Exhibit 9
FINAL
______________________________________________________________________________
AMENDED AND RESTATED
PURCHASE AGREEMENT
Dated as of August 14, 2000
Among
SYNAGRO TECHNOLOGIES, INC.
and
GTCR FUND VII, L.P.,
GTCR CO-INVEST, L.P.,
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.,
TCW/CRESCENT MEZZANINE TRUST II,
TCW LEVERAGED INCOME TRUST, L.P.,
TCW LEVERAGED INCOME TRUST II, L.P., AND
TCW LEVERAGED INCOME TRUST IV, L.P.
________________________________________________________________________________
TABLE OF CONTENTS
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Section 1. Authorizations and Closings....................................... 2
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1A. Authorization of the Stock...................................... 2
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1B. August 2000 Closing............................................. 2
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1C. Subsequent Closings............................................. 3
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Section 2. Conditions of Purchasers' Obligation at the August 2000 Closing... 4
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2A. General Conditions.............................................. 4
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2B. Subordinated Loan Agreement..................................... 4
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2C. Registration Agreement.......................................... 4
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2D. Stockholders Agreement.......................................... 4
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2E. Warrant......................................................... 4
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2F. Fees and Expenses............................................... 5
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Section 3. General Conditions to Purchasers' Obligation to Make Purchases.... 5
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3A. Representations and Warranties.................................. 5
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3B. No Default...................................................... 5
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3C. Approved Use.................................................... 5
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3D. Acquisitions.................................................... 5
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3E. Certificates of Designation..................................... 6
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3F. Opinion of Counsel to the Company............................... 6
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3G. Opinion of Company General Counsel.............................. 6
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3H. Acquisition Opinions............................................ 6
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3I. Authorization; Listing.......................................... 6
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3J. Closing Documents............................................... 6
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3K. Compliance with Applicable Laws................................. 7
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Section 4. Covenants......................................................... 7
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4A. Financial Statements and Other Information...................... 7
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(i) Audit Report............................................. 7
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(ii) Quarterly Reports........................................ 8
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(iii) Monthly Reports.......................................... 8
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(iv) Reports to SEC and to Shareholders....................... 8
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(v) Notice of Default, Litigation and ERISA Matters.......... 8
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(vi) Management Reports....................................... 9
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(vii) Projections.............................................. 9
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(viii) Other Information........................................ 9
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4B Inspection of Property.......................................... 9
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4C. Listing......................................................... 10
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4D. Section 203 of the DGCL......................................... 10
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4E. [Reserved]..................................................... 10
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4F. Restrictions................................................... 10
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4G. Affirmative Covenants.......................................... 15
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4H. Current Public Information..................................... 15
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4I. Public Disclosures............................................. 15
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4J. Unrelated Business Taxable Income.............................. 16
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4K. Xxxx-Xxxxx-Xxxxxx Compliance................................... 16
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4L. Rights Agreement............................................... 16
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4M. [Reserved]..................................................... 16
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4N. [Reserved]..................................................... 16
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4O. Board of Director Nominations.................................. 16
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Section 5. Transfer of Restricted Securities................................ 16
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Section 6. Representations and Warranties of the Company.................... 17
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6A Shareholders Consent........................................... 17
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6B. Waiver of Vesting Upon Change in Control....................... 18
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6C. Organization, Corporate Power and Licenses..................... 18
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6D. Capital Stock and Related Matters.............................. 18
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6E. Subsidiaries; Investments...................................... 19
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6F. Authorization; No Breach....................................... 19
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6G. Financial Statements........................................... 20
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6H. Absence of Undisclosed Liabilities............................. 21
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6I. No Material Adverse Change..................................... 21
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6J. Absence of Certain Developments................................ 21
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6K. Assets......................................................... 23
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6L. Real Property.................................................. 23
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(a) Owned Properties.......................................... 23
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(b) Leased Properties......................................... 23
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(c) Real Property Disclosure.................................. 24
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6M. Tax Matters.................................................... 24
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6N. Contracts and Commitments...................................... 25
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6O. Intellectual Property Rights................................... 26
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6P. Litigation, etc................................................ 27
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6Q. Brokerage...................................................... 28
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6R. Governmental Consent, etc...................................... 28
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6S. Insurance...................................................... 28
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6T. Employees...................................................... 28
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6U. Employee Benefit Plans......................................... 29
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6V. Compliance with Laws........................................... 30
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6W. Environmental and Safety Matters............................... 30
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6X. Affiliated Transactions........................................ 31
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6Y. Real Property Holding Corporation Status....................... 32
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6Z. Customers and Suppliers........................................ 32
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6AA. Reports with the Securities and Exchange Commission............ 32
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6BB. Investment Company............................................. 32
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6CC. Section 203 of the DGCL; Takeover Statute...................... 32
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6DD. Rights Agreement............................................... 33
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6EE. Purchaser Warrants............................................. 33
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6FF. Disclosure..................................................... 33
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Section 7. Definitions...................................................... 34
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Section 8. Miscellaneous.................................................... 46
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8A. Expenses....................................................... 46
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8B. Remedies....................................................... 47
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8C. Purchaser's Investment Representations......................... 47
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8D. Funding Letter................................................. 48
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8E. Consent to Amendments.......................................... 48
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8F. Survival of Representations and Warranties..................... 48
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8G. Successors and Assigns......................................... 49
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8H. Generally Accepted Accounting Principles....................... 49
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8I. Severability................................................... 49
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8J. Counterparts................................................... 49
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8K. Entire Agreement............................................... 49
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8L. Descriptive Headings; Interpretation........................... 49
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8M. Governing Law.................................................. 50
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8N. Notices........................................................ 50
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8O. Indemnification................................................ 51
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(a) General.................................................. 51
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(b) Environmental Liabilities................................ 52
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8P. Standstill..................................................... 53
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8Q. Amendment and Restatement...................................... 53
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AMENDED AND RESTATED
PURCHASE AGREEMENT
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THIS AMENDED AND RESTATED PURCHASE AGREEMENT (this "Agreement") dated
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as of August 14, 2000, among Synagro Technologies, Inc., a Delaware corporation
(the "Company"), GTCR Fund VII, L.P., a Delaware limited partnership ("GTCR Fund
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VII"), GTCR Co-Invest, L.P., a Delaware limited partnership ("GTCR Co-Invest
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Fund" and together with GTCR Fund VII, the "GTCR Purchasers"), and the
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TCW/Crescent Lenders (as defined herein) (each of the GTCR Purchasers and the
TCW/Crescent Lenders a "Purchaser" and collectively, the "Purchasers"). Except
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as otherwise indicated herein, capitalized terms used herein are defined in
Section 7 hereof.
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RECITALS
WHEREAS, the Company and GTCR Fund VII are parties to a Purchase
Agreement dated as of January 27, 2000 (the "Original Purchase Agreement");
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WHEREAS, (i) on January 27, 2000, the Company sold to GTCR Fund VII
and, subject to the terms and conditions set forth in the Original Purchase
Agreement, GTCR Fund VII purchased from the Company 17,358.824 shares of Series
C Preferred and 2,641.176 shares of Series D Preferred, at a price of $1,000 per
share; (ii) on February 4, 2000, the Company sold to GTCR Fund VII and, subject
to the terms and conditions set forth in the Original Purchase Agreement, GTCR
Fund VII purchased from the Company 419.4 shares of Series C Preferred, at a
price of $1,000 per share; (iii) on March 24, 2000, the Company sold to GTCR
Fund VII and, subject to the terms and conditions set forth in the Original
Purchase Agreement, GTCR Fund VII purchased from the Company 225 shares of
Series C Preferred at a price of $1,000 per share; (iv) on March 27, 2000, the
Company sold to GTCR Fund VII and, subject to the terms and conditions set forth
in the Original Purchase Agreement, GTCR Fund VII purchased from the Company
1,260 shares of Series C Preferred at a price of $1,000 per share; and (v) on
June 15, 2000, the Company sold to GTCR Fund VII and, subject to the terms and
conditions set forth in the Original Purchase Agreement, GTCR Fund VII purchased
from the Company 6,840 shares of Series E Preferred;
WHEREAS, the Company and GTCR Fund VII are parties to a Warrant
Agreement, dated June 15, 2000 (the "GTCR Fund VII Warrant Agreement");
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WHEREAS, pursuant to the GTCR Fund VII Warrant Agreement, on June 15,
2000, the Company granted a warrant to GTCR Fund VII for the purchase of 1,285.5
shares of Series E Preferred, which warrant was immediately exercised by GTCR
Fund VII;
WHEREAS, GTCR Fund VII converted all of the shares of Series C
Preferred held by it into shares of Series D Preferred on April 3, 2000, and, as
of the close of business on the day before the date hereof, GTCR Fund VII is the
record and beneficial owner of 21,904.4 shares of Series D Preferred and 8,125.5
shares of Series E Preferred;
WHEREAS, the Series D Preferred and the Series E Preferred are
convertible into shares of the Company's Common Stock, par value $0.002 per
share (the "Common Stock") and, pursuant to the Original Purchase Agreement, the
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Company has authorized and reserved for issuance upon conversion of the Series D
Preferred and the Series E Preferred at least that number of shares of the
Common Stock as would be issuable upon conversion of the Series D Preferred and
the Series E Preferred held on the date hereof by GTCR Fund VII;
WHEREAS, the Company, the GTCR Purchasers and the TCW/Crescent Lenders
have agreed to enter into this Agreement in order, among other things, to: (a)
amend and restate the Original Purchase Agreement in its entirety and (b) join
GTCR Co-Invest Fund and the TCW/Crescent Lenders as parties hereto; and
WHEREAS, the parties hereto intend that this Agreement and the
documents executed in connection herewith not effect a novation of the
obligations of the Company under the Original Purchase Agreement, but merely a
restatement of and, where applicable, an amendment to the terms governing such
obligations.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Original Purchase Agreement is amended and restated in its entirety,
and the parties hereto agree as follows:
Section 1. Authorizations and Closings.
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1A. Authorization of the Stock. The Company shall authorize the
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issuance and sale to the Purchasers of an aggregate 29,003 shares of Series E
Preferred for sale to the Purchasers in connection with the August 2000 Closing
(as defined below).
