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EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into on this 31st day of March, 1998, by and between Synagro
Technologies, Inc., a Delaware corporation (the "Company"), Environmental
Opportunities Fund, L.P., a Delaware limited partnership ("EOF"), Environmental
Opportunities Fund (Cayman), L.P., a Delaware limited partnership ("EOFC") and
other purchasers of the Company's Series B Preferred Stock, par value $.002 per
share (the "Preferred Stock"), listed on Exhibit A hereto (collectively with
EOF and EOFC, the "Purchasers").
WHEREAS, the parties hereto have entered into that certain
Subscription Agreement (the "Subscription Agreement" pursuant to which the
Purchasers have subscribed for shares of the Company's Preferred Stock; and
WHEREAS, pursuant to Section 1.2 of the Subscription Agreement, the
Company has agreed to provide the Purchasers with certain registration rights
in respect of the Company's common stock, par value $.002 per share (the
"Common Stock"), issuable upon conversion of the Preferred Stock.
NOW, THEREFORE, for and in consideration of the premises, and the
mutual and dependent promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
indicated meanings:
1.1 "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
1.2 "EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at any time.
1.3 "HOLDER" shall mean a Purchaser and any person or entity who
holds of record Registrable Securities originally held by a Purchaser if such
person meets the requirements of Section 2.8 hereof.
1.4 The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration of a cash offering effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering by the Commission of the effectiveness of such
registration statement.
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1.5 "REGISTRABLE SECURITIES" shall mean the shares of Common Stock
issued or issuable upon conversion of the Preferred Stock held by a Purchaser,
including any Common Stock issued or issuable upon a stock dividend, stock
split, recapitalization or other similar event involving the Company; provided,
however, that such shares of Registrable Securities shall cease to be
Registrable Securities (1) when a registration statement covering such
securities has become effective with the Commission and they have been sold or
transferred by the Holder pursuant to such effective Registration Statement,
(2) when transferred to any person who is not a Holder or (3) when otherwise
transferred and such securities may be resold without subsequent registration
under the Securities Act.
1.6 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
ARTICLE 2
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION RIGHTS. (a) For the five-year period
commencing on the first anniversary of the date of the Closing (as defined in
the Subscription Agreement), after receipt of a written request (a
"Registration Request") from the Holders of a majority in interest of the
Registrable Securities requesting that the Company effect the registration of
Registrable Securities under the Securities Act and specifying the intended
method or methods of disposition thereto, the Company shall prepare and file
with the Commission a registration statement under the Securities Act on any
form which the Company is eligible to use for registering the resale of the
Registrable Securities which the Company has been requested to register
(including, without limitation, a registration statement on Form S-3 of the
Securities Act) and shall use its best efforts to cause such registration
statement to become effective. The Company shall send prompt written notice to
all Holders of any request for registration received hereunder and each such
Holder shall have the right to include its Registrable Securities therein by so
requesting in writing within 15 days after receipt of such notice by the
Company. Any Holder not electing to include its Registrable Securities in such
registration will have no further rights to have such Registrable Securities
registered pursuant to this Section 2.1 (other than in the case of a withdrawn
registration statement, as provided below). The Company shall not be required
to effect more than a total of one registration statement of Registrable
Securities with respect to a Registration Request pursuant to this Section 2.1
and, in the case of an underwritten offering, the Company shall have the right
to approve the underwriter, which approval shall not be unreasonably withheld;
provided, however, that if a registration statement of Registrable Securities
with respect to a Registration Request pursuant to this Section 2.1 is
withdrawn prior to the registration statement becoming effective, or the
offering of such Registrable Securities is otherwise terminated before
completion thereof, for any reason other than at the request of the Holders,
the Company shall continue to be required to effect one registration statement
of Registrable Securities upon receipt of a Registration Request from the
Holders (including any Holders who previously elected not to participate in a
registration that was withdrawn or terminated for any reason other than at the
request of the Holders) of a majority in interest of the Registrable
Securities. The Company shall have the right to defer the filing of any
registration statement requested pursuant to this Section 2.1 if (i) on the
date of the request the Company is in the process of preparing another
registration
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statement for an underwritten public offering, until the 90th day after the
date of such Registration Request, (ii) in order to file such registration
statement, the Company would be required to conduct an audit other than the
regular audit conducted by the Company at the end of its fiscal year, until
such time the Company conducts its regular annual audit (unless the Holder
agrees to pay the expenses of such an audit) and (iii) the Board of Directors
of the Company gives written notice to the Holders making such Registration
Request that, in its good faith determination, the filing of such registration
statement would have a materially adverse effect on the Company, until such
time period as such filing would not have such effect, such period not to
exceed 90 days.
