foreign laws) and has, within the time and the manner prescribed by
law, withheld and paid over to the appropriate taxing authority all amounts
required to be so withheld and paid over under all applicable laws in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party; (x) no federal, state, local or foreign audits
or other administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company, and, as of the date of
this Agreement, the Company has not received a written notice of any pending
audits or proceedings;
EXHIBIT 1 - Page 12
(xi) no shareholder or director or officer (or employee responsible for Tax
matters) of the Company expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed; (xii) the federal income Tax
Returns of the Company have been examined by the Internal Revenue Service
("IRS") (which examination has been completed) or the statute of limitations for
the assessment of federal income Taxes of the Company has expired, for all
periods through and including December 31, 1994, and no deficiencies were
asserted as a result of such examinations which have not been resolved and fully
paid; (xiii) no adjustments or deficiencies relating to Tax Returns of the
Company have been proposed, asserted or assessed by any taxing authority, except
for such adjustments or deficiencies which have been fully paid or finally
settled; and (xiv) the Company has delivered to the Parent true, correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1991.
(b) There are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies against the Company, and no power of attorney granted by
the Company with respect to any Taxes is currently in force. The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. The Company is not a party to any agreement
providing for the allocation or sharing of Taxes. The Company has not, with
regard to any assets or property held, acquired or to be acquired by it, filed a
consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company.
The Company (i) has not been a member of an affiliate group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company) and (ii) has no liability for Taxes of any person (other
than any of the Company and its Subsidiaries) under Section 1.1502-6 of the
United States Treasury Regulations (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
SECTION 5.13. EMPLOYEE BENEFIT PLANS.
(a) Each Plan and each Benefit Program (as such terms are defined
below) is listed on SCHEDULE 5.13 hereto. No Plan or Benefit Program is or has
been (i) covered by Title IV of the Employer Retirement Income Security Act of
1974, as amended ("ERISA"), (ii) subject to the minimum funding requirements of
Section 412 of the Code or (iii) a "multi-employer plan" as defined in Section
3(37) of ERISA, nor has the Company contributed to, or ever had any obligation
to contribute to, any multi-employer plan. Each Plan and Benefit Program
intended to be qualified under Section 401(a) of the Code is designated as a
tax-qualified plan on SCHEDULE 5.13 and is so qualified. No Plan or Benefit
Program provides for any retiree health benefits for any employees or dependents
of the Company other than as required by COBRA (as hereinafter defined). There
are no claims pending with respect to, or under, any Plan or any Benefit
Program, other than routine claims for benefits, and there are no disputes or
litigation pending or, to the knowledge of the Company, threatened, with respect
to any such Plans or Benefit Programs.
EXHIBIT 1 - Page 13
(b) The Company has heretofore delivered to Parent true and correct
copies of the following, if any:
(i) each Plan and each Benefit Program listed on SCHEDULE
5.13, all amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit Programs;
(ii) each trust agreement and annuity contract (or any other
funding instruments) pertaining to any of the Plans or Benefit Programs,
including all amendments to such documents to the date hereof;
(iii) each management or employment contract or contract for
personal services and a complete description of any understanding or commitment
between the Company and any officer, consultant, director, employee or
independent contractor of the Company; and
(iv) a complete description of each other plan, policy,
contract, program, commitment or arrangement providing for bonuses, deferred
compensation, retirement payments, profit sharing, incentive pay, commissions,
hospitalization or medical expenses or insurance or any other benefits for any
officer, consultant, director, annuitant, employee or independent contractor of
the Company as such or members of their families (other than directors' and
officers' liability policies), whether or not insured (a "BENEFIT PROGRAM"). For
purposes of this Agreement, "PLAN" means an "employee benefit plan" (as defined
in Section 3(3) of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by the Company or by any trade or
business, whether or not incorporated, which, together with the Company, is
under common control, as described in Section 414(b) or (c) of the Code.
(c) Each Plan and Benefit Program has been maintained and
administered in compliance with its terms and in accordance with all applicable
laws, rules and regulations. The Company has no commitment or obligation to
establish or adopt any new or additional Plans or Benefit Programs or to
increase the benefits under any existing Plan or Benefit Program.
(d) Except as set forth in SCHEDULE 5.13, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) result in any payment to be made by the Company,
including, without limitation, severance, unemployment compensation, golden
parachute (defined in Section 280G of the Code) or otherwise, becoming due to
any employee of the Company, or (ii) increase any benefits otherwise payable
under any Plan or any Benefit Program.
(e) As of the date hereof, the Company does not sponsor any
simplified employee pension plans as described in Section 408(k) of the Code and
there are no claims against the Company for benefits relating to any such plans.
EXHIBIT 1 - Page 14
SECTION 5.14. EMPLOYEE AND LABOR MATTERS.
(a) Company has provided Parent with a true and complete list dated
as of December 31, 1998 (the "EMPLOYEE SCHEDULE ") of all employees of the
Company listing the title or position held, base salary or wage rate and any
bonuses, commissions, profit sharing, the Company's vehicles, club memberships
or other compensation or perquisites payable, all employee benefits received by
such employees and any other material terms of any written agreement with the
Company. As of the date of this Agreement and as of the Closing Date, the
Company has not entered into any agreement or agreements pursuant to which the
combined annual payroll of the Company, including projected pay increases,
overtime and fringe benefit costs, required to operate its business (including
all administrative and support personnel) would be greater than as listed on the
Employee Schedule. Set forth on SCHEDULE 5.14 is a detailed description of all
health, dental, life and disability insurance plans of the Company and a
description of the cost per employee under each such plan for individual
coverage as well as for coverage of such employee's dependents.
(b) Except as set forth on SCHEDULE 5.14, the Company is not a party
to or bound by any written employment agreements or commitments, other than on
an at-will basis. The Company is in compliance with all applicable laws
respecting the employment and employment practices, terms and conditions of
employment and wages and hours of its employees and is not engaged in any unfair
labor practice. All employees of the Company who work in the United States are
lawfully authorized to work in the United States according to federal
immigration laws. There is no labor strike or labor disturbance pending or, to
the knowledge of the Company, threatened against the Company with respect to the
Business and, during the past five years, the Company has not experienced a work
stoppage.
(c) Except as set forth on SCHEDULE 5.14, (i) the Company is not a
party to or bound by the terms of any collective bargaining agreement or other
union contract applicable to any employee of the Company and no such agreement
or contract has been requested by any employee or group of employees of the
Company, nor has there been any discussion with respect thereto by management of
the Company with any employees of the Company, (ii) the Company is not aware of
any union organizing activities or proceedings involving, or any pending
petitions for recognition of, a labor union or association as the exclusive
bargaining agent for, or where the purpose is to organize, any group or groups
of employees of the Company, or (iii) there is not currently pending, with
regard to any of its facilities, any proceeding before the National Labor
Relations Board, wherein any labor organization is seeking representation of any
employees of the Company.
SECTION 5.15. ENVIRONMENTAL MATTERS. Without in any manner limiting any
other representations and warranties set forth in this Agreement:
(a) Neither the Company nor any of its Business Facilities, is in
violation of, or has violated, or has been or is in non-compliance with, any
Environmental Laws, including but not limited to in connection with the
ownership, use, maintenance or operation of, or conduct of the business of the
Company or any of its Business Facilities.
(b) Without in any manner limiting the generality of (a) above:
EXHIBIT 1 - Page 15
(i) Except in compliance with Environmental Laws (including,
without limitation, by obtaining necessary Environmental Permits), no Materials
of Environmental Concern (as defined in EXHIBIT A) have been used, generated,
extracted, mined, beneficiated, manufactured, stored, treated, or disposed of,
or in any other way released (and no release is threatened), on, under or about
any Business Facility (as defined in EXHIBIT A) or transferred or transported to
or from any Business Facility, and no Materials of Environmental Concern have
been generated, manufactured, stored or treated or disposed of, or in any other
way released (and no release is threatened), on, under, about or from any
property adjacent to any current Business Facility;
(ii) The Company is not now, and will not be in the future, as
a result of the operation or condition of the business of the Company on or
prior to the date of Closing, subject to any: (a) contingent liability in
connection with any release or threatened release of any Materials of
Environmental Concern into the environment whether on or off any Business
Facility; (b) reclamation, decontamination or Remediation (as defined in EXHIBIT
A) requirements under Environmental Laws, or any reporting requirements related
thereto; or (c) consent order, compliance order or administrative order relating
to or issued under any Environmental Law;
(iii) There are no Environmental Claims known, pending or, to
the knowledge of the Company and the Shareholder, threatened against the Company
or any of its Business Facilities, and there is no basis for same;
(iv) The Company and all of its Business Facilities have and
have timely filed applications for renewal of all Environmental Permits; the
Company has all environmental and pollution control equipment necessary to
comply with all Environmental Laws (including, without limitation, to comply
with all applicable Environmental Permits) and operation of the business of the
Company as presently conducted, and the Company and its Business Facilities, are
in compliance with all terms and conditions of such Environmental Permits;
(v) Regarding all Environmental Permits for which renewal,
amendment, or modification is sought or pending, no material expenditures,
capital improvements, or changes in operation will be necessary as a condition
or as a result of such renewal, amendment, or modification.