1B. August 2000 Closing. At the August 2000 Closing, subject to the
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terms and conditions set forth herein, the Company shall sell to each Purchaser
and each Purchaser shall purchase from the Company that number of shares of
Series E Preferred as is set forth opposite such Purchaser's name on the
"Schedule of Purchasers to the August 2000 Closing" attached hereto under the
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heading "Shares of Series E Preferred Purchased at August 2000 Closing". In
consideration for such shares and the Purchaser Warrants referred to in Section
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2E, each Purchaser shall deliver to the Company the aggregate amount set forth
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opposite such Purchaser's name under the heading "Consideration for Series E
Preferred and Warrants." The closing of the purchase and sale of the Series E
Preferred to be purchased pursuant to this Section 1B (the "August 2000
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Closing") shall take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx
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Xxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on August 14, 2000 or at such other
place or on such other date as may be mutually agreeable to the Company and the
Purchasers. At the August 2000 Closing, the Company shall deliver to each
Purchaser stock certificates evidencing the Series E Preferred to be purchased
by it, registered in such Purchaser's name or the name of its nominee, upon
payment of the consideration referred to above by a cashier's or certified
check, or by wire transfer of immediately available funds to such account as
designated by the Company.
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1C. Subsequent Closings.
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(a) The Company engages in the biosolids management business and
from time to time undertakes acquisitions which are synergistic with or
otherwise complementary to its business. The Purchasers intend to provide up to
an aggregate of $125 million in equity financing to the Company as the equity
portion of the debt and equity financing necessary to fund the acquisitions
which were Approved Uses under the Original Purchase Agreement, to fund the
acquisition taking place on the date of this Agreement and to fund future
acquisitions (each, an "Acquisition") and for certain other uses, in each case
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as approved by the Board of Directors of the Company (the "Board") and the GTCR
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Purchasers (an "Approved Use"). In order to implement the foregoing, the GTCR
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Purchasers may purchase from time to time after the August 2000 Closing, subject
to the terms and conditions set forth herein, upon the written request of the
Board in connection with an Approved Use, up to an additional 63,488 shares of
one or more New Series (as defined below) at a price of $1,000 per share (such
amounts to be adjusted from time to time as a result of stock dividends, stock
splits, recapitalization and similar events) (each, a "Subsequent Closing"). In
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connection with each such Subsequent Closing, the Board shall designate a new
series of convertible preferred stock in the form of and with the rights and
preferences of the certificate of designations set forth as Exhibit A hereto and
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with an initial Conversion Price specified therein which shall be mutually
agreed upon by the Board and the Majority Holders (a "New Series"), taking into
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account, among other things, an assumed equity value for the Company equal to
the result of (i) seven multiplied by the Company's earnings before interest,
taxes and amortization minus (ii) the Company's outstanding indebtedness. Any
additional purchases of Preferred Stock by the GTCR Purchasers pursuant to this
Agreement shall be allocated between the GTCR Purchasers in accordance with the
allocation percentages opposite to each GTCR Purchaser's name under the heading
"GTCR Allocations" on the Schedule of Purchasers to the August 2000 Closing.
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(b) Simultaneously with any purchase by the GTCR Purchasers of
Preferred Stock at such Subsequent Closing pursuant to Section 1C(a) above, the
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TCW/Crescent Lenders will purchase, and the Company will sell to the
TCW/Crescent Lenders, at a price of $1,000 per share, a number of shares of the
series of Preferred Stock being sold to the GTCR Purchasers at such Subsequent
Closing equal to (i) the number of shares of Preferred Stock to be purchased by
the GTCR Purchasers from the Company at such Subsequent Closing, multiplied by
(ii) 0.059322034; provided, however, that, with respect to a Subsequent Closing,
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the TCW/Crescent Lenders shall not have the right to purchase (and the Company
shall not have the right or obligation to sell to the TCW/Crescent Lenders)
Preferred Stock pursuant to this Section 1C(b) in connection with such
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Subsequent Closing if the Initial Lender has agreed to make a loan to the
Company pursuant to the Subordinated Loan Agreement at such Subsequent Closing
and the TCW/Crescent Lenders do not make a loan pursuant to the Subordinated
Loan Agreement at such Subsequent Closing. The maximum aggregate amount that
the TCW/Crescent Lenders shall fund pursuant to this Section 1C(b) shall be
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$3,766,213. Any purchases of Preferred Stock by the TCW/Crescent Lenders
pursuant to this Agreement shall be allocated among the TCW/Crescent Lenders in
accordance with the allocation percentages opposite to each TCW/Crescent
Lender's name under the heading
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"TCW/Crescent Allocations" on the Schedule of Purchasers to the August 2000
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Closing. For the avoidance of doubt, for all purposes hereof, each purchase of
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Preferred Stock by the TCW/Lenders pursuant to this Section 1C(b) will be deemed
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to be at and a part of each Subsequent Closing.
(c) The closing of the purchase and sale of the Preferred Stock to be
purchased at each Subsequent Closing pursuant to Section 1C(a) and (b) shall
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take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 or at such other place as may be mutually agreeable to the
Company and the GTCR Purchasers. At each Subsequent Closing, the Company shall
deliver to each Purchaser stock certificates evidencing the Preferred Stock to
be purchased by it, registered in such Purchaser's or the name of its nominee,
upon payment of the purchase price thereof by a cashier's or certified check, or
by wire transfer of immediately available funds to such account as designated by
the Company.
Section 2. Conditions of Purchasers' Obligation at the August 2000
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Closing. The obligation of each Purchaser to purchase and pay for the Series E
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Preferred to be purchased by it at the August 2000 Closing is subject to the
satisfaction as of the August 2000 Closing of the following conditions:
2A. General Conditions. Each of the conditions set forth in Section
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3 shall have been satisfied with respect to the August 2000 Closing.
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2B. Subordinated Loan Agreement. The Company and the Purchasers
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shall have entered into the Subordinated Loan Agreement, and the Subordinated
Loan Agreement shall be in full force and effect as of the August 2000 Closing.
2C. Registration Agreement. The Company and the Purchasers shall
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have entered into the amended and restated registration agreement, dated as of
the date of this Agreement, (the "Registration Agreement"), and the Registration
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Agreement shall be in full force and effect as of the August 2000 Closing.
2D. Stockholders Agreement. The Company and the Purchasers shall
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have entered into the Stockholders Agreement, and the Stockholders Agreement
shall be in full force and effect as of the August 2000 Closing.
2E. Warrant. The Company shall have granted to each Purchaser a
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Purchaser Warrant, exercisable for the number of shares of Series E Preferred
set forth opposite such Purchaser's name on the Schedule of Purchasers to the
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August 2000 Closing under the heading "Shares of Series E Preferred Granted
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Under Purchaser Warrant", and the Purchaser Warrants shall be in full force and
effect as of the August 2000 Closing.
2F. Fees and Expenses. The Company shall have reimbursed each
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Purchaser for its fees and expenses as provided in Section 8A hereof.
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Any condition specified in this Section 2 may be waived only if such waiver is
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set forth in a writing executed by each of the Purchasers.
Section 3. General Conditions to Purchasers' Obligation to Make
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Purchases. The obligation of each Purchaser to purchase the Preferred Stock at
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each Closing is subject to the satisfaction of the following conditions, each as
of the date of each such Closing:
3A. Representations and Warranties. All representations and
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warranties of the Company contained in this Agreement shall be true and correct
in all material respects (other than representations and warranties qualified by
a materiality standard including, without limitation, a Material Adverse Effect
qualifier, which shall be true and correct in all respects) as of the making of
such purchase, before and after giving effect to such purchase and to the
application of the proceeds therefrom, with the same effect as though such
representations and warranties had been made on and as of such date, except that
(a) references to financial statements and the Latest Balance Sheet in such
representations and warranties shall be deemed to refer for this purpose to the
financial statements required to be provided to the Purchasers pursuant to
Section 4A hereof and the latest consolidated balance sheet of the Company
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required to be provided to the Purchasers pursuant to Section 4A hereof,
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respectively, and (b) references to the date of this Agreement, the August 2000
Closing Date and the like shall be deemed to refer to the date of the making of
such purchase.
3B. No Default. No Default or Event of Default (as such terms are
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defined in the Subordinated Loan Agreement) shall exist as of the date of such
purchase or would result from the consummation of the borrowings by the Company
under the Subordinated Loan Agreement made concurrently with such purchase of
Preferred Stock.
3C. Approved Use. The GTCR Purchasers shall have approved the
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acquisition or other Approved Use being financed therewith and the Purchasers
shall have received such documents and deliveries in connection therewith as
reasonably requested by them. The Purchasers shall have received evidence
satisfactory to them that the proceeds of such purchase will be used for the
Approved Use.
3D. Acquisitions. No default or material breach of performance shall
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have occurred under the agreements related to the Acquisition, if any, for which
the Preferred Stock is being purchased, and all of the buyers' material
conditions to closing thereunder shall have been satisfied and not waived
(except with the GTCR Purchasers' consent).
3E. Certificates of Designation. With respect to the August 2000
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Closing, the Company shall not have adopted or filed any other document
designating terms, relative rights or preferences of its preferred stock, other
than the certificates of designation establishing the terms of the Series A,
Series B, Series C, Series D, and Series E Preferred. With respect to any
Subsequent Closing, the Company shall have duly adopted, executed and filed with
the Secretary of State of Delaware a Certificate of Designation of Rights and
Preferences establishing the terms and the relative rights and preferences of
the New Series, which shall be identical in all respects to the form
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of certificate of designation attached hereto as Exhibit A except that the
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Conversion Price set forth therein shall be as agreed to by the Board and the
Majority Holders pursuant to Section 1C(a) hereof (the "New Series Certificate
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of Designations"), and the Company shall not have adopted or filed any other
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document designating terms, relative rights or preferences of its preferred
stock, other than the certificates of designation establishing the terms of the
Series A, Series B, Series C, Series D and Series E Preferred and any other
previously issued New Series. Each of the Series E Certificate of Designations
and any New Series Certificate of Designations shall be in full force and effect
as of such Closing under the laws of Delaware and shall not have been amended or
modified.
3F. Opinion of Counsel to the Company. The Purchasers shall have
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received an opinion from the special counsel for the Company, which shall be
addressed to the Purchasers, dated the date of the Closing and in form and
substance reasonably satisfactory to the Purchasers.