(b) The notification by the Holders to the Company of their
request for registration shall contain the number of shares to be offered and
the proposed manner of their distribution for inclusion in the registration
statement. In the event that any registration pursuant to this Section shall
be, in whole or in part, in connection with an underwritten offering of Common
Stock, any request by Holders pursuant to this Section to register Common Stock
shall be subject to the requirement that such Common Stock be included in the
underwriting on the same terms and conditions as the shares of Common Stock to
be registered, if any, and sold through underwriters under such registration.
2.2 PIGGYBACK REGISTRATION RIGHTS. (a) At any time that the
Company proposes to register for sale for cash any of its equity securities
under the Securities Act (excluding registrations on Form S-8 or Form S-4, or
any comparable successor forms), whether such registration statement relates to
sales of equity securities by the Company or other holders of its equity
securities, it shall not less than 30 days prior to the filing of any such
registration statement, give notice to Holders of its intention to do so and,
upon the written request of Holders delivered to the Company within 15 days of
the Company's notice, the Company shall use all commercially reasonable efforts
to cause Registrable Securities owned by Holders as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, to the extent
necessary to permit the sale or other disposition in accordance with the
request of Holders.
(b) The notification by the Holders to the Company of their
request for registration shall contain the number of shares to be offered and
the proposed manner of their distribution for inclusion in the registration
statement. In the event that any registration pursuant to this Section shall
be, in whole or in part, in connection with an underwritten offering of Common
Stock, any request by Holders pursuant to this Section to register Common Stock
shall be subject to the requirement that such Common Stock be included in the
underwriting on the same terms and conditions as the shares of Common Stock to
be registered, if any, and sold through underwriters under such registration.
(c) Notwithstanding the foregoing provisions of this Section 2.2,
if the managing underwriter in any underwritten offering relating to sales of
Common Stock by the Company determines and advises in writing that the
inclusion in the underwriting of all Common Stock proposed to be included by
Holders and any other shares of Common Stock sought to be registered by any
other stockholder of the Company exercising "piggyback" registration rights
comparable to
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those of the Purchasers under this Agreement (the "Other Common Stock") would
interfere with the successful marketing of the securities proposed to be
registered by the Company, then the number of shares of Common Stock and Other
Common Stock requested to be included in the underwriting shall be reduced pro
rata among the Holders and the holders of Other Common Stock requesting such
registration and inclusion in the underwriting and may, in the determination of
such managing underwriter and consistent with pro rata reduction, be reduced to
zero.
(d) The Holders shall have the right at any time prior to a
registration statement under this Section 2.2 becoming effective to withdraw
their Registrable Securities from the offering.