(vi) The Company has received no notice and has no knowledge
that any occupant or tenant of any current Business Facility (a) is in violation
of any Environmental Law; (b) is the subject of any Environmental Claims; or (c)
does not have or has not renewed any Environmental Permits applicable to its
assets or operations.
(vii) There are no, nor have there ever been any, storage
tanks or solid waste management units located on or under any Business Facility
of the Company or any of its Subsidiaries, and there are no Materials of
Environmental Concern on any Business Facility of the Company exceeding any
standard or limitation established, published or promulgated pursuant to
Environmental Laws, which would require reporting to any governmental authority
or Remediation to comply with Requirements of Environmental Laws (as defined in
EXHIBIT A);
EXHIBIT 1 - Page 16
(viii) To the knowledge of the Company and the Shareholder,
none of the off-site locations where Materials of Environmental Concern
generated from any Business Facility of the Company or for which the Company has
arranged for their disposal, treatment or application, has been nominated or
identified as a facility which is subject to an existing or potential claim
under Environmental Laws;
(ix) The Company has not been named as a potentially
responsible party under, and no Business Facility of the Company has been
nominated or identified as a facility which is subject to an existing or
potential claim under CERCLA or comparable Environmental Laws, and no Business
Facility of the Company is subject to any lien arising under Environmental Laws;
(x) The Company has not received any notice of any release or
threatened release of Materials of Environmental Concern, or of any violation
of, noncompliance with, or remedial obligation under, Environmental Laws or
Permits, relating to the ownership, use, maintenance, operation of any Business
Facility or in connection with the business of the Company, nor, to the
knowledge of the Company and the Shareholder, is there any basis for any of the
foregoing, nor has the Company voluntarily undertaken Remediation or other
decontamination or cleanup of any facility or site or entered into any agreement
for the payment of costs associated with such activity;
(xi) There is no Requirement of Environmental Laws that will
require future compliance costs on the part of the Company in excess of $10,000
above costs currently expended in the ordinary course of business;
(xii) Except as set forth on SCHEDULE 5.15, there are no
present or past events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance by the Company with Requirements of Environmental Laws or which may
give rise to any common law or statutory liability under Environmental Laws or
form the basis of an Environmental Claim against the Company;
(xiii) There are no obligations, undertakings or liabilities
arising out of or relating to Environmental Laws which the Company has agreed
to, assumed or retained, by contract or otherwise.
(xiv) The Company has filed all notices, notifications,
financial security, waste managements plans, or applications which are required
to be obtained or filed by the Company for the operation of its business or the
use or operation of any Business Facility of the Company;
(xv) The Company and all Business Facilities are in compliance
in all material respects with all other applicable limitations, restrictions,
conditions, schedules and timetables contained in Environmental Laws or
contained in any plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder; and
EXHIBIT 1 - Page 17
(xvi) No current Business Facility (or equipment thereon) of
the Company contains any asbestos containing materials or polychlorinated
biphenyls in any form nor any wetland areas or other land subject to restricted
development under Environmental Laws.
For purposes of this Section, the "Company" shall include any entity which is,
in whole or in part, a predecessor of the Company and all of its former
Subsidiaries and their predecessors.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Neither the Company nor the
Shareholder is a party to any agreement which purports to restrict or prohibit
any of them from, directly or indirectly, engaging in any business currently
engaged in by the Company. None of the Company's shareholders, officers,
directors, or key employees is a party to any agreement which, by virtue of such
person's relationship with the Company, restricts the Company or any Subsidiary
of the Company from, directly or indirectly, engaging in any of the businesses
described above.
SECTION 5.17. TITLE TO ASSETS. The Company has good and marketable title
in fee simple to all its real property and good title to all its leasehold
interests and other properties, as reflected in the most recent balance sheet
included in the Company Financial Statements, except for properties and assets
that have been disposed of in the ordinary course of business since the date of
the latest balance sheet included therein, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i)
liens for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not detract from the value, or
interfere with the present use or marketability of the property subject thereto
or affected thereby, or otherwise impair the Company's business operations (in
the manner presently carried on by the Company), or (iii) any lien securing any
debt or obligation described on SCHEDULE 5.17 which is expressly referenced as
being secured. All leases under which the Company leases any real property have
been delivered to Parent and are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event which with notice or lapse of time or both
would become a default by or on behalf of the Company or its Subsidiaries, or by
or on behalf of any third party.
SECTION 5.18. CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. SCHEDULE 5.18
hereto sets forth a complete list of the following contracts, agreements, plans
and commitments (collectively, the "CONTRACTS") to which the Company is a party
or by which the Company or any of its properties is bound as of the date hereof:
(a) any contract, commitment or agreement that involves aggregate
expenditures by the Company of more than $10,000 per year;
(b) any contract or agreement (including any such contracts or
agreements entered into with any Governmental Authority) relating to the
maintenance or operation of the business that involves aggregate expenditures by
the Company of more than $10,000;
(c) any indenture, loan agreement or note under which the Company
has outstanding indebtedness, obligations or liabilities for borrowed money;
EXHIBIT 1 - Page 18
(d) any lease or sublease for the use or occupancy of real property;
(e) any agreement that restricts the right of the Company to engage
in any type of business;
(f) any guarantee, direct or indirect, by any person of any
contract, lease or agreement entered into by the Company;
(g) any partnership, joint venture or construction and operation
agreement;
(h) any agreement of surety, guarantee or indemnification with
respect to which the Company is the obligor, outside of the ordinary course of
business;
(i) any contract that requires the Company to pay for goods or
services substantially in excess of its estimated needs for such items or the
fair market value of such items;
(j) any contract, agreement, agreed order or consent agreement that
requires the Company to take any actions or incur expenses to remedy
non-compliance with any Environmental Law; and
(k) any other contract material to the Company or its business.
True, correct and complete copies of each of such contracts, agreements, plans
and commitments have been delivered to or made available for inspection by
Parent. All such contracts, agreements, plans and commitments (i) were duly and
validly executed and delivered by the Company and the other parties thereto and
(ii) are valid and in full force and effect. The Company has fulfilled all
material obligations required of the Company under each such contract,
agreement, plan or commitment to have been performed by it prior to the date
hereof, including timely paying all interest on its debt as such interest has
become due and payable. Except as set forth on SCHEDULE 5.18, there are no
counterclaims or offsets under any of such contracts, agreements, plans and
commitments. The consummation of the Merger will vest in the Survivor
Corporation all rights and benefits under the Contracts and the right to operate
the Company's business and assets under the terms of the Contracts in the manner
currently operated and used by the Company.
SECTION 5.19. REGISTRATION STATEMENT. None of the information to be
supplied by the Company or the Shareholder for inclusion in the Registration
Statement will contain any untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading.
SECTION 5.20. BROKERS AND FINDERS. Neither the Company nor the Shareholder
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of the Company to pay any finder's fees,
brokerage or agent commissions or other like payments in connection with the
transactions contemplated hereby. There is no claim for payment by the Company
of any investment banking fees, finder's fees, brokerage or agent commissions or
EXHIBIT 1 - Page 19
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 5.21. INTELLECTUAL PROPERTY. The Company has rights to use,
whether through ownership, licensing or otherwise, all patents, trademarks,
service marks, trade names, copyrights, software, trade secrets and other
proprietary rights and processes that are material to its business as now
conducted (collectively the "Intellectual Property Rights"). Except as set forth
on SCHEDULE 5.21, the Company does not own any patents. The Company has no
knowledge of any infringement by any other person of any of the Intellectual
Property Rights, and the Company has not entered into any agreement to indemnify
any other party against any charge of infringement of any of the Intellectual
Property Rights. The Company has not and does not violate or infringe any
intellectual property right of any other person, and the Company has not
received any communication alleging that it violates or infringes the
intellectual property right of any other person. The Company has not been sued
for infringing any intellectual property right of another person. There is no
claim or demand of any person pertaining to, or any proceeding which is pending
or, to the knowledge of the Company, threatened, that challenges the rights of
the Company in respect of any Intellectual Property Rights, or that claims that
any default exists under any Intellectual Property Rights. None of the
Intellectual Property Rights is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, tribunal, arbitrator, or
other governmental authority.
SECTION 5.22. RELATIONSHIPS. Except as set forth on SCHEDULE 5.22, since
January 1, 1998, the Company has not received notice from any customer, supplier
or any party to any Contract involving more than $10,000 annually with the
Company (each a "CONTRACT PARTY") that such customer, supplier or Contract Party
intends to discontinue doing business with the Company, and since such date, no
customer, supplier or Contract Party has indicated any intention (a) to
terminate its existing business relationship with the Company or (b) not to
continue its business relationship with the Company, whether as a result of the
transactions contemplated hereby or otherwise. Except for the lease of office
space disclosed on SCHEDULE 5.22, the Company has not entered into or
participated in any related party transaction during the past three years.