3G. Opinion of Company General Counsel. The Purchasers shall have
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received an opinion from Xxxxx X. Xxxxxx XX, general counsel for the Company, or
his successor, if any, which shall be addressed to the Purchasers, dated as of
the date of such Closing, and in form and substance reasonably satisfactory to
the Purchasers.
3H. Acquisition Opinions. To the extent the Company or any of its
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Subsidiaries receives (or is otherwise entitled to rely on) an opinion of
counsel in connection with any Acquisition, such opinion shall also be addressed
to the Purchasers or the Purchasers shall otherwise be entitled to rely thereon.
3I. Authorization; Listing. The Common Stock issuable upon
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conversion of (i) all outstanding shares of Preferred Stock and (ii) the
Preferred Stock to be issued in connection with such Closing shall have been
duly authorized and reserved for issuance and such Common Stock shall have been
approved for listing on the NASDAQ SmallCap Market ("Nasdaq"), subject to
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official notice of issuance.
3J. Closing Documents. The Company shall have delivered to the
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Purchasers all of the following documents:
(a) an Officer's Certificate, dated the date of the Closing,
stating that the conditions specified in Sections 3A through 3I,
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inclusive, have been fully satisfied;
(b) certified copies of the resolutions duly adopted by the Board
authorizing the issuance and sale of the Preferred Stock at such Closing
and the filing of the certificate of designations filed in connection with
such sale of Preferred Stock;
(c) certified copies of the Company's certificate of
incorporation and all of its certificates of designation and the Company's
bylaws, each as in effect at the Closing; and
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(d) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law
filings and waivers of all preemptive rights and rights of first refusal).
3K. Compliance with Applicable Laws. The purchase of Preferred Stock
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by each Purchaser hereunder shall not be prohibited by any applicable law or
governmental regulation, shall not subject any Purchaser to any penalty or
liability under or pursuant to any applicable law or governmental regulation,
and shall be permitted by laws and regulations of the jurisdictions to which any
such Purchaser is subject.
Any condition specified in this Section 3 may be waived in whole or in part by
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the Majority Holders, in their sole discretion, only if such waiver is set forth
in a writing executed by the Majority Holders. Upon the waiver of any condition
specified in this Section 3 by the Majority Holders, the Majority Holders shall
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give notice thereof to the other Purchasers in accordance with Section 8M
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hereof.
Section 4. Covenants.
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4A. Financial Statements and Other Information. The Company shall
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deliver to each Purchaser (so long as such Purchaser holds any Preferred Stock)
and to each holder of at least 15% of the Investor Preferred:
(i) Audit Report. Promptly when available and in any event
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within 90 days after the close of each Fiscal Year: (a) a copy of the annual
audit report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year certified without
qualification by Xxxxxx Xxxxxxxx LLP or other independent auditors of recognized
standing selected by the Company and reasonably acceptable to the Majority
Holders, together with a written statement from such accountants to the effect
that in making the examination necessary for the signing of such annual audit
report by such accountants, they have not become aware of any Event of Default
or Default that has occurred and is continuing or, if they have become aware of
any such event, describing it in reasonable detail and (b) consolidating balance
sheets of the Company and its Subsidiaries as of the end of such Fiscal Year and
consolidating statements of earnings for the Company and its Subsidiaries for
such Fiscal Year, certified by the chief financial officer of the Company.
(ii) Quarterly Reports. Promptly when available and in any
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event within 45 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter) of each Fiscal Year, consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such Fiscal Quarter,
together with consolidated and consolidating statements of earnings and
consolidated statements of cash flow for such Fiscal Quarter and for the period
beginning with the
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first day of such Fiscal Year and ending on the last day of such Fiscal Quarter,
certified by the chief financial officer of the Company.
(iii) Monthly Reports. Promptly when available and in any
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event within 30 days after the end of each of the first two months of each
Fiscal Quarter, consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such month, together with consolidated and
consolidating statements of earnings for such month and for the period beginning
with the first day of the applicable Fiscal Year and ending on the last day of
such month, certified by the chief financial officer of the Company.
(iv) Reports to SEC and to Shareholders. Promptly upon the
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filing or sending thereof, copies of all regular, periodic or special reports of
the Company or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Company shall promptly deliver any such exhibit to the
Purchasers upon request therefor); copies of all registration statements of the
Company or any Subsidiary filed with the SEC (other than on Form S-8); and
copies of all proxy statements or other communications made to shareholders
generally concerning material developments in the business of the Company or any
of its Subsidiaries.
(v) Notice of Default, Litigation and ERISA Matters. Promptly
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upon becoming aware of any of the following, written notice describing the same
and the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or a Default under the
Subordinated Loan Agreement or an Event of Noncompliance;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Purchasers which has
been instituted or, to the knowledge of the Company, is threatened against the
Company or any of its Subsidiaries or to which any of the properties of any
thereof is subject which, if adversely determined, might reasonably be expected
to have a Material Adverse Effect;
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure of any
member of the Controlled Group to make a required contribution to any Pension
Plan (if such failure is sufficient to give rise to a lien under Section 302(f)
of ERISA) or to any Multiemployer Pension Plan, or the taking of any action with
respect to a Pension Plan which could result in the requirement that the Company
furnish a bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan or Multiemployer
Pension Plan which could result in the incurrence by any member of the
Controlled Group of any material liability, fine or penalty (including any claim
or demand for withdrawal liability or partial withdrawal from any Multiemployer
Pension Plan), or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such
-8-
plan is or may be terminated, or that any such plan is or may become insolvent;
provided that such matter would reasonably be expected to have a Material
--------
Adverse Effect.
(d) any cancellation (without replacement) or material change in
any insurance maintained by the Company or any Subsidiary thereof, which would
reasonably be expected to have a Material Adverse Effect;
(e) any event (including any violation of any Environmental Law
or the assertion of any Environmental Claim) which would reasonably be expected
to have a Material Adverse Effect;
(f) any event or circumstance which requires the Company to give
notice to the Senior Lenders under the Credit Documents; or
(g) any notice of default received by it under any Credit
Document.
(vi) Management Reports. Promptly upon the request of any
------------------
Purchaser, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
(vii) Projections. As soon as practicable and in any event
-----------
within 60 days after the commencement of each Fiscal Year, financial projections
for the Company and its Subsidiaries for such Fiscal Year prepared in a manner
consistent with those projections delivered by the Company to GTCR Fund VII
prior to the August 2000 Closing Date.
(viii) Other Information. From time to time such other
-----------------
information concerning the Company and its Subsidiaries as any Purchaser may
reasonably request.
4B. Inspection of Property. The Company shall permit any
----------------------
representatives designated by any Purchaser (so long as any Purchaser holds any
Preferred Stock) or any holder of at least 15% of the outstanding Investor
Preferred, upon reasonable notice and during normal business hours and such
other times as any such holder may reasonably request, to (i) visit and inspect
any of the properties of the Company and its Subsidiaries, (ii) examine the
corporate and financial records of the Company and its Subsidiaries and make
copies thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers, key employees
and independent accountants of the Company and its Subsidiaries; provided that
the Company shall have the right to have its chief financial officer present at
any meetings with the Company's independent accountants.
4C. Listing. The Company shall use its reasonable best efforts to
-------
continue to have its Common Stock listed on Nasdaq or a national securities
exchange for so long as any Preferred Shares are outstanding. Prior to the
August 2000 Closing, the Company shall prepare and submit
-9-
to Nasdaq a listing application covering the shares of Common Stock issuable
upon conversion of the Series E Preferred being issued at the August 2000
Closing and shall obtain approval for the listing of such shares, subject to
official notice of issuance. Prior to each Subsequent Closing, the Company shall
prepare and submit to Nasdaq a listing application covering the shares of Common
Stock issuable upon conversion of the New Series to be purchased in connection
with such Subsequent Closing and shall obtain approval for the listing of such
shares, subject to official notice of issuance.
4D. Section 203 of the DGCL. The Board shall not adopt any
-----------------------
resolution containing any provisions, relating to the exemption from Section 203
of the DGCL granted to the GTCR Purchasers or their Affiliates which would
adversely affect or otherwise impair the rights of the GTCR Purchasers or their
Affiliates thereunder.
4E. [Reserved].