2.3 REGISTRATION PROCEDURES. (a) In connection with the
Company's obligations with respect to any registration pursuant to this Article
2, and subject to the limitations therein, the Company shall use all
commercially reasonable best efforts to effect or cause the registration of the
Registrable Securities requested to be registered under the Securities Act to
permit the sale of such Registrable Securities by the Holders in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto, the Company shall, as soon as reasonably possible following any
request for such registrations:
(i) prepare and file with the Commission a registration
statement on any form selected by the Company which may be used by the
Company and which shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof,
and use all commercially reasonable efforts to cause such registration
statement or statements to become effective as soon as possible
thereafter;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to maintain the
effectiveness of such registration statement or statements for the
period necessary for the distribution contemplated thereby and comply
with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities included in such
registration statement;
(iii) provide the participating Holders and the
underwriters (which term, for purposes of this Agreement, shall
include a person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, of the securities being
sold, counsel for participating Holders and such underwriters copies
of such registration statement, each prospectus included therein or
proposed to be filed with the Commission, and each amendment or
supplement thereto prior to their filing with the Commission, all of
which shall be subject to the reasonable approval of such persons;
and, subject to the execution of confidentiality agreements in a form
reasonably satisfactory to the Company, make available for inspection
by such persons such financial
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and other information, books and records of the Company, and cause the
officers, directors and employees of the Company, and counsel and
independent certified public accountants of the Company, to respond to
such inquiries as shall be reasonably necessary, in the opinion of
counsel to participating Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act;
(iv) promptly notify the participating Holders and the
managing underwriters, if any, of the securities being sold and (if
requested by any such person) confirm such advice in writing (1) when
such registration statement, the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by
the Commission for amendments or supplements to such registration
statement or the prospectus or for additional information, (3) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations
and warranties of the Company contemplated by Section 2.2(a)(xi)(1)
cease to be true and correct in all material respects, (5) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose, or (6) at any time when a prospectus is required to
be delivered under the Securities Act, of the happening of any event
as a result of which such registration statement, prospectus, any
prospectus supplement or any document incorporated by reference in any
of the foregoing contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(v) use all commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration
statement hereunder or any post-effective amendment thereto at the
earliest practicable date;
(vi) if requested by the managing underwriter or
underwriters or Holders, promptly incorporate in a prospectus,
prospectus supplement or post-effective amendment such information as
such managing underwriter or underwriters or Holders specify should be
included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the amount
of Registrable Securities being sold to such underwriters, the
purchase price being paid
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therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such prospectus, prospectus supplement or
post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus, prospectus supplement or
post-effective amendment;
(vii) furnish to participating Holders and each
underwriter, if any, of the securities being sold such number of
copies of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with
the requirements of the Securities Act, and such other documents as
participating Holders and each underwriter, if any, may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by participating Holders; and the Company hereby
consents to the use of the prospectus or any amendment or supplement
thereto by participating Holders and each underwriter, if any, in
connection with the offering and sale of the Registrable Securities
covered by the prospectus or any supplement or amendment thereto;
(viii) use all commercially reasonable efforts to (1) register
or qualify the Registrable Securities to be included in a registration
statement under such other securities laws or blue sky laws of such
jurisdictions as the participating Holders and each underwriter, if
any, of the securities being sold shall reasonably request, (2) keep
such registrations or qualifications in effect for so long as the
registration statement remains in effect, and (3) take any and all
such actions as may be reasonably necessary or advisable to enable
participating Holders and each underwriter, if any, to consummate the
disposition in such jurisdictions of such Registrable Securities owned
by participating Holders, provided, however, that the Company shall
not for any purpose be required to qualify to do business as a foreign
corporation in any jurisdiction or file a general consent to service
of process in any jurisdiction;
(ix) use commercially reasonable efforts to cause all of
the Registrable Securities to be included in a registration statement
hereunder to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business
and operations of the Company to enable the participating Holders to
consummate the disposition of such Registrable Securities;
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(x) cooperate with the participating Holders and the
managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends; and, in the case of an
underwritten offering, enable such Registrable Securities to be in
such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
delivery of the Registrable Securities;
(xi) enter into such customary agreements (including an
underwriting agreement) and take such other actions in connection
therewith as participating Holders shall reasonably request in order
to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration (1) make such representations and warranties
to the participating Holders and the underwriters, if any, in form,
substance and scope as are customarily made in such a registration;
(2) use all commercially reasonable efforts to obtain an opinion of
counsel to the Company in customary form and covering such matters of
the type customarily covered by such opinion as the participating
Holders and the underwriters, if any, may reasonably request,
addressed to the participating Holders and the underwriters, if any,
and dated the effective date of such registration statement (or, if
such registration includes an underwritten offering, dated the date of
the closing under the underwriting agreement); (3) use all
commercially reasonable efforts to obtain a "cold comfort" letter from
the independent certified public accountants of the Company addressed
to the participating Holders and the underwriters, if any, dated the
effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the
closing under the underwriting agreement), such letter to be in
customary form and covering such matters of the type customarily
covered by such letter; and (4) deliver such documents and
certificates as may be reasonably requested by the participating
Holders and the managing underwriters, if any, to evidence compliance
with clause (xi)(1) above and with any customary conditions contained
in the underwriting agreement or other agreement entered into by the
Company;
(xii) use all commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of at least 12 months which
shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder; and
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(xiii) use all commercially reasonable efforts to cause all
such Registrable Securities to be listed on each securities exchange
on which the Company's capital stock is then listed.