SECTION 5.23. CERTAIN PAYMENTS. Neither the Company nor any shareholder,
officer, director or employee of the Company has paid or received or caused to
be paid or received, directly or indirectly, in connection with the business of
the Company (a) any bribe, kickback or other similar payment to or from any
domestic or foreign government or agency thereof or any other person or (b) any
contribution to any domestic or foreign political party or candidate (other than
from personal funds of such shareholder, officer, director or employee not
reimbursed by the Company or as permitted by applicable law).
SECTION 5.24. BOOKS AND RECORDS. The corporate minute books, and other
corporate records of the Company are correct and complete in all material
respects and the signatures appearing on all documents contained therein are the
true signatures of the person purporting to have signed the same. All actions
reflected in said books and records were duly and validly taken in compliance
with the laws of the applicable jurisdiction and no meeting of the board of
directors of the Company or any committee thereof has been held for which
minutes have not been prepared and are not contained in the minute books. To the
extent that they exist, all personnel files, reports, strategic planning
EXHIBIT 1 - Page 20
documents, financial forecasts, accounting and tax records and all other records
of every type and description that relate to the business of the Company have
been prepared and maintained in accordance with good business practices and
applicable laws and regulations. All such books and records are located in the
offices of the Company.
SECTION 5.25. CONDITION AND SUFFICIENCY OF ASSETS. Except for tank repairs
in the amount of approximately $4,000 to be made to one pump truck, all
buildings, improvements and equipment owned or leased by the Company are
structurally sound, are in good operating condition and repair (subject to
normal wear and tear) and are adequate for the uses to which they are being put,
and none of such buildings, improvements or equipment is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
SECTION 5.26. INVESTMENT REPRESENTATIONS. Each of the Company and the
Shareholder acknowledges, represents and agrees that:
(a) (i) Parent has made available to the Company and the Shareholder
the information and documents described in SECTION 4.5 hereof, (ii) the
Shareholder understands the risks associated with ownership of Parent Common
Stock, and (iii) the Shareholder is capable of bearing the financial risks
associated with such ownership;
(b) The Parent Shares included within the Merger Consideration has
not been registered under the Securities Act or registered or qualified under
any applicable state securities laws;
(c) The Parent Shares are being issued to the Shareholder in
reliance upon exemptions from such registration or qualification requirements,
and the availability of such exemptions depends in part upon the Shareholder's
bona fide investment intent with respect to the Parent Shares;
(d) The Shareholder's acquisition of the Parent Shares is solely for
his own account for investment, and the Shareholder is not acquiring such Parent
Shares for the account of any other person or with a view toward resale,
assignment, fractionalization, or distribution thereof;
(e) The Shareholder shall not offer for sale, sell, transfer,
pledge, hypothecate or otherwise dispose of any of the Parent Shares except in
accordance with this Agreement and (i) the registration requirements of the
Securities Act and applicable state securities laws or (ii) upon delivery to
Parent of an opinion of legal counsel reasonably satisfactory to Parent that an
exemption from registration is available or pursuant to an effective
registration statement covering the Parent Shares to be sold;
(f) The Shareholder has such knowledge and experience in financial
and business matters that they are capable of evaluating the merits and risks of
an investment in the Parent Shares, and to make an informed investment decision
with respect thereto;
EXHIBIT 1 - Page 21
(g) The Shareholder has had the opportunity to ask questions of, and
receive answers from Parent's officers and directors concerning the
Shareholder's acquisition of the Parent Shares and to obtain such other
information concerning Parent and the Parent Shares, to the extent Parent's
officers and directors possessed the same or could acquire it without
unreasonable effort or expense, as the Shareholder deemed necessary in
connection with making an informed investment decision; and
(h) In addition to any other legends required by law or the other
agreements entered into in connection herewith, each certificate evidencing the
Parent Shares will bear a conspicuous restrictive legend substantially as
follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH OTHER STATE
LAWS OR UPON DELIVERY TO THIS CORPORATION OF AN OPINION OF LEGAL
COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. After
the date hereof and prior to the Closing Date, unless Parent shall otherwise
agree in writing, the Company shall, and the Shareholder shall cause the Company
to:
(a) conduct its businesses in the ordinary and usual course of
business and consistent with past practice;
(b) not (i) amend or propose to amend its charter or bylaws, (ii)
split, combine, reorganize, reclassify, recapitalize or take any similar action
with respect to their outstanding capital stock or (iii) declare, set aside or
pay any dividend or distribution payable in cash, stock, property or otherwise;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional share of, or any options, warrants or
rights of any kind to acquire any share of, its capital stock of any class or
any debt or equity securities convertible into or exchangeable for such capital
stock;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money, (ii) redeem, purchase, acquire or offer to
redeem, purchase or acquire any
EXHIBIT 1 - Page 22
shares of its capital stock or any options, warrants or rights to acquire any of
its capital stock or any security convertible into or exchangeable for its
capital stock, (iii) make any acquisition of any assets or businesses other than
expenditures for fixed or capital assets in the ordinary course of business not
exceeding $10,000 in any instance or $50,000 in the aggregate, (iv) sell,
pledge, dispose of or encumber any assets or businesses other than sales in the
ordinary course of business or (v) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with them
and not engage in any action, directly or indirectly, with the intent to
adversely impact the transactions contemplated by this Agreement;
(f) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees;
(g) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law;
(h) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are consistent
with past practice;
(i) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority;
(j) not make any change in the Company's financial, Tax or
accounting methods, practices or policies, or in any assumption underlying such
a method, practice or policy;
(k) give prompt written notice to Parent of the commencement of any
Environmental Claim, or non-routine inspection by any governmental authority
with responsibility for enforcing or implementing any applicable Environmental
Laws, and provide to Parent such information as Parent may reasonably request
regarding such Environmental Claim, any developments in connection therewith,
and, as applicable, the Company's anticipated or actual response thereto;
(l) use its commercially reasonable efforts to cause the transfer of
Environmental Permits (on the same terms and conditions), and any financial
assurance required thereunder to Parent or Merger Sub as may be necessary under
applicable Environmental Laws in connection with the consummation of the
transactions under this Agreement to allow Parent or Merger Sub to conduct the
business of the Company, as currently conducted;
EXHIBIT 1 - Page 23
(m) not enter into or assume any contracts or agreements having a
value or imposing an obligation upon the Company in excess of $10,000 annually
and all contracts or agreements having a value to or imposing an obligation on
the Company that have remaining obligations of $50,000 or more, regardless of
the annual payment;
(n) maintain its books of account and records in the usual, regular
and ordinary manner consistent with past policies and practice;
(o) not compromise, settle, grant any waiver or release relating to
or otherwise adjust any litigation or claims of any nature whatsoever pending
against the Company;
(p) not take any action or omit to take any action, which action or
omission would result in a breach of any of the representations and warranties
set forth in this Agreement; and
(q) not make or commit to make any capital expenditures, except for
capital expenditures in the ordinary course of business not in excess of $50,000
in the aggregate.
SECTION 6.2. CONTROL OF THE COMPANY'S OPERATIONS. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
SECTION 6.3. OTHER OFFERS. Except in connection with the transactions
contemplated by this Agreement, from and after the date hereof, the Company and
the Shareholder shall not, and shall not permit any of the Company's officers,
directors, employees, Affiliates, representatives or agents to, directly or
indirectly, (i) solicit, initiate or knowingly encourage any offer or proposal
for, or any indication of interest in, a merger or business combination
involving the Company or the acquisition of an equity interest in, or any
substantial portion of the assets of, the Company or (ii) engage in negotiations
with or disclose any nonpublic information relating to the Company or Parent, or
afford access to the properties, books or records of the Company, to any Person.
The Company shall promptly notify and provide copies to Parent of any offer,
proposal or indication of interest, or communication with respect thereto,
delivered to or received from any third party.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS TO INFORMATION. The Company shall afford to Parent and
Merger Sub and their respective accountants, counsel, financial advisors and
other representatives (the "Parent Representatives") full access during normal
business hours throughout the period prior to the Effective Time to all of its
respective properties (including without limitation to conduct soil,
groundwater, ambient air or other environmental testing or analyses), books,
contracts, personnel, representatives of or contacts with governmental or
regulatory authorities, agencies or bodies, commitments, and records (including,
but not limited to, Tax Returns and any and all records or documents which are
within the possession of governmental or regulatory authorities, agencies or
bodies, and the disclosure of which the Company can facilitate or control) and,
during such period,
EXHIBIT 1 - Page 24
shall furnish promptly to Parent and Merger Sub all such information concerning
its respective businesses, properties and personnel as Parent or Merger Sub, as
the case may be, shall request. No investigation pursuant to this Section shall
affect any representation or warranty made by any party.
SECTION 7.2. REGISTRATION STATEMENT.
(a) Parent shall use reasonable efforts to file with the SEC
promptly upon receipt of a written request from the Shareholder (provided that
such request may be made or delivered no earlier than March 31, 2000), the
Registration Statement and shall use reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly as reasonably practicable.