----------
4F. Restrictions. For so long as the Purchasers collectively hold
------------
shares of Investor Preferred convertible into at least 15% of the outstanding
shares of Common Stock (after giving effect to such conversion), the Company
shall not, without the prior written consent of the Majority Holders:
(a) directly or indirectly declare or pay any dividends or make
any distributions upon any of its equity securities, other than payments of
dividends on, or redemption payments in respect of, the Preferred Stock
pursuant to the Certificates of Designation;
(b) directly or indirectly redeem, purchase or otherwise acquire,
or permit any Subsidiary to redeem, purchase or otherwise acquire, any of
the Company's equity securities (including, without limitation, warrants,
options and other rights to acquire equity securities) other than
redemptions of Preferred Stock pursuant to the Certificates of Designation;
(c) except as expressly contemplated by this Agreement or
pursuant to obligations currently in effect, authorize, issue, sell or
enter into any agreement providing for the issuance (contingent or
otherwise), or permit any Subsidiary to authorize, issue, sell or enter
into any agreement providing for the issuance (contingent or otherwise) of,
(i) any notes or debt securities containing equity features (including,
without limitation, any notes or debt securities convertible into or
exchangeable for equity securities, issued in connection with the issuance
of equity securities or containing profit participation features) or (ii)
any equity securities (or any securities convertible into or exchangeable
for any equity securities) or rights to acquire any equity securities,
other than the issuance of equity securities by a Subsidiary to the Company
or another Subsidiary; provided, that, this Section 4F(c) shall not prevent
-------- ---- -------------
the Company from (x) authorizing or issuing options to its employees and
directors in an amount representing not more than 15% of the then-
outstanding Common Stock
-10-
(assuming exercise of the Warrants and conversion of all Preferred Stock)
or (y) issuing equity securities in connection with an acquisition approved
by the GTCR Purchasers;
(d) make, or permit any Subsidiary to, make, incur, assume or
suffer to exist any Investment in any other Person, except (without
duplication) the following:
(i) equity Investments existing on the August 2000 Closing
Date in wholly-owned Subsidiaries identified on the "Subsidiary
----------
Schedule" attached hereto;
--------
(ii) equity Investments in Subsidiaries acquired after the
August 2000 Closing Date in transactions approved by the GTCR
Purchasers including approved Acquisitions (unless not required
to be approved pursuant to Section 4F(e));
--------------
(iii) in the ordinary course of business, contributions by the
Company to the capital of any of its Subsidiaries, or by any such
Subsidiary to the capital of any of its Subsidiaries;
(iv) in the ordinary course of business, Investments by the
Company in any Subsidiary or by any of the Subsidiaries in the
Company, by way of intercompany loans, advances or guaranties,
all to the extent permitted by Section 6.9 of the Subordinated
-----------
Loan Agreement;
(v) Suretyship Liabilities permitted by Section 6.9 of the
-----------
Subordinated Loan Agreement;
(vi) loans to officers and employees not exceeding (i) $287,500
in the aggregate to any single individual or (ii) $575,500 in the
aggregate for all such individuals;
(vii) good faith deposits and escrow accounts in connection with
prospective acquisitions of stock or assets for Acquisitions
approved by the GTCR Purchasers;
(viii) Cash Equivalent Investments; and
(ix) bank deposits in the ordinary course of business;
provided that the aggregate amount of all such deposits
--------
(excluding (x) amounts in payroll accounts or for accounts
payable, in each case to the extent that checks have been issued
to third parties, and (y) amounts maintained (in the ordinary
course of business consistent with past practice) in accounts of
any Person which is acquired by the Company or a Subsidiary in
accordance with the
-11-
terms hereof during the 45 days following the date of such
acquisition) which are maintained with any bank other than a
Senior Lender shall not at any time exceed (x) in the case of
such deposits with any single bank, $115,000 for three
consecutive Business Days and (y) in the case of all such
deposits, $1,115,000 for three consecutive Business Days;
provided that no Investment otherwise permitted by clause (ii), (iii), (iv),
-------- ----------- ----- ----
(v), (vi) or (vii) shall be permitted to be made if, immediately before or after
--- ---- -----
giving effect thereto, any Event of Default or Default or any Event of
Noncompliance shall have occurred and be continuing;
(e) be a party to, or permit any Subsidiary to be a party to, any
merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or sell,
transfer, convey or lease all or any substantial part of its assets, or
sell or assign with or without recourse any receivables, except for (a) any
such merger or consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into the Company or into,
with or to any other Wholly-Owned Subsidiary; (b) any such purchase or
other acquisition by the Company or any Wholly-Owned Subsidiary of the
assets or stock of any Wholly-Owned Subsidiary; and (c) any such purchase
or other acquisition by the Company or any wholly-owned Subsidiary of the
assets or stock of any other Person where (1) such assets (in the case of
an asset purchase) are for use, or such Person (in the case of a stock
purchase) is engaged, or after the acquisition will be, in the business
activities permitted by Section 4F(f); (2) immediately before or after
-------------
giving effect to such purchase or acquisition, no Event of Default or
Default s under the Subordinated Loan Agreement shall have occurred and be
continuing; (3) the aggregate consideration to be paid by the Company and
its Subsidiaries (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP) in
connection with such purchase or other acquisition after the date hereof
(or any series of related acquisitions) is less than $10,000,000 for any
single transaction or series of related transactions and less than
$50,000,000 in the aggregate for all such transactions; (4) the Company is
in pro forma compliance with all the financial ratios and restrictions set
--- -----
forth in Section 6.8 of the Subordinated Loan Agreement; and (5) the
-----------
proceeds of any of the Preferred Stock hereunder are not used to finance
such transactions;
(f) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
management, processing, collection, handling and disposal of non-hazardous
bio-solid waste, animal manures, and green and other organic waste or
similar non-hazardous waste-related business activities;
(g) enter into, or permit any Subsidiary to, enter into, or
cause, suffer or permit to exist any transaction, arrangement or contract
with any of its other Affiliates (other than the Company and its
Subsidiaries and the Purchasers and their respective Affiliates)
-12-
which is on terms which are less favorable than are obtainable from any
Person which is not one of its Affiliates;
(h) become subject to, or permit any of its Subsidiaries to
become subject to, any agreement or instrument which by its terms would
(under any circumstances) restrict (A) the right of any Subsidiary to make
loans or advances or pay dividends to, transfer property to, or repay any
Debt owed to, the Company or any Subsidiary or (B) the Company's right to
perform the provisions of this Agreement, the Certificates of Designation,
the Bylaws or the other Documents;
(i) except as expressly contemplated by this Agreement, make any
amendment to the Certificates of Designation or the Bylaws, or file any
resolution of the Board with the Secretary of the State of Delaware, in
each case containing any provisions which would increase the number of
authorized shares of capital stock or adversely affect or otherwise impair
the rights or the relative preferences and priorities of the holders of the
Preferred Stock under this Agreement, the Certificates of Designation, the
Bylaws or the other Documents; or
(j) create, incur, assume or suffer to exist or permit any
Subsidiary to, create, incur, assume or suffer to exist any Debt, except:
(i) Debt under the Credit Agreement or Permitted Refinancing Debt
with respect thereto in an aggregate principal amount at any one
time outstanding (including loans, the nominal amount of
outstanding letters of credit and all unused commitments) not to
exceed (as determined from time to time, the "Maximum Senior
--------------
Indebtedness") (A) $30,000,000 of revolving Senior Indebtedness,
------------
(B) $150,000,000 of term Senior Indebtedness, (C) $50,000,000 of
Acquisition Loans and (D) $30,000,000 of additional Senior
Indebtedness (whether revolving or term) in each case with
respect to this Section 4F(j)(i) less the aggregate principal
----------------
amount of any permanent reductions of commitments for revolving
Senior Indebtedness or the Acquisition Loans or repayments of
term Senior Indebtedness under the instruments governing such
Senior Indebtedness (including, without limitation, payments
actually applied to the Senior Indebtedness pursuant to Section
-------
3.5 of the Subordinated Loan Agreement) and (D) guaranties in
---
respect of Debt described in the foregoing clauses (A), (B), (C)
and (D);
(ii) unsecured seller Debt which represents all or part of the
purchase price payable in connection with Acquisitions approved
by the GTCR Purchasers and the Debt listed on the attached
"Unsecured Seller Debt Schedule"; provided that the aggregate
------------------------------ --------
principal amount of all such Debt (other than (i) the Debt
designated with an asterisk on the Unsecured Seller Debt
Schedule, and (ii) an unsecured seller note payable in connection
with the acquisition
-13-
of EPIC not in excess of $6,000,000, the payment of which is
contingent upon the performance of EPIC) shall not at any time
exceed $7,500,000;
(iii) Debt arising under Capital Leases, Debt secured by Liens
permitted by subsection 6.10(c) or (d) of the Subordinated Loan
------------------ ---
Agreement, Rhode Island Non-Recourse Debt in an aggregate amount
not to exceed $13,000,000 and other Debt outstanding on the date
hereof and listed on the attached "Capital Lease Debt Schedule",
---------------------------
and refinancings of any such Debt so long as the terms applicable
to such refinanced Debt are no less favorable to the Company or
the applicable Subsidiary than the terms in effect immediately
prior to such refinancing, provided that the aggregate amount of
--------
all such Debt at any time outstanding shall not exceed
$25,000,000;
(iv) Debt of Subsidiaries owed to the Company;
(v) Hedging Obligations of the Company for the hedging of
interest payments on the Senior Indebtedness to the extent
required by the Credit Agreement;
(vi) unsecured Debt of the Company to Subsidiaries;
(vii) the Loans made pursuant to the Subordinated Loan
Agreement;
(viii) subordinated Debt issued to former employees to
repurchase stock from such former employees in an aggregate
principal amount at any time outstanding not to exceed
$2,500,000;
(ix) the Baltimore Bonds; and
(x) Suretyship Liabilities with respect to performance and
payment bonds issued for the benefit of customers of the Company
or its Subsidiaries in the ordinary course of business.
4G. Affirmative Covenants. For so long as any Purchaser holds
---------------------
shares of Investor Preferred convertible into at least 15% of the outstanding
shares of Common Stock (after giving effect to such conversion), the Company
shall, and shall cause each Subsidiary to:
(a) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company
and its Subsidiaries taken as a whole, and pay and discharge when payable
all taxes, assessments and governmental charges (except to the
-14-
extent the same are being contested in good faith and adequate reserves
therefor have been established); and
(b) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees.
4H. Current Public Information. At all times after the Company has
--------------------------
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable such holders to
sell Restricted Securities pursuant to (i) Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act (as such rule may be amended
from time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
4I. Public Disclosures. The Company shall not, nor shall it permit
------------------
any Subsidiary to, disclose the Purchasers' name or identity as an investor in
the Company in any press release or other public announcement or in any document
or material filed with any governmental entity, without the prior written
consent of the Purchasers, unless such disclosure is required by applicable law
or governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written notice
to the Purchasers describing in reasonable detail the proposed content of such
disclosure and shall permit the Purchasers to review and comment upon the form
and substance of such disclosure.
4J. Unrelated Business Taxable Income. The Company shall not engage
---------------------------------
in any transaction which is reasonably likely to cause the Purchasers or any of
their limited partners which are exempt from income taxation under Section
501(a) of the IRC and, if applicable, any pension plan that any such trust may
be a part of, to recognize unrelated business taxable income as defined in
Section 512 and Section 514 of the IRC.
4K. Xxxx-Xxxxx-Xxxxxx Compliance. In connection with any transaction
----------------------------
in which the Company is involved (an "HSR Transaction") which is required to be
---------------
reported under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended from time to time (the "HSR Act"), the Company and the Purchasers shall
-------
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice which may be required to comply with the HSR Act,
and shall promptly furnish all materials thereafter requested by any of the
regulatory agencies having jurisdiction over such filings, in connection with an
HSR Transaction. The Company and the Purchasers shall take all reasonable
actions and shall file and use reasonable best
-15-
efforts to have declared effective or approved all documents and notifications
with any governmental or regulatory bodies, as may be necessary or may
reasonably be requested under federal antitrust laws for the consummation of the
HSR Transaction; provided that in no event shall the Company or the Purchasers
--------
or any of their Affiliates be required to divest any of their assets or
Subsidiaries. If the Purchasers are required to make a filing under the HSR Act
in connection with an HSR Transaction, the Company will provide to the
Purchasers all necessary information relating to the Company for such filing and
will pay all fees associated with such filing.