(b) Upon the occurrence of any event contemplated by Section
2.2(a)(iv)(6), the Company shall prepare and furnish to the participating
Holders and each underwriter, if any, a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of the Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. The participating Holders agree
that upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 2.2(a)(iv)(6), they shall forthwith
discontinue the offer or sale of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until the
participating Holders receive copies of such amended or supplemented
registration statement or prospectus, and if so directed by the Company, the
participating Holders shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, of the prospectus covering such
Registrable Securities in the participating Holders' possession at the time of
receipt of such notice.
(c) The Company may require the Holders to furnish to the Company
such information regarding such participating Holders and the distribution of
such Registrable Securities as the Company may from time to time reasonably
request in writing in order to comply with the Securities Act. Each
participating Holder agrees to notify the Company as promptly as practicable of
any inaccuracy or change in information previously furnished by such
participating Holder to the Company or of the happening of any event in either
case as a result of which any prospectus relating to such registration contains
an untrue statement of a material fact regarding such participating Holder or
the distribution of such Registrable Securities by such participating Holder or
omits to state any material fact regarding such participating Holder or the
distribution of such Registrable Securities by such participating Holder
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and to promptly furnish
to the Company any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to Stockholder or the distribution of such Registrable
Securities by such participating Holder, an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statement therein not misleading in light of the circumstances then
existing.
2.4 REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Article 2, including, without
limitation, all Commission and any national securities exchange or National
Association of Securities Dealers, Inc. registration and filing fees and
expenses, fees and expenses of compliance with securities and blue sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
document and certificate preparation and printing expenses, messenger and
delivery expenses, fees and expenses of any transfer agent or registrar,
internal expenses (including, without limitation, all salaries and expenses of
the Company's officers
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and employees performing legal or accounting duties), fees and disbursements of
counsel and independent certified public accountants of the Company (including
the expenses of any "cold comfort" letters required by or incident to such
performance and compliance), and fees and expenses of any other persons,
including special experts, retained by the Company shall be borne by the
Company. The Company shall not be required to pay any stock transfer taxes or
underwriting discounts, fees or commissions attributable to the sale of its
Registrable Securities and all fees and disbursements of counsel to the Holders
retained in connection with each such registration.
2.5 RESTRICTION ON OTHER REGISTRATIONS. The Company hereby agrees
that, if requested by the managing underwriter in any offering in which
Registrable Securities are included, it shall not effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any equity securities (other than registrations
on Form S-8 or Form S-4, or any comparable successor forms) during the seven
(7) days prior to and the ninety (90) days after the effective date of the
registration statement relating to such offering.
2.6 UNDERWRITTEN OFFERINGS. (a) In the event that participating
Holders request the sale of Registrable Securities pursuant to a registration
statement for an underwritten public offering, each participating Holder shall
become a party to the underwriting agreements pertaining to such public
offering. Notwithstanding any other term of this Agreement to the contrary, no
participating Holder shall be required as a condition to its right to
participate in any underwritten offering to make any representations or
warranties to or agreements (including without limitation indemnities) with the
Company or the underwriters other than representations, warranties or
agreements (including without limitation indemnities) regarding such
participating Holder, such participating Holder's Registrable Securities and
such participating Holder's intended method or methods of disposition with
respect to the Registrable Securities.
(b) Holders may not participate in any underwritten
offering pursuant to this Agreement unless such Holder (i) agrees to sell its
securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements, and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
2.7 RULE 144. The Company covenants to Holder that, if and to the
extent it shall be required to do so under the Exchange Act, the Company shall
use reasonable commercial efforts to timely file the reports required to be
filed by it thereunder (including, but not limited to, the reports under
Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of
Rule 144 adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder, all to the extent required
from time to time to enable the Holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder who proposes to sell Registrable
Securities in compliance with Rule 144, the Company shall deliver to Holder a
written statement as to whether it has complied with the filing
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requirements of the Commission as set forth in Rule 144, as such Rule may be
amended from time to time.
2.8 RIGHTS OF SUBSEQUENT HOLDERS. (a) The registration rights of
this Agreement, subject to the terms and conditions hereof, shall be available
at a Purchaser's option (but without duplication) to any subsequent holder of
the shares of Registrable Securities, so long as such subsequent holder shall
be the beneficial owner of 25% or more of the Registrable Securities originally
held by a Purchaser. Each subsequent Holder entitled to registration rights
under this Agreement shall be bound by the terms and subject to the obligations
of this Agreement as though it were an original signatory hereto.