Parent shall also take any action required to be taken under applicable state
blue sky or securities laws in connection with the issuance of Parent Shares
pursuant hereto. Parent and the Company shall promptly furnish to each other all
information, and take such other actions, as may reasonably be requested in
connection with any action by any of them in connection with this Section.
Except as otherwise provided in this SECTION 7.2, no Parent Shares may be
transferred or sold during the 12 months following Closing.
(b) If within one year after the Closing Date Parent proposes to
register any of its securities for its own account under the Securities Act for
sale, Parent shall give written notice to the Shareholder of its intention to
effect such a registration not later than 15 days prior to the anticipated date
of filing with the SEC of a registration statement, which notice shall offer the
Shareholder the opportunity to include in such registration statement any of the
Parent Shares held by the Shareholder that the Shareholder may request (a
"PIGGYBACK REGISTRATION"). Parent's obligation under this SECTION 7.2(B) shall
be limited to registrations as to which a registration statement is to be filed
on or before one year after the date hereof. Subject to the provisions of this
Agreement, Parent will use its reasonable efforts to cause all the Parent Shares
for which the Shareholder has requested registration to be registered under the
Securities Act to the extent required to permit the sale by the Shareholder of
such Parent Shares; provided, that if the registration relates to an
underwritten public offering and the managing underwriter or underwriters
believe that the inclusion of all shares requested to be included in the
proposed registration would adversely affect the marketing of such shares,
Parent may first include in such registration all securities Parent proposes to
sell, and the Shareholder shall accept a reduction (including a total
elimination) in the number of shares to be included in such registration, pro
rata with the other holders of Parent Common Stock making requests for
registration, on the basis of the number of shares of Parent Common Stock so
requested to be included by the Shareholder and the other selling shareholders.
Nothing in this section shall limit Parent's ability to withdraw a registration
statement it has filed either before or after effectiveness.
(c) Parent shall pay all expenses incurred in connection with a
proposed registration by Parent under this SECTION 7.2, whether or not effected
or consummated, including, without limitation, all registration and filing fees,
printing expenses, and fees and disbursements of counsel and accountants for
Parent.
EXHIBIT 1 - Page 25
SECTION 7.3. SYNAGRO LIQUIDITY PROGRAM. Notwithstanding any other
provision set forth herein, with respect to all sales by the Shareholder of
Parent Shares through the NASDAQ or any such other exchange, the Shareholder may
only sell such shares on any day after the first sale of Parent Common Stock has
occurred through the NASDAQ or such other exchange on such day and thereafter
the Shareholder may only sell 1,000 Parent Shares in the aggregate for each
1,000 shares of Parent Common Stock sold by unrelated third parties through the
NASDAQ or such other exchange on such day. In no event shall the plan of
distribution of Parent Shares include the use of a contractual underwriter, nor
shall Parent have any obligation to enter into an underwriting agreement with
any investment banking firm participating as a broker in the execution of any
such resales. Parent agrees that it will furnish to the Shareholder such number
of prospectuses, prospectus supplements, or other documents incident to any
registration, qualification or compliance referred to herein as the Shareholder
from time to time may reasonably request.
SECTION 7.4. EXCHANGE LISTING. Parent shall use its reasonable efforts to
effect, at or before the effective date of the Registration Statement,
authorization for listing on NASDAQ, upon official notice of issuance, of the
shares of Parent Common Stock to be issued pursuant to the Merger.
SECTION 7.5. EXPENSES AND FEES. The Shareholder shall pay all costs and
expenses incurred by the Company and the Shareholder in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, any and all broker's commissions and the fees and expenses of the
Company's and the Shareholder's attorneys and accountants, and will make all
necessary arrangements so that the Company, Parent or Merger Sub will not be
charged with any such cost or expense; provided, however, that the Company
Required Statutory Approvals and the expenses under SECTION 7.2 shall be paid by
Parent. Parent shall pay all costs and expenses incurred by Parent and Merger
Sub in connection with this Agreement and the transactions contemplated hereby,
including without limitation, the fees and expenses of their attorneys and
accountants.
SECTION 7.6. AGREEMENT TO COOPERATE. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary, proper or
advisable waivers, consents and approvals under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts to obtain all necessary or
appropriate waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of the Company.
SECTION 7.7. PUBLIC STATEMENTS. Except as required by law, the parties
shall obtain the written consent of the other prior to issuing any press release
or any written public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
written public statement prior to such consent, which will not be unreasonably
withheld.
EXHIBIT 1 - Page 26
SECTION 7.8. NOTIFICATION OF CERTAIN MATTERS. Each of the Company, Parent
and Merger Sub agrees to give prompt notice to each other of, and to use their
respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material respect (or in all respects in the case of
any representation or warranty containing any materiality qualification) at any
time from the date hereof to the Effective Time and (ii) any material failure
(or any failure in the case of any covenant, condition or agreement containing
any materiality qualification) on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 7.9. TAX PERIODS ENDING ON OR BEFORE THE CLOSING. Shareholder
shall prepare or cause to be prepared and file or cause to be filed all tax
returns for the Company for all periods ending on or prior to the Closing which
are filed after the Closing. Shareholder shall permit the Parent to review and
comment on each such tax return described in the preceding sentence prior to
filing.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver, if permissible, at or prior to the Effective Time
of the following conditions:
(a) no preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted); and
(b) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal.
SECTION 8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER.
Unless waived by the Company, the obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) Parent and Merger Sub shall have performed in all material
respects (or in all respects in the case of any agreement containing any
materiality qualification) their agreements contained in this Agreement required
to be performed on or prior to the Closing Date;
(b) the representations and warranties of Parent and Merger Sub
contained in this Agreement shall be true and correct in all material respects
(or in all respects in the case of any
EXHIBIT 1 - Page 27
representation or warranty containing any materiality qualification) on and as
of the date made and on and as of the Closing Date as if made at and as of such
date; and
(c) Parent shall have removed the Shareholder from any and all
personal guaranties and/or surety obligations in connection with the Company's
debts or operations listed on SCHEDULE 8.2(C) hereto.
(d) the Company shall have received a certificate executed on behalf
of Parent by the Chief Executive Officer or a Vice President of Parent and on
behalf of Merger Sub by the President or a Vice President of Merger Sub with
respect to (a) and (b) above.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB TO EFFECT
THE MERGER. Unless waived by Parent and Merger Sub, the obligations of Parent
and Merger Sub to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects (or in
all respects in the case of any agreement containing any materiality
qualification) its agreements contained in this Agreement required to be
performed on or prior to the Closing Date;
(b) the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date;
(c) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a Material Adverse Effect;
(d) all governmental waivers, consents, orders, permit transfers
(including without limitation Environmental Permits) and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby or to permit Parent to carry on the business of the Company after Closing
in accordance with past customs and practice shall have been obtained and be in
effect at the Closing Date, and no governmental authority shall have promulgated
any statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value of the Company to Parent;
(e) all waivers, consents and approvals from third parties necessary
for the transfer of any material contracts, financial assurances and any other
rights and benefits in connection with the Merger, or necessary for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and be in effect at the Closing Date;
(f) all transactions, contracts, agreements and guarantees between
the Company and the Shareholder or any Affiliate of the Company or the
Shareholder shall have been terminated and all amounts owed by the Shareholder
and his Affiliates to the Company shall have been paid in full;
EXHIBIT 1 - Page 28
(g) the board of directors and Shareholder of the Company shall
approve this Agreement and the closing of the transactions contemplated herein;
(h) the board of directors of Parent shall approve this Agreement
and the closing of the transactions contemplated herein;
(i) the officers and directors of the Company shall deliver to
Parent an instrument dated the Closing Date releasing the Company from any and
all claims of such officers and directors (except as to accrued compensation
prior to the Closing Date in accordance with the terms of the Agreement);
(j) Parent shall have received the resignations of the officers and
directors of the Company;
(k) Parent shall have completed its due diligence review regarding
the Company and its business, operations, assets, liabilities, taxes, insurance,
contracts, prospects and environmental and other matters as Parent deems
relevant and Parent shall be satisfied, in its sole discretion, with the results
of such review;
(l) Parent shall have received a legal opinion from Cunningham,
Albritton, Miller, Heffernan, Crimella, Xxxxxxxx & Xxxxx, LLP, in the form
reasonably satisfactory to Parent;
(m) Xxx Xxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxx shall have entered into
Employment and Confidentiality Agreements, in the form attached as EXHIBIT B
hereto; and
(n) Parent shall have received a certificate executed on behalf of
the Company by the President or Chief Executive Officer of the Company and the
Shareholder with respect to (a) through (f) above.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time as follows:
(a) The Company shall have the right to terminate this Agreement:
(i) if the representations and warranties of Parent and Merger
Sub shall fail to be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made or, except in the case of
any such representations and warranties made as of a specified date, on and as
of any subsequent date as if made at and as of subsequent date and such failure
shall not have been cured in all material respects (or in all respects in the
case of any representation or warranty containing any materiality qualification)
within 30 days after written notice of such failure is given to Parent by the
Company;
EXHIBIT 1 - Page 29
(ii) if the Merger is not completed by April 30, 1999
(PROVIDED that the right to terminate this Agreement under this SECTION
9.1(A)(II) shall not be available to the Company if the failure of the Company
or the Shareholder to fulfill any obligation to Parent under or in connection
with this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date);
(iii) if the Merger is enjoined by a final, unappealable court
order; or
(iv) if Parent or Merger Sub (A) fails to perform in any
material respect (or in all respects in the case of any covenant containing any
materiality qualification) any of its covenants in this Agreement and (B) does
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within 30 days after
notice of such default is given to Parent by the Company.