4L. Rights Agreement. The Company will not further amend the Rights
----------------
Agreement, or adopt any similar rights plan or rights agreement, in a manner
that conflicts with, or restricts the GTCR Purchasers or any of its Affiliates
to a greater extent than the amendment to the Rights Agreement as set forth in
the representation in Section 6DD.
-----------
4M. [Reserved].
----------
4N. [Reserved].
----------
4O. Board of Director Nominations. For so long as the GTCR
-----------------------------
Purchasers hold shares of Investor Preferred convertible into at least 15% of
the outstanding shares of Common Stock (after giving effect to such conversion),
the GTCR Purchasers and the Nominating Committee of the Board shall have the
right to mutually approve all nominations to elect or appoint persons to serve
as members of the Board, other than directors elected pursuant to the
Certificates of Designation.
Section 5. Transfer of Restricted Securities.
----------------------------------
(a) Restricted Securities are transferable only pursuant to
(i) public offerings registered under the Securities Act, (ii) Rule 144 of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule or rules are available and (iii) subject to the conditions
specified in clause (b) below, any other legally available means of transfer;
----------
provided that the conditions specified in clause (b) shall be deemed to have
----------
been satisfied without any further action or evidence if the holder of any
Restricted Securities shall deliver to the Company a written notice stating that
the holder is transferring Restricted Securities to an Affiliate of a Purchaser,
provided that the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the provisions contained in this Section 5; provided further, that
---------
this Section 5 shall not limit the right of each TCW/Crescent Lender to pledge
---------
Restricted Securities held by it to a trustee for the benefit of secured
noteholders pursuant to documents relating to the financing of such TCW/Crescent
Lender.
(b) In connection with the transfer of any Restricted
Securities (other than a transfer described in Sections 5(a)(i) or (ii) above),
---------------- --
the holder thereof shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
Xxxxxxxx & Xxxxx or other counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Restricted Securities may
-16-
be effected without registration of such Restricted Securities under the
Securities Act. In addition, if the holder of the Restricted Securities delivers
to the Company an opinion of Xxxxxxxx & Xxxxx or such other counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in Section 8C. If the Company
----------
is not required to deliver new certificates for such Restricted Securities not
bearing such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this Section and Section 8C.
----------
(c) Upon the request of any Purchaser, the Company shall
promptly supply to such Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission.
Section 6. Representations and Warranties of the Company. As a
---------------------------------------------
material inducement to the Purchasers to enter into this Agreement and purchase
the Preferred Stock, the Company hereby represents and warrants to the
Purchasers that:
6A. Shareholders Consent. The Shareholders Consent was executed by
--------------------
the stockholders of the Company set forth on the attached "Shareholders Consent
--------------------
Schedule", each of whom owns the number of shares of Common Stock indicated next
--------
to such person's name on the Shareholders Consent Schedule (the "Consenting
----------
Stockholders"), before January 27, 2000. The Consenting Stockholders
------------
collectively own a majority of the outstanding Common Stock. The disclosure
provided to the Consenting Stockholders in connection with the solicitation of
the Shareholders Consent did not contain a material misstatement of fact or an
omission of a material fact necessary to make the statements made, in light of
the circumstances in which they were made, not misleading.
6B. Waiver of Vesting Upon Change in Control. Each employee and
----------------------------------------
director of the Company who has the right (whether granted in an agreement, by
action of the Board or otherwise) to have his or her options to purchase the
Company's stock vest upon a "change in control" has executed a waiver providing
that GTCR Fund VII's and the Initial Lender's investment in the Company pursuant
to the this Agreement, the Subordinated Loan Agreement and the GTCR Warrant
Agreement, whether on or prior to the date hereof or in the future, shall not be
considered a "change in control" and shall not trigger vesting of such person's
options. In addition, each employee who has an agreement with the Company that
contains provisions allowing such agreement to be terminated upon a "change in
control" or requiring the payment of severance upon a "change in control" has
executed a waiver providing that GTCR Fund VII's and the Initial Lender's
investment in the Company pursuant to this Agreement, the Subordinated Loan
Agreement and the GTCR Warrant Agreement, whether on the date hereof or in the
future, shall not be considered a "change in control" for purposes of such
agreement.
-17-
6C. Organization, Corporate Power and Licenses. The Company is a
------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify (except in
those instances in which the failure to be so qualified or to be validly
existing and in good standing has not and would not reasonably be expected to
have a Material Adverse Effect). The Company possesses all requisite corporate
power and authority and all material licenses, permits and authorizations
necessary to own and operate its properties, to carry on its businesses as now
conducted and presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement. The copies of the Company's and
each Subsidiary's charter documents and bylaws which have been furnished to the
GTCR Purchasers' special counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
6D. Capital Stock and Related Matters.
---------------------------------
(a) As of the Closing and immediately thereafter, the authorized,
issued and outstanding and reserved capital stock of the Company shall be as set
forth on the attached "Capitalization Schedule."
-----------------------
(b) As of the Closing, neither the Company nor any Subsidiary
shall have outstanding any stock or securities convertible or exchangeable for
any shares of its capital stock or containing any profit participation features,
nor shall it have outstanding any rights or options to subscribe for or to
purchase its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or phantom
stock plans, except for the Preferred Stock, the Warrants and except as set
forth on the Capitalization Schedule. The Capitalization Schedule accurately
----------------------- -----------------------
sets forth the following information with respect to all outstanding options and
rights to acquire the Company's capital stock: the holder, the type of security,
the number of shares covered, the exercise price, the expiration date and
whether such security vests upon a "change in control". As of the Closing,
neither the Company nor any Subsidiary shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to acquire
its capital stock, except as set forth on the Capitalization Schedule and except
-----------------------
pursuant to the Certificates of Designation. As of the Closing, all of the
outstanding shares of the Company's capital stock shall be validly issued, fully
paid and nonassessable.
(c) There are no statutory or, to the best of the Company's
knowledge, contractual stockholders preemptive rights or rights of refusal with
respect to the issuance of the Warrant Shares, the Warrants, or the Preferred
Stock or the issuance of the Common Stock issuable upon conversion of the
Warrant Shares or the Preferred Stock or upon exercise of the Warrants. The
Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock, and the
offer, sale and issuance of the Warrants and the Preferred Stock do not require
registration under the Securities Act or any applicable state securities laws.
To the best of the Company's knowledge, there are no agreements between the
Company's
-18-
stockholders with respect to the voting or transfer of the Company's capital
stock or with respect to any other aspect of the Company's affairs, except as
set forth on the Capitalization Schedule.
-----------------------
6E. Subsidiaries; Investments. The Subsidiary Schedule correctly
------------------------- -------------------
sets forth the name of each Subsidiary, the jurisdiction of its incorporation
and the Persons owning the outstanding capital stock of such Subsidiary. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, possesses all requisite corporate
power and authority and all material licenses, permits and authorizations
necessary to own its properties and to carry on its businesses as now being
conducted and as presently proposed to be conducted and is qualified to do
business in every jurisdiction in which its ownership of property or the conduct
of business requires it to qualify (except in those instances in which the
failure to be so qualified or to be validly existing and in good standing has
not and would not reasonably be expected to have a Material Adverse Effect). All
of the outstanding shares of capital stock of each Subsidiary are validly
issued, full paid and nonassessable, and all such shares are owned by the
Company or another Subsidiary free and clear of any Lien, except for Liens under
the Credit Documents, and not subject to any option or right to purchase any
such shares. Except as set forth on the Subsidiary Schedule, neither the Company
nor any Subsidiary owns or holds the right to acquire any shares of stock or any
other security or interest in any other Person.
6F. Authorization; No Breach. The execution, delivery and
------------------------
performance of this Agreement and the other Documents, the filing of the
Certificates of Designation and the amendment of the Company's bylaws have been
duly authorized by the Company. This Agreement, the other Documents and the
Certificates of Designation each constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms (except as limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights. Except as set forth on the attached "Restrictions Schedule," the
---------------------
execution and delivery by the Company of this Agreement and the other Documents,
the offering, sale and issuance of the Preferred Stock, the issuance of the
Common Stock upon conversion of the Preferred Stock, the issuance of Warrants
pursuant to the Warrant Agreements, the issuance of the Warrant Shares upon
exercise of Warrants, the filing of the Certificates of Designation, and the
amendment of the Company's bylaws and the fulfillment of and compliance with the
respective terms hereof and thereof by the Company, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any Subsidiary's
capital stock or assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the Certificates of
Designation or the charter or bylaws of the Company or any Subsidiary, or any
law, statute, rule or regulation to which the Company or any Subsidiary is
subject, or any agreement, instrument, order, judgment or decree to which the
Company or any Subsidiary is subject. Except as set forth on the Restrictions
Schedule, none of the Subsidiaries are subject to any restrictions upon making
loans or advances or paying dividends to, transferring property to, or repaying
any Debt owed to, the Company or another Subsidiary.
-19-
6G. Financial Statements. Attached hereto as the "Financial
-------------------- ---------
Statements Schedule" are the following financial statements:
-------------------
(a) the audited consolidated balance sheets of the Company and
its Subsidiaries as of December 31, 1997, 1998, and 1999, and the related
statements of income and cash flows (or the equivalent) for the respective
twelve-month periods ended December 31, 1997, 1998 and 1999; and
(b) the unaudited consolidated balance sheet of the Company and
its Subsidiaries as of June 30, 2000 (the "Latest Balance Sheet"), and the
--------------------
related statements of income and cash flows (or the equivalent) for the six-
month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of the Company (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with GAAP, consistently applied, subject in the case of the unaudited
financial statements to the absence of footnote disclosure and changes resulting
from normal year-end adjustments for recurring accruals (none of which would,
alone or in the aggregate, be materially adverse to the financial condition,
operating results, assets, operations or business prospects of the Company and
its Subsidiaries taken as a whole).