2.9 RESTRICTIVE LEGEND. Each of the certificates evidencing the
Registrable Securities shall be stamped or otherwise conspicuously imprinted
with a legend substantially as follows:
The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
transferred (other than pursuant to Rule 144 or any similar analogous
rule or rules) except pursuant to an effective registration statement
under the Act or in a transaction which, in the opinion of counsel
reasonably satisfactory to the Company, qualifies as an exempt
transaction under the Act and the rules and regulation promulgated
thereunder. In addition, the securities evidenced hereby are subject
to the provisions of a Registration Rights Agreement dated March 31,
1998, between the Company and the original holder of such securities,
a copy of which will be furnished by the Company to the owner hereof
without charge upon written request.
ARTICLE 3
INDEMNIFICATION
3.1 INDEMNIFICATION BY THE COMPANY. Upon the registration of the
Registrable Securities pursuant to Article 2, the Company shall, and it hereby
agrees to, indemnify and hold harmless each participating Holder, each person
who participates as an underwriter in the offering or sale of such Registrable
Securities, each officer, director or partner of such underwriter, and each
other person, if any, who controls any such underwriter within the meaning of
the Securities Act, from and against any and all losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof), and expenses (including, subject to Section
3.3 hereof, fees of counsel and any amounts paid in any settlement effected
with the consent of the Company) to which any participating Holder, such
underwriter or such director, officer or partner of such underwriter, and any
such controlling person may become subject under the Securities Act, the
Exchange Act, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof), or expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto, or (ii) any omission
or alleged omission
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to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading except as otherwise provided in the
proviso in the next sentence. The Company shall reimburse any participating
Holder, such underwriter, such officer, director or partner of such
underwriter, and such controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided, however,
that the Company shall not be required to make any such reimbursement to the
extent that any such loss, claim, damage, liability (or action or proceeding,
whether commenced or threatened, in respect thereof) or expenses arise out of
or is based upon (A) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or
preliminary, final or summary prospectus or amendment or supplement in reliance
upon and in conformity with written information concerning such Holder
furnished to the Company by such person with the intent that such information
be included therein, or (B) the sale of Registrable Securities by a Holder or
any underwriter after delivery by a Holder or underwriter of a preliminary
prospectus in connection with such sale, if such Holder or such underwriter
failed to send or give a copy of the related prospectus, as the same may be
then amended or supplemented, to such person within the time required by the
Securities Act and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
preliminary prospectus was corrected in the prospectus, and if Stockholder or
such underwriter would not have been liable had a copy of the prospectus, as
the same may be amended or supplemented, been so sent or given, unless such
failure resulted from the Company's non-compliance with Section 2.2(a)(vii).
Such indemnification and reimbursement of expenses shall remain in full force
and effect regardless of any investigation made by or on behalf of a Purchaser,
the underwriter, such director, officer or partner of such underwriter, or such
controlling person and shall survive the transfer of such securities by a
Purchaser.
3.2 INDEMNIFICATION BY THE PARTICIPATING HOLDERS. Upon the
registration of Registrable Securities pursuant to Article 2, each
participating Holder shall, and it hereby agrees to, indemnify and hold
harmless the Company, each director and officer of the Company and each other
person, if any, who controls the Company (within the meaning of the Securities
Act), and all other Holders, if any, participating in such offering, each
person who participates as an underwriter in the offering or sale of such
Registrable Securities, and their respective directors, officers, partners and
controlling persons, if any, from and against any and all losses, claims,
damages or liabilities, joint or several (or actions or proceedings, whether
commenced or threatened, in respect thereof), and expenses (including, subject
to Section 3.3 hereof, fees of counsel and any amounts paid in settlement
effected with the consent of such Holder) to which the Company, such director
or officer or controlling person of the Company or such other holder or such
director, officer, partner or controlling person of such other holder may
become subject under the Securities Act, the Exchange Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof), or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities
Act, or any preliminary, final or summary prospectus contained therein, or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to the
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extent, such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
concerning such Holder to the Company by such Holder with the intent that such
information be included therein; provided, however, that such Holder shall not
be liable to any such person under this Section 3.2 for any amount in excess of
the dollar amount of the net proceeds received by such Holder from the sale of
such Holder's Registrable Securities pursuant to such registration. Such
indemnification and reimbursement of expenses shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any of its directors, officers or controlling persons or any of such other
Holders or any person who participates as an underwriter in the offering or any
of their respective directors, officers, partners or controlling persons and
shall survive the transfer of such securities by Holder.