(b) Parent shall have the right to terminate this Agreement;
(i) if the representations and warranties of the Company and
the Shareholder shall fail to be true and correct in all material respects (or
in all respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made or, except in the case of
any such representations and warranties made as of a specified date, on and as
of any subsequent date as if made at and as of such subsequent date and such
failure shall not have been cured in all material respects (or in all respects
in the case of any representation or warranty containing any materiality
qualification) within 30 days after written notice of such failure is given to
the Company by Parent;
(ii) if the Merger is not completed by April 30, 1999
(PROVIDED that the right to terminate this Agreement under this SECTION
9.1(B)(II) shall not be available to Parent if the failure of Parent to fulfill
any obligation to the Company under or in connection with this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or before
such date); or
(iii) if the Company or the Shareholder (A) fail to perform in
any material respect (or in all respects in the case of any covenant containing
any materiality qualification) any of its covenants in this Agreement and (B) do
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within 30 days after
notice of such default is given to the Company by Parent.
(c) The Board of Directors of the Company and Parent mutually agree.
SECTION 9.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company pursuant to the provisions of SECTION
9.1, this Agreement shall forthwith become void and there shall be no further
obligations on the part of the Company, Parent, Merger Sub or their respective
officers or directors (except as set forth in SECTIONS 11.5 and 11.6, each of
which shall survive termination in its entirety). Notwithstanding any other
provision set forth herein, nothing in this SECTION 9.2 shall relieve any party
from liability for any breach of this Agreement.
EXHIBIT 1 - Page 30
SECTION 9.3. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties.
SECTION 9.4. EXTENSIONS; WAIVER. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. THE SHAREHOLDER'S INDEMNITY OBLIGATIONS. The Shareholder
shall indemnify and hold harmless the Company, Parent and the Company's and
Parent's respective officers, directors, stockholders, employees, agents,
representatives and Affiliates (each a "PARENT INDEMNIFIED PARTY") from and
against any and all claims (including without limitation, Environmental Claims),
actions, causes of action, arbitrations, proceedings, losses, damages,
remediations, liabilities, strict liabilities, judgments, fines, penalties and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, the "INDEMNIFIED AMOUNTS"), paid, imposed on or incurred by a
Parent Indemnified Party, directly or indirectly, relating to, resulting from or
arising out of, or any allegation of a third party of (a) any breach or
misrepresentation in any of the representations and warranties made by or on
behalf of the Company and/or the Shareholder in this Agreement, including
without limitation with respect to environmental matters, or any certificate or
instrument delivered in connection with this Agreement, (b) any violation or
breach by the Company and/or the Shareholder of or default by the Company and/or
the Shareholder under the terms of this Agreement or any certificate or
instrument delivered in connection with this Agreement, (c) any act or omission
by the Company, the Shareholder or any officer, director, employee, agent or
representative of the Company, occurring on or prior to the Closing Date
(including any claim by a third party, including employees and customers arising
out of or related to any act or omission by the Company, the Shareholder or any
shareholder, officer, director, employee, agent or representative of the Company
occurring on or prior to the Closing Date), (d) any Environmental Claim and/or
any violation of any Requirements of Environmental Law if such Environmental
Claim or violation relates, directly or indirectly, to events, conditions,
operations, facts or circumstances which occurred or commenced on or prior to
the Closing Date, or (e) any Taxes incurred by the Shareholder or the Company as
a result of the consummation of the transactions contemplated by this Agreement.
For purposes of this SECTION 10.1, Indemnified Amounts shall include without
limitation those Indemnified Amounts ARISING OUT OF THE STRICT LIABILITY
(INCLUDING BUT NOT LIMITED TO STRICT LIABILITY ARISING PURSUANT TO ENVIRONMENTAL
LAWS) OR NEGLIGENCE OF ANY PARTY, INCLUDING ANY PARENT INDEMNIFIED PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE.
EXHIBIT 1 - Page 31
SECTION 10.2. PARENT'S INDEMNITY OBLIGATIONS. Parent shall indemnify and
hold harmless the Shareholder and the Shareholder's agents, representatives and
Affiliates (each a "SHAREHOLDER'S INDEMNIFIED PARTY") from and against any and
all Indemnified Amounts incurred by a Shareholder's Indemnified Party as a
result of (a) any breach or misrepresentation in any of the representations and
warranties made by or on behalf of Parent or Merger Sub in this Agreement or any
certificate or instrument delivered in connection with this Agreement, or (b)
any violation or breach by Parent or Merger Sub of or default by Parent under
the terms of this Agreement or any certificate or instrument delivered in
connection with this Agreement.
SECTION 10.3. INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an
"INDEMNIFIED PARTY") shall with reasonable promptness (i) notify the party from
whom indemnification is sought (the "INDEMNIFYING PARTY") of any third-party
claim or claims asserted against the Indemnified Party ("THIRD PARTY CLAIM") for
which indemnification is sought and (ii) transmit to the Indemnifying Party a
copy of all papers served with respect to such claim (if any) and a written
notice ("CLAIM NOTICE") containing a description in reasonable detail of the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Within 15 days after receipt of any Claim Notice (the "ELECTION PERIOD"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this SECTION 10.3(A). The Indemnifying
Party shall have full control of such defense and proceedings. The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall reasonably deem necessary or
appropriate to protect its interests. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. Except as otherwise provided herein, the
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party claim controlled by the Indemnifying Party pursuant to this
SECTION 10.3 and shall bear its own costs and expenses with respect to such
participation.
EXHIBIT 1 - Page 32
If the Indemnifying Party fails to notify the Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding paragraph, or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably objects to such
election on the grounds that counsel for such Indemnifying Party cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 10.3, and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
The Indemnifying Party shall not settle or compromise any Third Party
Claim unless (i) the terms of such compromise or settlement require no more than
the payment of money (i.e., such compromise or settlement does not require the
Indemnified Party to admit any wrongdoing or take or refrain from taking any
action), (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable unconditional satisfaction
and/or release, in form and substance reasonably satisfactory to it, providing
that such Third Party Claim and any claimed lability of the Indemnified Party
with respect thereto is being fully satisfied by reason of such compromise or
settlement and that the Indemnified Party is being released from any and all
obligations or liabilities it may have with respect thereto. The Indemnified
Party shall not settle or admit liability to any Third Party Claim without the
prior written consent of the Indemnifying Party unless (x) the Indemnifying
Party has disputed its potential liability to the Indemnified Party, and such
dispute either has not been resolved or has been resolved in favor of the
Indemnifying Party or (y) the Indemnifying Party has failed to respond to the
Indemnified Party's Claim Notice.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"INDEMNITY NOTICE") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement.
SECTION 10.4. DETERMINATION OF INDEMNIFIED AMOUNTS. The Indemnified
Amounts payable by an Indemnifying Party hereunder shall be determined (i) by
the written agreement of the parties, (ii) by mediation, (iii) by binding
arbitration pursuant to SECTION 11.6 hereof, (iv) by a final judgment or decree
of any court of competent jurisdiction, or (v) by any other means agreed to in
writing by the parties. A judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken have been fully determined. In calculating
or determining the Indemnified Amounts, such calculation or determination shall
take into account the actual receipt of any amounts from any third party and the
reductions to such Indemnified Amounts in SECTION 10.7.
EXHIBIT 1 - Page 33
SECTION 10.5. LIMITATION OF SHAREHOLDER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE X,
the aggregate liability of the Shareholder for any event or occurrence giving
rise to the Shareholder being required to indemnify Parent Indemnified Parties
pursuant to SECTION 10.1 of this Agreement shall be limited to the sum of the
Merger Consideration plus the amounts deducted from the cash portion of the
Merger Consideration pursuant to SECTION 3.1(A)(II)(1) and (2).
(b) Parent Indemnified Parties are entitled to indemnification
pursuant to SECTION 10.1 only to the extent that the amount of any Indemnified
Amount, individually or in the aggregate, exceeds $25,000 and then to the full
amount of such Indemnified Amount.
SECTION 10.6. LIMITATION OF PARENT'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in ARTICLE X,
the aggregate liability of Parent for any event or occurrence giving rise to
Parent being required to indemnify Shareholder's Indemnified Parties pursuant to
SECTION 10.2 shall be limited to $1,000,000.