The pro forma consolidated balance sheet of the Company and its Subsidiaries as
of August 14, 2000, which gives effect to the Transactions and the acquisition
of Bio Gro, is also attached hereto in the Financial Statement Schedule and is
----------------------------
complete and correct in all material respects and presents fairly in all
material respects the consolidated financial condition of the Company and its
Subsidiaries as of such date as if the transactions contemplated by this
Agreement had occurred immediately prior to such date, and such balance sheet
contains all pro forma adjustments necessary in order to fairly reflect such
assumption.
6H. Absence of Undisclosed Liabilities. Except as set forth on the
----------------------------------
attached "Liabilities Schedule," the Company and its Subsidiaries do not have
--------------------
any material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company or any
Subsidiary, whether due or to become due and regardless of when asserted)
arising out of transactions entered into at or prior to the Closing, or any
action or inaction at or prior to the Closing, or any state of facts existing at
or prior to the Closing other than: (i) liabilities set forth on the Latest
Balance Sheet (including any notes thereto), (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business consistent with past practice (none of which is a liability
resulting from breach of contract, breach of warranty, tort, infringement, claim
or lawsuit), (iii) other liabilities and obligations expressly disclosed in the
other Schedules to this Agreement and (iv) obligations under contract not
required to be disclosed on the Contracts Schedule.
------------------
-20-
6I. No Material Adverse Change. Except as set forth on the attached
--------------------------
"Adverse Change Schedule," since June 30, 2000, there has been no material
-----------------------
adverse change in the financial condition, operating results, assets,
operations, business prospects, employee relations or customer or supplier
relations of the Company and its Subsidiaries taken as a whole.
6J. Absence of Certain Developments.
-------------------------------
(i) Except as expressly contemplated by this Agreement or as set
forth on the attached "Developments Schedule," since the date of the Latest
---------------------
Balance Sheet, neither the Company nor any Subsidiary has
(a) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(b) borrowed any amount or incurred or become subject to any
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary course of
business;
(c) discharged or satisfied any Lien or paid any obligation or
liability, other than current liabilities paid in the ordinary course of
business;
(d) declared or made any payment or distribution of cash or
other property to its stockholders with respect to its capital stock or other
equity securities or purchased or redeemed any shares of its capital stock or
other equity securities (including, without limitation, any warrants, options or
other rights to acquire its capital stock or other equity securities);
(e) mortgaged or pledged any of its properties or assets or
subjected them to any Lien, except for Permitted Encumbrances;
(f) sold, assigned or transferred any of its tangible assets,
except in the ordinary course of business, or canceled any debts or claims;
(g) sold, assigned or transferred any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible assets,
or disclosed any proprietary confidential information to any Person;
(h) suffered any extraordinary losses or waived any rights of
value, whether or not in the ordinary course of business or consistent with past
practice;
(i) made capital expenditures or commitments therefor that
aggregate in excess of $250,000;
-21-
(j) made any loans or advances to, guarantees for the benefit
of, or any Investments in, any Persons in excess of $50,000 in the aggregate;
(k) made any charitable contributions or pledges in excess of
$10,000 in the aggregate;
(l) suffered any damage, destruction or casualty loss exceeding
in the aggregate $100,000, whether or not covered by insurance;
(m) made any Investment in or taken steps to incorporate any
Subsidiary except for the incorporation of Wholly-Owned Subsidiaries in
connection with Acquisitions approved by the Board and the GTCR Purchasers; or
(n) entered into any other transaction other than in the
ordinary course of business or entered into any other material transaction,
whether or not in the ordinary course of business consistent with past practice.
(ii) No officer, director, employee or agent of the Company or
any of its Subsidiaries has been or is authorized to make or receive, and the
Company does not know of any such person making or receiving, any bribe,
kickback or other illegal payment.
6K. Assets. Except as set forth on the attached "Assets Schedule,"
------ ---------------
the Company and each Subsidiary have good and marketable title to, or a valid
leasehold interest in, the properties and assets used by them, located on their
premises or shown on the Latest Balance Sheet or acquired thereafter, free and
clear of all Liens, except for properties and assets disposed of in the ordinary
course of business since the date of the Latest Balance Sheet and except for
Liens disclosed on the Latest Balance Sheet (including any notes thereto) and
Permitted Encumbrances. Except as described on the Assets Schedule, the
---------------
Company's and each Subsidiary's buildings, equipment and other tangible assets
are in good operating condition in all material respects and are fit for use in
the ordinary course of business. The Company and each Subsidiary own, or have a
valid leasehold interest in, all assets necessary for the conduct of their
respective businesses as presently conducted and as presently proposed to be
conducted.
6L. Real Property.
-------------
(a) Owned Properties. The "Owned Real Property Schedule" attached
---------------- ----------------------------
hereto sets forth a list of all owned real property (the "Owned Real Property")
-------------------
used by the Company or any of it Subsidiaries in the operation of the Company's
or any of it Subsidiaries' business. With respect to each such parcel of Owned
Real Property and except for Liens in favor of the Senior Lenders: (i) such
parcel is free and clear of all covenants, conditions, restrictions, easements,
liens or other encumbrances, except Permitted Encumbrances; (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or oral,
granting to any person the right of use or
-22-
occupance of any portion of such parcel; and (iii) there are no outstanding
actions or rights of first refusal to purchase such parcel, or any portion
thereof or interest therein.
(b) Leased Properties. The "Leased Property Schedule" attached
----------------- ------------------------
hereto sets forth a list of all of the leases and subleases ("Leases") and each
------
leased and subleased parcel of real property in which the Company or any of it
Subsidiaries have a leasehold and subleasehold interest (the "Leased Real
-----------
Property"). With respect to each Lease listed on the Leased Property Schedule:
-------- ------------------------
(i) the Lease is legal, valid, binding, enforceable and in full force and
effect; (ii) the Lease will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the Closing; (iii)
neither the Company nor any of its Subsidiaries nor, to the best of the
Company's knowledge, any other party to the Lease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute such
a breach or default or permit termination, modification or acceleration under
the Lease; (iv) to the best of the Company's knowledge, no party to the Lease
has repudiated any provision thereof; (v) to the best of the Company's
knowledge, there are no disputes, oral agreements, or forbearance programs in
effect as to the Lease; (vi) the Lease has not been modified in any respect,
except to the extent that such modifications are disclosed in the Leased
------
Property Schedule; and (vii) neither the Company nor any of its Subsidiaries has
-----------------
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the Lease.
(c) Real Property Disclosure. Except as disclosed in the Owned Real
------------------------ ----------
Property Schedule and the Leased Property Schedule, there is no Real Property
----------------- ------------------------
leased or owned by the Company or any of it Subsidiaries used in the Company's
or any of it Subsidiaries' business.
6M. Tax Matters.
-----------
(a) Except as set forth on the attached "Taxes Schedule": the
--------------
Company, each Subsidiary and each Affiliated Group have filed all Tax Returns
which they are required to file under applicable laws and regulations; all such
Tax Returns are complete and correct in all material respects and have been
prepared in compliance with all applicable laws and regulations in all material
respects; the Company, each Subsidiary and each Affiliated Group in all material
respects have paid all Taxes due and owing by them (whether or not such Taxes
are required to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, stockholder, creditor or other third
party; neither the Company, any Subsidiary nor any Affiliated Group has waived
any statute of limitations with respect to any Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency; the accrual for Taxes
on the Latest Balance Sheet would be adequate to pay all Tax liabilities of the
Company and its Subsidiaries if their current tax year were treated as ending on
the date of the Latest Balance Sheet (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income); since
the date of the Latest Balance Sheet, the Company and its Subsidiaries have not
incurred any liability for Taxes other than in the ordinary course of business;
the assessment of any additional Taxes for periods for which Tax Returns have
been filed by the Company, each Subsidiary and each Affiliated Group shall not
exceed the recorded liability therefor on the Latest Balance Sheet (excluding
any amount recorded which
-23-
is attributable solely to timing differences between book and Tax income); the
federal income Tax Returns of the Company and its Subsidiaries have been audited
and closed for all tax years through 1998; to the best of the Company's
knowledge, no foreign, federal, state or local tax audits or administrative or
judicial proceedings are pending or being conducted with respect to the Company,
any Subsidiary or any Affiliated Group; no information related to Tax matters
has been requested by any foreign, federal, state or local taxing authority; no
written notice indicating an intent to open an audit or other review has been
received by the Company from any foreign, federal, state or local taxing
authority; and there are no material unresolved questions or claims concerning
the Company's, any Subsidiary's or any Affiliated Group Tax liability.
(b) Neither the Company nor any of its Subsidiaries has made an
election under (S)341(f) of the Internal Revenue Code of 1986, as amended.
Neither the Company nor any Subsidiary is liable for the Taxes of another Person
that is not a Subsidiary in a material amount under (a) Treas. Reg. (S) 1.1502-6
(or comparable provisions of state, local or foreign law), (b) as a transferee
or successor, (c) by contract or indemnity or (d) otherwise. Neither the Company
nor any Subsidiary is a party to any tax sharing agreement. The Company, each
Subsidiary and each Affiliated Group have disclosed on their federal income Tax
Returns any position taken for which substantial authority (within the meaning
of IRC (S)6662(d)(2)(B)(i)) did not exist at the time the return was filed.
Neither the Company nor any Subsidiary has made any payments, is obligated to
make payments or is a party to an agreement that could obligate it to make any
payments that would not be deductible under IRC (S)280G.
6N. Contracts and Commitments.