3.3 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Article 3, such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party, give written notice to
the latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations, to the extent the
indemnifying party is not prejudiced thereby. In case any such action is
brought against an indemnified party, the indemnifying party shall be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof, other than reasonable costs
of investigation, unless the indemnifying party has failed to assume the
defense of such claim and to employ counsel reasonably satisfactory to such
indemnified person. An indemnifying party who elects not to assume the defense
of a claim shall not be liable for the fees and expenses of more than one
counsel in any single jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the
same general allegations. Notwithstanding any of the foregoing to the
contrary, the indemnified party will be entitled to select its own counsel and
assume the defense of any action brought against it if the indemnifying party
fails to select counsel reasonably satisfactory to the indemnified party, the
expenses of such defense to be paid by the indemnifying party. No indemnifying
party shall consent to entry of any judgment or enter into any settlement with
respect to a claim without the consent of the indemnified party, which consent
shall not be unreasonably withheld, or unless such judgment or settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim. No indemnified party shall consent to entry of any judgment or
enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying
party, which consent shall not be unreasonably withheld.
3.4 CONTRIBUTION. (a) If for any reason the indemnification
provided for in Section 3.1 or Section 3.2 is unavailable to or insufficient to
hold harmless an indemnified party in respect of
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any losses, claims, damages or liabilities covered by the indemnification
provisions set forth therein, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party and any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action or question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by
such indemnifying party or indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 3.3, any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. In no event shall any Holder be required to
contribute an amount greater than the dollar amount of the net proceeds
received by such Holder from the sale of Registrable Securities pursuant to the
registration in question.
(b) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 3.4 were determined by
pro rata allocation or by any other method of allocation which does not take
into account all of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(c) The contribution provided for in this Section 3.4
shall survive, with respect to Holder, the transfer of Registrable Securities
by such Holder and with respect to Holder or the Company shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party.
3.5 ADDITIONAL INDEMNIFICATION AND CONTRIBUTION. Indemnification
and contribution similar to that specified in Sections 3.1 through and
including 3.4 (with appropriate modifications) shall be given by the Company
and the Purchasers with respect to any required registration or other
qualification of such Registrable Securities under any authority other than the
Securities Act.
3.6 METHOD OF PAYMENT. The indemnification required by this
Article 3 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred, subject to refund in the event
any such payments are determined not to have been due and owing hereunder,
together with interest thereon at the applicable federal rate for short term
investments.
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ARTICLE 4
MISCELLANEOUS
4.1 NO INCONSISTENT RIGHTS. The Company covenants and agrees that
it shall not grant, and has not previously granted, registration rights with
respect to Registrable Securities or any other securities which are
inconsistent with the registration rights contained in this Agreement.
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties contained herein shall survive the consummation
of any transactions contemplated hereby and shall remain in full force and
effect regardless of any investigation that may have been or may be made at any
time by or on behalf of the party to whom such representations and warranties
are made.
4.3 AGREEMENT TO TAKE ACTIONS. Each party hereto shall perform
its covenants and agreements promptly and diligently and shall not take any
action or omit to take any action which might adversely affect its ability to
consummate the transactions contemplated by this Agreement and shall execute
and deliver such documents, certificates, agreements and other writings and
take such other actions as may be necessary or desirable in order expeditiously
to consummate such transactions.
4.4 AMENDMENTS; ASSIGNABILITY OF RIGHTS. Except as otherwise
provided herein, neither this Agreement nor any term or provision hereof may be
amended, waived or modified without the written consent of the party or parties
against whom enforcement of the amendment, waiver or modification is sought.
Except as provided in Section 2.8, no Purchaser may assign its rights or
delegate its duties under this Agreement without the Company's prior written
consent. The Company may not assign its rights or delegate its duties under
this Agreement without the prior written consent of the holders of a majority
of the Registrable Securities.