(b) Company Indemnified Parties are entitled to indemnification
pursuant to SECTION 10.2 only to the extent that the amount of any Indemnified
Amount, individually or in the aggregate, exceeds $25,000 and then to the full
amount of such Indemnified Amount.
SECTION 10.7. LIMITATION ON INDEMNIFIED AMOUNTS. Notwithstanding any
provision of this ARTICLE X to the contrary, Indemnified Amounts owed by an
Indemnifying Party to an Indemnified Party shall be reduced by the amount of any
mitigating recovery or benefit (net of reasonable expenses and tax and other
costs incurred in obtaining such recovery or benefit) an Indemnified Party shall
have received or otherwise enjoyed with respect thereto from: (i) any recovery
under any insurance policies, without regard to whether the Indemnified Party or
another person paid the premiums therefor; and (ii) the amount of tax or other
economic benefit (if any) to any Indemnified Party or its affiliate occurring in
connection with the occurrence of any action, cause of action, arbitration,
proceeding, loss, damage, remediation, liability, strict liability, judgment,
fine, penalty and expense in connection with an event leading to the accrual of
Indemnified Amounts. If such a mitigating recovery or benefit set forth in
SECTION 10.7(I) and (II) above is received or enjoyed by an Indemnified Party
after it receives payment or other credit under this Agreement with respect to
Indemnified Amounts, then a refund equal in aggregate amount to the mitigating
recovery, net of reasonable expenses and tax or other costs incurred in
obtaining recovery, shall be made promptly to the Indemnifying Party.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. SURVIVAL. The representations and warranties set forth in
this Agreement and in any certificate or instrument delivered in connection
herewith shall be continuing and shall survive the Closing for a period of three
years following the Closing Date; PROVIDED, HOWEVER, that in the case of all
representations and warranties, there shall be no such termination with respect
to any such
EXHIBIT 1 - Page 34
representation or warranty as to which a bona fide claim has been asserted by
written notice of such claim delivered to the party or parties making such
representation or warranty prior to the expiration of the survival period;
PROVIDED, FURTHER, that the representations and warranties set forth in SECTIONS
5.2 and 5.23 hereof shall survive the Closing indefinitely, SECTIONS 5.6 and
5.15 shall survive the Closing for five years and SECTIONS 5.5, 5.8, 5.10, 5.12,
5.13 and 5.19 shall survive the Closing for the greater of three years or the
statutory survival period. The covenants and agreements, including but not
limited to indemnification obligations, set forth in this Agreement and in any
certificate or instrument delivered in connection herewith shall be continuing
and survive Closing; PROVIDED, HOWEVER, that the indemnification obligations of
the parties hereto (i) set forth in SECTIONS 10.1(A) and 10.2(A) with respect to
a breach of a representation or warranty shall terminate at the time such
particular representation or warranty shall terminate, and (ii) set forth in
SECTIONS 10.1(B) and 10.2(B) shall terminate three years following the Closing
Date. The indemnification obligations of the Shareholder set forth in SECTIONS
10.1(C) AND (E) shall survive the Closing indefinitely.
SECTION 11.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Parent or Merger Sub to:
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Rome
Telecopy: 713/369-1760
with a copy to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: 713/223-3717
(b) if to the Company (prior to Closing) or the Shareholder, to:
Mr. Xxx Xxxxx
00000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
EXHIBIT 1 - Page 35
with a copy to:
Xxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy: 305/743-8800
SECTION 11.3. INTERPRETATION. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way or interpretation of
this Agreement. In this Agreement, unless a contrary intention appears, (i) the
words "herein", "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or other
subdivision and (ii) reference to any Article or Section means such Article or
Section hereof. No provision of this Agreement shall be interpreted or construed
against any party hereto solely because such party or its legal representative
drafted such provision.
SECTION 11.4. MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
and (b) shall not be assigned by operation of law or otherwise except that
Merger Sub may assign this Agreement to any other wholly-owned Subsidiary of
Parent, but no such assignment shall relieve the Parent or the Merger Sub, as
the case may be, of its obligations hereunder.
SECTION 11.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS
OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 11.6. BINDING ARBITRATION.
(a) GENERAL. Notwithstanding any provision of this Agreement to the
contrary, upon the request of any party (defined for the purpose of this
provision to include affiliates, principles and agents of any such party), any
dispute, controversy or claim arising out of, relating to, or in connection
with, this Agreement or any agreement executed in connection herewith or
contemplated hereby, or the breach, termination, interpretation, or validity
hereof or thereof (hereinafter referred to as a "DISPUTE"), shall be finally
resolved by mandatory and binding arbitration in accordance with the terms
hereof. Any party to this Agreement may bring an action in court to compel
arbitration of any Dispute. Any party who fails or refuses to submit any Dispute
to binding arbitration following a lawful demand by the opposing party shall
bear all costs and expenses incurred by the opposing party in compelling
arbitration of such Dispute.
(b) GOVERNING RULES. The arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of the arbitration, except as they may be
modified herein or by mutual agreement of the parties. The seat of the
arbitration shall be Houston, Texas. Notwithstanding SECTION 11.5, the
arbitration and this clause shall be governed by the Federal Arbitration Act, 9
U.S.C. xx.xx. 1 et seq. (the "FEDERAL
EXHIBIT 1 - Page 36
ARBITRATION ACT"). The arbitrator shall award all reasonable and necessary costs
(including the reasonable fees and expenses of counsel) incurred in conducting
the arbitration to the prevailing party in any such Dispute. The parties
expressly waive all rights whatsoever to file an appeal against or otherwise to
challenge any award by the arbitrators hereunder; PROVIDED, that the foregoing
shall not limit the rights of either party to bring a proceeding in any
applicable jurisdiction to confirm, enforce or enter judgment upon such award
(and the rights of the other party, if such proceeding is brought to contest
such confirmation, enforcement or entry of judgment, but only to the extent
permitted by the Federal Arbitration Act).
(c) NO WAIVER; PRESERVATION OF REMEDIES. No provision of, nor the
exercise of any rights under this Agreement shall limit the right of any party
to apply for injunctive relief or similar equitable relief with respect to the
enforcement of this Agreement or any agreement executed in connection herewith
or contemplated hereby, and any such action shall not be deemed an election of
remedies. Such rights can be exercised at any time except to the extent such
action is contrary to a final award or decision in any arbitration proceeding.
The institution and maintenance of an action for injunctive relief or similar
equitable relief shall not constitute a waiver of the right of any party,
including without limitation the plaintiff, to submit any Dispute to arbitration
nor render inapplicable the compulsory arbitration provisions of this Agreement.
(d) ARBITRATION PROCEEDING. In addition to the authority conferred
on the arbitration tribunal by the rules specified above, the arbitration
tribunal shall have the authority to order reasonable discovery, including the
deposition of party witnesses and production of documents. The arbitral award
shall be in writing, state the reasons for the award, and be final and binding
on the parties. All statutes of limitations that would otherwise be applicable
shall apply to any arbitration proceeding. Any attorney-client privilege and
other protection against disclosure of confidential information, including
without limitation any protection afforded the work-product of any attorney,
that could otherwise be claimed by any party shall be available to and may be
claimed by any such party in any arbitration proceeding. No party waives any
attorney-client privilege or any other protection against disclosure of
confidential information by reason of anything contained in or done pursuant to
or in connection with this Agreement. Each party agrees to keep all Disputes and
arbitration proceedings strictly confidential, except for disclosures of
information to the parties' legal counsel or auditors or those required by
applicable law. The arbitrators shall determine the matters in dispute in
accordance with the substantive law of Texas, without regard to conflict of law
rules.
(e) APPOINTMENT OF ARBITRATORS. The arbitration shall be conducted
by three (3) arbitrators. The party initiating arbitration (the "CLAIMANT")
shall appoint its arbitrator in its request for arbitration (the "REQUEST"). The
other party (the "RESPONDENT") shall appoint its arbitrator within thirty (30)
days after receipt of the Request and shall notify the Claimant of such
appointment in writing. If the Respondent fails to appoint an arbitrator within
such thirty (30) day period, the arbitrator named in the Request shall decide
the controversy or claim as sole arbitrator. Otherwise, the two (2) arbitrators
appointed by the parties shall appoint a third (3rd) arbitrator within thirty
(30) days after the Respondent has notified Claimant of the appointment of the
Respondent's arbitrator. When the third (3rd) arbitrator has accepted the
appointment, the two (2) party-appointed arbitrators shall promptly notify the
parties of the appointment. If the two (2) arbitrators appointed
EXHIBIT 1 - Page 37
by the parties fail to appoint a third (3rd) arbitrator or so to notify the
parties within the time period prescribed above, then the appointment of the
third (3rd) arbitrator shall be made by the American Arbitration Association,
which shall promptly notify the parties of the appointment. The third (3rd)
arbitrator shall act as Chair of the panel.
(f) OTHER MATTERS. This arbitration provision constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
prior discussions, arrangements, negotiations and other communications on
dispute resolution. This arbitration provision shall survive any termination,
amendment, renewal, extension or expiration of this Agreement or any agreement
executed in connection herewith or contemplated hereby unless the parties
otherwise expressly agree in writing. The obligation to arbitrate any dispute
shall be binding upon the successors and assigns of each of the parties.