-------------------------
(i) Except as expressly contemplated by this Agreement or as set
forth on the attached "Contracts Schedule" or the attached "Employee Benefits
------------------ -----------------
Schedule," neither the Company nor any Subsidiary is a party to or bound by any
--------
written or oral:
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or arrangement, or
any collective bargaining agreement or any other contract with any labor union,
or severance agreements, programs, policies or arrangements;
(b) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $75,000 or contract relating to loans
to officers, directors or Affiliates;
(c) contract under which the Company or Subsidiary has advanced
or loaned any other Person amounts in the aggregate exceeding $100,000;
(d) agreement or indenture relating to borrowed money or other
Debt or the mortgaging, pledging or otherwise placing a Lien on any material
asset or material group of assets of the Company and its Subsidiaries;
-24-
(e) guarantee of any obligation in excess of $100,000 (other than by
the Company of a Wholly-Owned Subsidiary's debts or a guarantee by a Subsidiary
of the Company's debts or another Subsidiary's debts);
(f) lease or agreement under which the Company or any Subsidiary is
lessee of or holds or operates any property, real or personal, owned by any
other party, except for any lease of real or personal property under which the
aggregate annual rental payments do not exceed $100,000;
(g) lease or agreement under which the Company or any Subsidiary is
lessor of or permits any third party to hold or operate any property, real or
personal, owned or controlled by the Company or any Subsidiary;
(h) assignment, license, indemnification or agreement with respect to
any intangible property (including, without limitation, any Intellectual
Property);
(i) warranty agreement with respect to its services rendered or
its products sold or leased;
(j) agreement under which it has granted any Person any registration
rights (including, without limitation, demand and piggyback registration
rights);
(k) sales, distribution or franchise agreement;
(l) contract, agreement or other arrangement with any officer,
director, stockholder, employee or Affiliate, or any Affiliate of any officer,
director, stockholder or employee;
(m) contract or agreement prohibiting it from freely engaging in any
business or competing anywhere in the world; or
(n) contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves consideration in
excess of $200,000; or agreement with a term of more than six months which is
not terminable by the Company or any Subsidiary upon less than 30 days notice
without penalty.
(ii) All of the contracts, agreements and instruments set forth on
the Contracts Schedule are valid, binding and enforceable in accordance with
------------------
their respective terms in all material respects. The Company and each Subsidiary
have performed all material obligations required to be performed by them and are
not in default under or in breach of nor in receipt of any claim of default or
breach under any material contract, agreement or instrument to which the Company
or any Subsidiary is subject; no event has occurred which with the passage of
time or the giving of notice or both would result in a default, breach or event
of noncompliance by the Company or any Subsidiary under any material contract,
agreement or instrument to which the Company or
-25-
any Subsidiary is subject and; neither the Company nor any Subsidiary has any
present expectation or intention of not fully performing all such obligations;
neither the Company nor any Subsidiary has knowledge of any breach or
anticipated breach by the other parties to any material contract, agreement,
instrument or commitment to which it is a party.
6O. Intellectual Property Rights.
----------------------------
(a) The attached "Intellectual Property Schedule" contains a
------------------------------
complete and accurate list of all (i) patented or registered Intellectual
Property Rights owned or used by the Company or any Subsidiary, (ii) pending
patent applications and applications for registrations of other Intellectual
Property Rights filed by the Company or any Subsidiary, (iii) unregistered trade
names and corporate names owned or used by the Company or any Subsidiary and
(iv) unregistered trademarks, service marks, copyrights, mask works and computer
software owned or used by the Company or any Subsidiary, in each case which are
material to the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole. The
Intellectual Property Schedule also contains a complete and accurate list of all
------------------------------
licenses and other rights granted by the Company or any Subsidiary to any third
party with respect to any Intellectual Property Rights and all licenses and
other rights granted by any third party to the Company or any Subsidiary with
respect to any Intellectual Property Rights, in each case identifying the
subject Intellectual Property Rights. Except as set forth on the Intellectual
------------
Property Schedule, the Company or one of its Subsidiaries owns all right, title
-----------------
and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the businesses of
the Company and its Subsidiaries as presently conducted and as presently
proposed to be conducted, free and clear of all Liens. The loss or expiration of
any Intellectual Property Right or related group of Intellectual Property Rights
owned or used by the Company or any Subsidiary has not had and would not
reasonably be expected to have a Material Adverse Effect, and no such loss or
expiration is, to the best of the Company's knowledge, threatened, pending or
reasonably foreseeable. The Company and its Subsidiaries have taken all
reasonably necessary and desirable actions to maintain and protect the
Intellectual Property Rights which they own. To the best of the Company's
knowledge, the owners of any Intellectual Property Rights licensed to the
Company or any Subsidiary have taken all reasonably necessary and desirable
actions to maintain and protect the Intellectual Property Rights which are
subject to such licenses.
(b) (i) The Company and its Subsidiaries own all right, title
and interest in and to all of the Intellectual Property Rights listed on such
schedule, free and clear of all Liens, (ii) there have been no claims made
against the Company or any Subsidiary asserting the invalidity, misuse or
unenforceability of any of such Intellectual Property Rights, and, to the best
of the Company's knowledge, there are no grounds for the same, (iii) neither the
Company nor any Subsidiary has received any notices of, and is not aware of any
facts which indicate a likelihood of, any infringement or misappropriation by,
or conflict with, any third party with respect to such Intellectual Property
Rights (including, without limitation, any demand or request that the Company or
any Subsidiary license any rights from a third party), (iv) the conduct of the
Company's and each Subsidiary's business has not infringed, misappropriated or
conflicted with and does not infringe,
-26-
misappropriate or conflict with any Intellectual Property Rights of other
Persons, nor would any future conduct as presently contemplated infringe,
misappropriate or conflict with any Intellectual Property Rights of other
Persons and (v) to the best of the Company's knowledge, the Intellectual
Property Rights owned by or licensed to the Company or any Subsidiary have not
been infringed, misappropriated or conflicted by other Persons. The transactions
contemplated by this Agreement shall have no material adverse effect on the
Company's or any Subsidiary's right, title and interest in and to the
Intellectual Property Rights listed on the Intellectual Property Schedule.
------------------------------
6P. Litigation, etc. Except as set forth on the attached "Litigation
--------------- ----------
Schedule," there are no actions, suits, proceedings, orders, investigations or
--------
claims pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Subsidiary (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors or employees of the Company and its Subsidiaries with respect to their
businesses or proposed business activities), or pending or threatened by the
Company or any Subsidiary against any third party, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); neither the Company nor any Subsidiary is subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to the best
of the Company's knowledge, any governmental investigations or inquiries
(including, without limitation, inquiries as to the qualification to hold or
receive any license or permit); and, to the best of the Company's knowledge,
there is no basis for any of the foregoing. Neither the Company nor any
Subsidiary is subject to any judgment, order or decree of any court or other
governmental agency, and neither the Company nor any Subsidiary has received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any liability or disadvantage which may
be material to its business.
6Q. Brokerage. There are no claims for brokerage commissions,
---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company or any Subsidiary. The Company shall pay, and hold the
Purchasers harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim.
6R. Governmental Consent, etc. No permit, consent, approval or
-------------------------
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as set forth on the attached "Consents Schedule" and except as
-----------------
expressly contemplated herein or in the exhibits hereto.
6S. Insurance. The attached "Insurance Schedule" contains a
--------- ------------------
description of each insurance policy maintained by the Company and its
Subsidiaries with respect to its properties, assets
-27-
and businesses, and each such policy is in full force and effect as of the
Closing. Neither the Company nor any Subsidiary is in default with respect to
its obligations under any insurance policy maintained by it, and neither the
Company nor any Subsidiary has been denied insurance coverage. Except as set
forth on the Insurance Schedule, the Company and its Subsidiaries do not have
any self-insurance or co-insurance programs, and the reserves set forth on the
Latest Balance Sheet are adequate to cover all anticipated liabilities with
respect to any such self-insurance or co-insurance programs.
6T. Employees. The Company is not aware that any of the persons set
---------
forth in the "Key Employees Schedule" hereto has any plans to terminate
----------------------
employment with the Company or any Subsidiary. The Company and each Subsidiary
have complied in all material respects with all laws relating to the employment
of labor (including, without limitation, provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes), and the Company is not aware that it or any
Subsidiary has any material labor relations problems (including, without
limitation, any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Neither the Company, its Subsidiaries
nor, to the best of the Company's knowledge, any of their employees is subject
to any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present or
proposed business activities of the Company and its Subsidiaries, except for
agreements between the Company and its present and former employees.
6U. Employee Benefit Plans.
----------------------
(a) The attached Employee Benefits Schedule sets forth an accurate
--------------------------
and complete list of each employee benefit plan (as such term is defined in
Section 3(3) of ERISA), and any other bonus, deferred compensation, incentive
compensation, stock, severance or other plan or arrangement, other than a non-
material fringe benefit plan (each of the foregoing, a "Benefit Plan"),
------------
currently maintained or contributed to by the Company and its Subsidiaries or
with respect to which the Company and its Subsidiaries have or may have any
material liability.
(b) None of the Benefit Plans is subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code or Section 302 of ERISA.
No underfunded defined benefit plan has been, during the five years preceding
the August 2000 Closing Date, transferred out of the Company's Controlled Group.
(c) None of the Benefits Plans is a multiemployer plan (as defined in
Section 3(37) of ERISA).
(d) None of the Benefit Plans provides for medical or life insurance
benefits to current or future retired or former employees of the Company or any
Subsidiary beyond their retirement or other termination of service (other than
as required under Section 4980B of the Code or applicable state law).
-28-
(e) None of the Benefit Plans obligates the Company or any Subsidiary
to pay any severance or similar benefit solely as a result of a change in
control or ownership within the meaning of Section 280G of the Code.
(f) All required contributions to date by the Company or any
Subsidiary under the terms of any Benefit Plan or applicable law have been made
within the time prescribed by any such plan or applicable law or properly
accrued on the appropriate balance sheet. All contributions, premiums and
expenses payable to or in respect of any Benefit Plan or the operation or
administration thereof relating to any period on or prior to the date hereof
have been paid or properly accrued on the appropriate balance sheet. No
material liability has been assessed or is expected to be incurred by the
Company or any Subsidiary or any trade or business, whether or not incorporated,
which is or would have been at any date of determination occurring within the
preceding six years treated as a single employer under Section 414 of the Code
together with the Company or the Subsidiaries (each such person, a "Related
-------
Person") (either directly or indirectly, including as a result of an
------
indemnification obligation or any joint and several liability obligations) under
or pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans, and
no event, transaction or condition has occurred or exists that could result in
any material liability to the Purchasers, the Company, any Subsidiary or any
Related Person or any employee benefit plan of the Company, any Subsidiary or
any Related Person. No actions, suits, investigations or claims with respect to
any Benefit Plan (other than routine claims for benefits) are pending or, to the
knowledge of the Company, threatened, which could reasonably be expected to
result in liability to the Company or any Subsidiary.
(g) Each of the Benefit Plans has been administered in accordance
with its terms in all material respects and is in compliance in all material
respects with applicable laws and regulations including, without limitation,
ERISA and the Code.