4.5 SUCCESSORS AND ASSIGNS. Subject to other contrary provisions
hereof, this Agreement shall bind, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assigns,
and if an individual, by his executors, administrators, and beneficiaries of
his estate by will or the laws of descent and distribution.
4.6 NOTICES. Any notice, instruction, authorization, request,
demand or waiver required hereunder shall be in writing, and shall be delivered
either by personal delivery, by telegram, telex, telecopy or similar facsimile
means, by certified or registered mail, return receipt requested, or by courier
or delivery service, addressed to the parties hereto at the principal offices
of the Company at the address indicated beneath its signature on the execution
page of this Agreement, and to the Stockholders at their respective addresses
indicated beneath their respective signatures on the execution page of this
Agreement, or at such other address and number as a party shall have previously
designated by written notice given to the other party in the manner hereinabove
set forth. Notices shall be deemed given when received, if sent by facsimile
means (confirmation of such receipt by confirmed facsimile transmission being
deemed receipt of communications sent by facsimile means); and when delivered
and receipted for (or upon the date of attempted delivery
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where delivery is refused), if hand-delivered, sent by express courier or
delivery service, or sent by certified or registered mail, return receipt
requested.
4.7 CERTAIN REFERENCES. Unless otherwise specified, all
references herein to days, weeks, months or years shall be to calendar days,
weeks, months or years. Whenever the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter. References to
Sections are to Sections of this Agreement unless otherwise specified. The
headings and captions used in this Agreement are solely for convenient
reference and shall not affect the meaning or interpretation of any section or
paragraph herein, or this Agreement. The terms "hereof," "herein" or
"hereunder" shall refer to this Agreement as a whole and not to any particular
section or paragraph. The terms "including" or "include" are used herein in an
illustrative sense and not to limit a more general statement. When computing
time periods described by a number of days before or after a stated date or
event, the stated date or date on which the specified event occurs shall not be
counted and the last day of the period shall be counted.
4.8 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and of the United
States applicable in Texas, excluding, however, any rule of conflict-of-laws
that would direct or refer the resolution of any issue to the laws of any other
jurisdiction. Each party hereto hereby acknowledges and agrees that it has
consulted legal counsel in connection with the negotiation of this Agreement
and that it has bargaining power equal to that of the other parties hereto in
connection with the negotiation and execution of this Agreement. Accordingly,
the parties hereto agree that the rule that an agreement shall be construed
against the draftsman shall have no application in the construction or
interpretation of this Agreement.
4.9 DISPUTE RESOLUTION; SEVERABILITY. Any dispute arising out of,
or in connection with any provision of this Agreement shall be resolved by
binding arbitration in Houston, Texas in accordance with the Commercial Rules
of the American Arbitration Association then in effect, and judgment on the
award rendered by the arbitrator(s) may be entered in any court of competent
jurisdiction. All costs and expenses, including attorneys' fees, relating to
the resolution of any such dispute shall be borne by the party incurring such
costs and expenses. If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed this Agreement had
the terms, provisions, covenants and restrictions which may be hereafter
declared invalid, void, or unenforceable not initially been included herein.
4.10 ENTIRETY. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersedes all prior agreements, arrangements, and understandings
relating to the subject matter hereof.
4.11 COUNTERPARTS. This Agreement may be executed by the parties
hereto in counterparts and by telecopy, each of which shall be deemed to
constitute an original and all of which together shall constitute one and the
same instrument.
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4.12 MAINTENANCE OF AGREEMENT. A counterpart of this Agreement
shall be deposited by the Company at its principal place of business and at the
registered office of the Company.
IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have executed this Agreement as of the date first
written above.
SYNAGRO TECHNOLOGIES, INC.
By:
----------------------------------------------------
Xxxxxx X. Xxxxx, Chairman of the Board
Address: 00000 Xxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxx
ENVIRONMENTAL OPPORTUNITIES FUND, L.P.
By: Environmental Opportunities Management Company,
L.L.C., its General Partner
By:
----------------------------------------------------
Xxxxx X. XxXxxxx, Manager
Address: 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxx X. XxXxxxx
ENVIRONMENTAL OPPORTUNITIES FUND (CAYMAN), L.P.
By: Environmental Opportunities Management Company,
L.L.C., its General Partner
By:
----------------------------------------------------
Xxxxx X. XxXxxxx, Manager
Address: 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxx X. XxXxxxx
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