SECTION 11.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 11.8. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 11.9. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof.
SECTION 11.10. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
EXHIBIT 1 - Page 38
IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Shareholder
have executed and delivered this Agreement effective as of the date first
written above.
SYNAGRO TECHNOLOGIES, INC.
By:/S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx, Chairman and CEO
APA ACQUISITION CORP.
By:/S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx, President
ANTI-POLLUTION ASSOCIATES, INC.
By:/S/ XXX XXXXX
Xxx Xxxxx, President
D&D PUMPING, INC.
By:/S/ XXX XXXXX
Xxx Xxxxx, President
THE SHAREHOLDER
/S/ XXX XXXXX
Xxx Xxxxx
EXHIBIT 1 - Page 39
EXHIBIT A
GLOSSARY
For purposes of this Agreement, the following terms shall have the meaning
specified or referred to below when capitalized (or if not capitalized, unless
the context clearly requires otherwise) when used in this Agreement.
"BUSINESS FACILITY" includes any property (whether real or personal) which
the Company or any of its Subsidiaries currently leases, operates, or owns or
manages in any manner or which the Company or any of its Subsidiaries or any of
their respective organizational predecessors formerly leased, operated, owned or
managed in any manner.
"ENVIRONMENTAL CLAIM" means any claim; litigation; demand; action; cause
of action; suit; loss; cost, including, but not limited to, attorneys' fees,
diminution in value, and expert's fees; damage; punitive damage; fine, penalty,
expense, liability, criminal liability, strict liability, judgment, governmental
or private investigation and testing; notification of status of being
potentially responsible for clean-up of any facility or for being in violation
or in potential violation of any Requirement of Environmental Law; proceeding;
consent or administrative orders, agreements or decrees; lien; personal injury
or death of any person; or property damage, whether threatened, sought, brought
or imposed, that is related to or that seeks to recover losses, damages, costs,
expenses and/or liabilities related to, or seeks to impose liability for: (i)
improper use or treatment of wetlands, pinelands or other protected land or
wildlife; (ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials ["NORM"]; (iv) explosives; (v) pollution, contamination,
preservation, protection, decontamination, remediation or clean-up of the air,
surface water, groundwater, soil or protected lands; (vi) solid, gaseous or
liquid waste generation, handling, discharge, release, threatened release,
treatment, storage, disposal or transportation; (vii) exposure of persons or
property to Materials of Environmental Concern and the effects thereof; (viii)
the release or threatened release (into the indoor or outdoor environment),
generation, extraction, mining, beneficiating, manufacture, processing,
distribution in commerce, use, application, transfer, transportation, treatment,
storage, disposal or Remediation of Materials of Environmental Concern; (ix)
injury to, death of or threat to the health or safety of any person or persons
caused directly or indirectly by Materials of Environmental Concern; (x)
destruction caused directly or indirectly by Materials of Environmental Concern
or the release or threatened release of any Materials of Environmental Concern
or any property (whether real or personal); (xi) the implementation of spill
prevention and/or disaster plans relating to Material of Environmental Concern;
(xiii) community right-to-know and other disclosure laws; or (xiii) maintaining,
disclosing or reporting information to Governmental Authorities of any other
third person under any Environmental Law. The term, "Environmental Claim," also
includes, without limitation, any losses, damages, costs, expenses and/or
liabilities incurred in testing.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, guidance document, order, consent agreement,
order or consent judgment, decree, injunction, requirement or agreement with any
governmental entity or any judicial or administrative decision relating to (x)
the
Exhibit A to Exhibit 1 - Page 1
protection, preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, application, production, release or disposal of Materials of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker protection or community's right to know. The term "Environmental Law"
includes, without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal Act and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Occupational Safety and Health Act of 1970, each as amended from
time to time, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Materials of Environmental Concern.
"ENVIRONMENTAL PERMITS" means all permits, licenses, certificates,
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent, and exemptions necessary for the ownership, use
and/or operation of any current Business Facility or to conduct the Company's
business as currently conducted in compliance with Requirements of Environmental
Laws.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"INTELLECTUAL PROPERTY" includes all fictitious business names, trade
names, brand names, registered and unregistered trademarks, service marks and
applications, all patents and patent applications, all copyrights in both
published works and unpublished works, and all inventions, processes, formulas,
patterns, designs, know-how, trade secrets, confidential information, software,
technical information, process technology, plans, drawings and blue prints
owned, used or licensed by the Company or its Subsidiaries as licensee or
licensor.
When used in this Agreement in connection with the Company and its
Subsidiaries, or Parent and its Subsidiaries, as the case may be, "MATERIAL
ADVERSE EFFECT" means any event, occurrence, fact, condition, change,
development or effect that is or could reasonably be anticipated to be
materially adverse to the business, assets (including intangible assets),
liabilities, financial condition, results of operations, properties (including
intangible properties) or business prospects of the Company and all of its
Subsidiaries or the Parent and all of its Subsidiaries, as applicable, taken as
a whole.
"MATERIALS OF ENVIRONMENTAL CONCERN" means: (i) those substances included
within the statutory and/or regulatory definitions or listings of "hazardous
substance," "solid waste," "medical waste," "special waste," "hazardous waste,"
"extremely hazardous substance," "regulated substance," "hazardous materials,"
or "toxic substances," under any Environmental Law; (ii) any material, waste or
substance which is or contains: (A) petroleum, oil or a fraction thereof, (B)
Exhibit A to Exhibit 1 - Page 2
explosives, or (C) radioactive materials (including naturally occurring
radioactive materials); and (iii) such other substances, materials, or wastes
that are or become classified or regulated as hazardous or toxic under any
applicable federal, state or local law or regulation. To the extent that the
laws or regulations of any applicable state or local jurisdiction establish a
meaning for any term defined herein through reference to federal Environmental
Laws which is broader than the meaning under such federal Environmental Laws,
such broader meaning shall apply.
"NET WORKING CAPITAL" means the aggregate current assets of the Company
less the aggregate current liabilities of the Company determined in accordance
with GAAP.
"REMEDIATION" means any action necessary to: (i) comply with and ensure
compliance with the Requirements of Environmental Laws and (ii) the taking of
all reasonably necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened release of Materials of
Environmental Concern at, on, in, about, under, within or near the air, soil,
surface water, groundwater or soil vapor at any Business Facility of the Company
or any of its Subsidiaries or of any property affected by the business
operations, acts, omissions or Materials of Environmental Concern, of the
Company or any of its Subsidiaries.
"REQUIREMENT(S) OF ENVIRONMENTAL LAW(S)"means all requirements,
conditions, restrictions or stipulations of Environmental Laws imposed upon or
related to the Company or any of its Subsidiaries or the assets, Business
Facilities and/or the business of the Company or any of its Subsidiaries.
"SUBSIDIARY" shall mean, when used with reference to an entity, any other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions, or a majority of the outstanding voting securities of which,
are owned directly or indirectly by such entity.
"TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
severance, environmental, license, net worth, payroll, employment, franchise,
transfer and recording taxes, fees and charges, imposed by the IRS or any other
taxing authority (whether domestic or foreign including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments.
"TAX RETURN" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns and documents (i) with respect to or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information, including any schedule or attachment
thereto and any amendment thereof.
Exhibit A to Exhibit 1 - Page 3
EXHIBIT B
EMPLOYMENT AGREEMENTS
EMPLOYMENT AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT is made between SYNAGRO OF FLORIDA - ANTI-POLLUTION,
INC., (" ANTI-POLLUTION ") a Florida corporation with its principal place of
business at 00000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000 and ________________
residing at __________________ ("XXXXX").
WHEREAS, XXXXX and ANTI-POLLUTION desire and agree to formalize the
employment relationship that will commence between ANTI-POLLUTION and XXXXX upon
the merger of ANTI-POLLUTION Acquisition Corp. with and into ANTI-POLLUTION (the
"Merger") by means of this Employment and Confidentiality Agreement (the
"Agreement");
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and between the parties as follows.
1. BASIC COMPENSATION
For the services rendered by XXXXX to ANTI-POLLUTION, ANTI-POLLUTION shall
pay XXXXX a base salary at the rate of $______ per year (the "Basic
Compensation") during the Initial Term, and then as agreed upon from time to
time by the parties hereto.
2. BONUSES
In addition to Basic Compensation, XXXXX shall also be eligible to
participate in the ANTI-POLLUTION bonus program that may be established from
time to time. Such bonus program changes from time to time and ANTI-POLLUTION
makes no guarantee that any bonus shall be paid. Any such bonus paid will be
discretionary and based on the financial performance of ANTI-POLLUTION and its
parent Synagro Technologies, Inc. and XXXXX'x individual job performance as
determined by ANTI-POLLUTION management.
3. INITIAL TERM
Commencing on the effective date of the Merger, XXXXX agrees to be
employed by ANTI-POLLUTION, and ANTI-POLLUTION agrees to employ XXXXX, to serve
as District Manager and to perform by and on behalf of ANTI-POLLUTION such
services for ANTI-POLLUTION (i) as are typical of that position or an employee
in a substantially similar position, and (ii) as may be requested by the senior
officers or the board of directors of ANTI-POLLUTION. During the period
beginning on the date of this Agreement and extending for one year (the "INITIAL
TERM"), XXXXX'x
Exhibit B to Exhibit 1 - Page 1
employment hereunder may not be voluntarily terminated by ANTI-POLLUTION or
XXXXX; provided, however, that ANTI-POLLUTION may terminate XXXXX for cause at
any time, if any of the following events ("Cause") has occurred:
(a) XXXXX willfully and continually, without proper legal cause, has
failed or refused to use his best efforts to follow the directions of the
senior officers or the board of directors of ANTI-POLLUTION;
(b) XXXXX has been convicted of, or has pleaded guilty or nolo
contendere to a charge that he committed a felony;
(c) XXXXX has perpetrated a fraud against, or theft of property of,
ANTI-POLLUTION or any affiliate of ANTI-POLLUTION;
(d) As a result of his negligence or willful misconduct, XXXXX has
violated any applicable federal or state law or regulation and, as a
result of such violation, has become, or has caused ANTI-POLLUTION to
become, the subject of any legal action or administrative proceeding or a
suspension of any right or privilege, which action, proceeding or
suspension could have a material adverse effect on the reputation,
prospects, condition or operations of ANTI-POLLUTION;
(e) As a result of his negligence or willful misconduct, XXXXX has
committed any act that causes, or shall knowingly or recklessly fail to
take reasonable and appropriate action to prevent, any material adverse
effect to the reputation, prospects, condition or operations of
ANTI-POLLUTION;
(f) XXXXX has violated any of the provisions of this Agreement; or
(g) XXXXX dies or becomes physically or mentally unable to perform
his duties hereunder at any time and such inability continues for 60 days.
At any time after the Initial Term, XXXXX or ANTI-POLLUTION may
voluntarily terminate XXXXX'x employment upon 30 days prior written notice by
either party to the other, without the payment of severance pay of any kind.
4. DUTIES AND EXTENT OF SERVICES
XXXXX will be engaged as ANTI-POLLUTION's District Manager. ANTI-POLLUTION
agrees to employ XXXXX primarily in the state of Florida during the term of this
Agreement. The precise services of XXXXX may be extended or curtailed, from time
to time, at the direction of ANTI-POLLUTION. XXXXX shall devote XXXXX'x entire
working time, attention, and energies to the business of ANTI-POLLUTION. XXXXX
shall receive time off for holidays and any other days as specified by
ANTI-POLLUTION, and shall assume and perform further reasonable responsibilities
and duties that may be assigned to him from time to time by ANTI-POLLUTION.
Exhibit B to Exhibit 1 - Page 2
5. VACATION
XXXXX is granted a reasonable amount of annual vacation as has been
customary for ANTI-POLLUTION prior to the merger during the Initial Term.
6. BUSINESS EXPENSES
XXXXX shall be reimbursed by ANTI-POLLUTION for the reasonable and
customary business expenses incurred by him in the performance of XXXXX'x duties
as a ANTI-POLLUTION employee. Business expenses include reimbursement for
business miles driven at the rate of $0.32 per mile. Such expenses will be
reimbursed through XXXXX'x timely submission of a properly prepared expense
report supported by receipts in accordance with ANTI-POLLUTION's standard
expense reporting procedures.
7. BENEFITS
XXXXX will be entitled to participate in the standard ANTI-POLLUTION
employee benefit plans made available by ANTI-POLLUTION in accordance with the
eligibility requirements and terms and conditions of the individual programs.
The individual plans and summary plan descriptions govern the specific terms and
conditions.
8. OWNERSHIP
XXXXX agrees that all developments made and works created by XXXXX or
under his direction in connection with employment shall be the sole and complete
property of ANTI-POLLUTION and that any and all copyrights and other proprietary
interests to such works shall belong to ANTI-POLLUTION.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
(a) NONDISCLOSURE. During the term of employment and for one year
thereafter, XXXXX agrees to keep Confidential all information provided by
ANTI-POLLUTION, excepting only such information as is already known to the
public, and including any such information and material relating to any
customer, vendor, licensor, licensee, or other party transacting business with
ANTI-POLLUTION, and not to release, use, or disclose the same except with the
prior written permission of ANTI-POLLUTION, or as otherwise ordered by a court
of competent jurisdiction.
All records, files, memorandums, reports, price lists, customer lists,
drawings, plans, sketches, documents, equipment, and the like, relating to the
business of ANTI-POLLUTION, which XXXXX shall use or prepare or come into
contact with, shall remain the sole property of ANTI-POLLUTION.
(b) POSSESSION. XXXXX agrees that, upon request by ANTI-POLLUTION, and in
any event upon termination of employment, XXXXX shall turn over to
ANTI-POLLUTION all documents, papers, or other material in his possession or
under his control which may contain or be
Exhibit B to Exhibit 1 - Page 3
derived from confidential information, together with all documents, notes, or
other work product which is connected with or derived from XXXXX'x services to
ANTI-POLLUTION whether or not such material is at the date hereof in XXXXX'x
possession. XXXXX agrees that he shall have no proprietary interest in any work
product developed or used by XXXXX and arising out of his employment by
ANTI-POLLUTION. XXXXX shall, from time to time as may be requested by
ANTI-POLLUTION, do all things that may be necessary to establish or document
ANTI-POLLUTION's ownership of any such work product, including, but not limited
to, execution of appropriate copyright applications or assignments.
(c) SURVIVAL OF COVENANT. The undertakings of this section of this
Agreement shall survive the termination or cancellation of the Agreement or of
XXXXX'x employment.
10. COVENANT NOT TO COMPETE
For a period of twelve (12) months from the date of any termination of
XXXXX'x employment with ANTI-POLLUTION, XXXXX shall not, directly or indirectly,
accept employment with or render any services to any other residuals, manure or
biosolids management business or form an association with or employ or offer to
employ in professional employment in a business competitive with ANTI-POLLUTION,
anyone who is or has been a director, officer, shareholder, or employee of
ANTI-POLLUTION or any related company. This restriction shall apply only in the
state of Florida. Twenty percent of XXXXX'x Base Salary during the Initial Term
is granted in exchange for this covenant not to compete.
XXXXX acknowledges that the restrictions imposed by this Agreement are
reasonable and are fully understood by him and will not preclude XXXXX from
becoming gainfully employed following a termination of employment with
ANTI-POLLUTION.
11. REMEDIES
XXXXX agrees that this Agreement is intended to protect and preserve
legitimate business interests of ANTI-POLLUTION. It is further agreed that any
breach of this Agreement may render irreparable harm to ANTI-POLLUTION. In the
event of a breach by XXXXX, ANTI-POLLUTION shall have available to it all
remedies provided by law, including, but not limited to, permanent injunctive
relief to restrain XXXXX from violating this Agreement. ANTI-POLLUTION shall
also be entitled to commence legal action against XXXXX for any breach of any
confidentiality agreement and/or confidentiality programs in effect at any time
between XXXXX and ANTI-POLLUTION. Notwithstanding any legal remedies available
to ANTI-POLLUTION as a result of a breach of this Agreement, in the event of a
breach by XXXXX, ANTI-POLLUTION shall immediately be entitled to withhold and
avoid payment of any sums of money or other benefits then due or to become due
under this or any other Agreement between XXXXX and ANTI-POLLUTION.
12. GENERAL PROVISIONS
(a) NO WAIVER. The failure of ANTI-POLLUTION to terminate this Agreement
for the breach of any condition or covenant herein by XXXXX shall not affect
ANTI-POLLUTION's
Exhibit B to Exhibit 1 - Page 4
right to terminate for subsequent breaches of the same or other conditions or
covenants. The failure of either party to enforce at any time or for any period
of time any of the provisions of this Agreement shall not be construed as a
waiver of such provisions or of the right of the party thereafter to enforce
each and every such provision.
(b) NOTICES. Any notice hereby required or permitted to be given shall be
sufficiently given if in writing and mailed by registered or certified mail,
postage prepaid, to either party at the address of such party or at such other
address as shall have been designated by written notice by such party to the
other party.
(c ) ENTIRE CONTRACT. This Agreement shall constitute the entire contract
between the parties and supersedes all existing agreements between them, whether
oral or written, with respect to the subject matter hereof. No change,
modification or amendment of this Agreement shall be of any effect unless in
writing signed by XXXXX and by the President of ANTI-POLLUTION.
(d) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
(e) SEVERABILITY. Should any provision of this Agreement not be
enforceable in any jurisdiction, the remainder of the Agreement shall not be
affected thereby.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on this
______________ day of April, 1999.
_________________________________________
Employee
SYNAGRO OF FLORIDA - ANTI-POLLUTION,
INC.
By:______________________________________
Xxxx X. Rome, Vice President
Exhibit B to Exhibit 1 - Page 5