(h) Each of the Benefit Plans which is intended to be a qualified
plan within the meaning of Section 401(a) of the Code and the trust forming a
part thereof has received a favorable determination letter from the IRS to be so
qualified and to the extent that each such trust is exempt from taxation under
section 501(a) of the Code, and, to the knowledge of the Company, nothing has
occurred since the date of such determination that could adversely affect such
qualification or tax-exempt status.
6V. Compliance with Laws. Neither the Company nor any Subsidiary has
--------------------
violated any law or any governmental regulation or requirement which violation
has had or would reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any Subsidiary has received notice of any such
violation.
6W. Environmental and Safety Matters.
--------------------------------
Except as set forth on the attached "Environmental Schedule":
----------------------
-29-
(a) The Company and its Subsidiaries have complied with and are
currently in compliance with all Environmental and Safety Requirements, and
neither the Company nor its Subsidiaries have received any oral or written
notice, report or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) or any corrective,
investigatory or remedial obligations arising under Environmental and Safety
Requirements which relate to the Company or its Subsidiaries or any of their
properties or facilities that has not been complied with.
(b) Without limiting the generality of the foregoing, the Company and
its Subsidiaries have obtained and complied with, and are currently in
compliance with, all material, permits, licenses and other authorizations that
may be required pursuant to any Environmental and Safety Requirements for the
occupancy of their properties or facilities or the operation of their
businesses. A list of all such permits, licenses and other authorizations is
set forth on the attached Environmental Schedule.
----------------------
(c) Neither this Agreement nor the consummation of the transactions
con templated by this Agreement shall impose any obligations on the Company and
its Subsidiaries or otherwise for site investigation or cleanup, or notification
to or consent of any government agencies or third parties under any
Environmental and Safety Requirements (including, without limitation, any so
called "transaction-triggered" or "responsible property transfer" laws and
regulations).
(d) To the best of the Company's knowledge, none of the following
exists at any property or facility owned, occupied or operated by the Company or
any of its Subsidiaries if the existence of same would violate Environmental
Laws:
(i) underground storage tanks or surface impoundments;
(ii) asbestos-containing materials in any form or condition; or
(iii) materials or equipment containing polychlorinated
biphenyls.
(e) Neither the Company nor any of its Subsidiaries has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or Released any substance (including, without limitation, any hazardous
substance) or owned, occupied or operated any facility or property, so as to
give rise to liabilities of the Company or its Subsidiaries pursuant to
Environmental and Safety Requirements (including, without limitation, any
liability for response costs, natural resource damages or attorneys fees
pursuant to CERCLA).
(f) Neither the Company nor any of its Subsidiaries has, either
expressly or by operation of law, assumed or undertaken any liability or
corrective, investigatory or remedial obligation of any other Person relating to
any Environmental and Safety Requirements.
(g) No Environmental Lien has attached to any property owned, leased
or operated by the Company or any of its Subsidiaries.
-30-
6X. Affiliated Transactions. Other than each Purchaser and its
-----------------------
Affiliates, except as set forth on the attached "Affiliated Transactions
-----------------------
Schedule," no officer, director, employee, or Affiliate of the Company or any
--------
Subsidiary or any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Company or any Subsidiary or has any material interest in
any material property used by the Company or any Subsidiary.
6Y. Real Property Holding Corporation Status. Since its date of
----------------------------------------
incorporation, the Company has not been, and as of the date of the Closing shall
not be, a "United States real property holding corporation", as defined in
Section 897(c)(2) of the Code, and in Section 1.897-2(b) of the Treasury
Regulations issued thereunder. The Company has no current plans or intentions
which would cause the Company to become a "United States real property holding
company," and the Company has filed with the Internal Revenue Service all
statements, if any, with its United States income tax returns which are required
under Section 1.897-2(h) of the Treasury Regulations.
6Z. Customers and Suppliers.
-----------------------
(a) The attached "Customer Schedule" lists the 10 largest
-----------------
customers of the Company (on a consolidated basis) for each of the two most
recent Fiscal Years and sets forth opposite the name of each such customer the
percentage of consolidated net sales attributable to such customer. The Customer
--------
Schedule also lists any additional current customers which the Company
--------
anticipates shall be among the 10 largest customers for the current Fiscal Year.
(b) Since the date of the Latest Balance Sheet, no material
supplier of the Company or any Subsidiary has indicated that it shall stop, or
materially decrease the rate of, supplying materials, products or services to
the Company or any Subsidiary, and no customer listed on the Customer Schedule
-----------------
has indicated that it shall stop, or materially decrease the rate of, buying
materials, products or services from the Company or any Subsidiary.
6AA. Reports with the Securities and Exchange Commission. The
---------------------------------------------------
Company's annual report on Form 10-K for its three most recent Fiscal Years, all
other reports or documents required to be filed by the Company pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act since the filing of the
most recent annual report on Form 10-K and its most recent annual report to its
stockholders do not contain any material false statements or any misstatement of
any material fact and do not omit to state any fact necessary to make the
statements set forth therein not misleading. The Company has made all filings
with the Securities and Exchange Commission which it is required to make, and
the Company has not received any request from the Securities and Exchange
Commission to file any amendment or supplement to any of the reports described
in this paragraph.
6BB. Investment Company. The Company is not an "investment company"
------------------
as defined under the Investment Company Act of 1940.
-31-
6CC. Section 203 of the DGCL; Takeover Statute. The Board of Directors
-----------------------------------------
has taken all actions necessary or advisable so that the restrictions contained
in Section 203 of the Delaware General Corporate Law ("DGCL") applicable to a
----
"business combination" (as defined in such Section) will not apply to the
execution, delivery or performance of this Agreement or any of the other
Documents or the consummation of the transactions contemplated hereby or
thereby, including the issuance of the Series C Preferred, the Series D
Preferred, the Series E Preferred, the Warrants and all New Series of Preferred
Stock. The execution, delivery and performance of this Agreement or any of the
other Documents and the consummation of the transactions contemplated hereby or
thereby will not cause to be applicable to the Company any "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover statute
or regulation enacted under state or federal laws.
6DD. Rights Agreement. The Rights Agreement has been amended to
----------------
provide that the GTCR Purchasers and GTCR Capital Partners, L.P. and their
respective Affiliates shall be an "Exempt Person" (and therefore not an
-------------
"Acquiring Person") under such plan and that the Rights Agreement is otherwise
----------------
inapplicable to the execution and delivery of this Agreement, the other
Documents and the transactions contemplated hereby and thereby, including the
issuance of the Series C Preferred, the Series D Preferred, the Series E
Preferred, the Warrants and all issuances of New Series of Preferred Stock. No
"Distribution Date" has occurred within the meaning of the Rights Agreement, and
-----------------
the consummation of the transactions contemplated hereby and by the other
Documents will not result in the occurrence of a Distribution Date. The Company
has taken all action required to render the Rights Agreement (and the "Rights"
------
thereunder) inapplicable to this Agreement, the other Documents and the
transactions contemplated hereby and thereby.
6EE. Purchaser Warrants. The Company has granted to each Purchaser,
------------------
on the date hereof, a Purchaser Warrant.
6FF. Disclosure. All information heretofore or contemporaneously
----------
herewith furnished in writing by the Company or any Subsidiary to any Purchaser
for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to any Purchaser pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Purchasers that (a) any projections
and forecasts provided by the Company are based on good faith estimates and
assumptions believed by the Company to be reasonable as of the date of the
applicable projections or assumptions and that actual results during the period
or periods covered by any such projections and forecasts will likely differ from
projected or forecasted results and (b) any information provided by the Company
or any Subsidiary with respect to any Person or assets acquired or to be
acquired by the Company or any Subsidiary shall, for all periods prior to the
date of such acquisition, be limited to the knowledge of the Company or the
acquiring Subsidiary after reasonable inquiry). There is no fact known to the
Company which the Company has not disclosed to the Purchasers in writing and of
which any of its officers, directors or executive employees is aware (other than
general
-32-
economic and industry conditions) and which has had or would reasonably be
expected to have a Material Adverse Effect.
On the August 2000 Closing Date and the date of each Subsequent Closing, or at
any other time at which the Company or its Subsidiaries is required to make
representations and warranties hereunder, each representation and warranty shall
be made after giving effect to each purchase of Preferred Stock hereunder, each
borrowing under the Subordinated Loan Agreement and under the Credit Agreement
and the application of the proceeds therefrom including the acquisition of Bio
Gro or any other Acquisition as if such acquisition had at that time been made.
Without limiting the foregoing, to the extent representations and warranties are
being made in connection with a purchase of Preferred Stock the proceeds of
which will be used to consummate an Acquisition, the Company's "Subsidiaries" in
such representations and warranties shall include the entities and businesses
being acquired pursuant to such Acquisition.
The Company shall have the right to supplement and amend the Schedules to this
Agreement with respect to events occurring after the date of this Agreement,
which such new event, when scheduled, shall not constitute a breach hereof;
provided that any such amendment or supplement shall be approved by the Majority
--------
Holders and shall be in a form satisfactory to the Majority Holders; and further
-------
provided that no such amendment or supplement shall cure a breach hereunder.
--------
Section 7. Definitions. For the purposes of this Agreement, the
-----------
following terms have the meanings set forth below:
"Acquisition Loans" has the meaning set forth in the Credit Agreement.
-----------------
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise. For purposes of this Agreement, all
holdings of Preferred Stock by Persons who are Affiliates of each other shall be
aggregated for purposes of meeting any threshold tests under this Agreement.
"Affiliated Group" means any affiliated group as defined in IRC
----------------
(S)1504 that has filed a consolidated return for federal income tax purposes (or
any similar group under state, local or foreign law) for a period during which
the Company or any of its Subsidiaries was a member.
"August 2000 Closing Date" means the date of the August 2000 Closing.
------------------------
"Baltimore Bonds" means the $58,550,000 Limited Obligation Solid
---------------
Waste Disposal Revenue Bonds (Wheelabrator Water Technologies Baltimore L.L.C.
Projects), 1996 Series.
-33-
"Bio Gro" means Wheelabrator Water Technologies, Inc., a Maryland
-------
corporation, and Residuals Processing, Inc., a California corporation, and each
of their respective Subsidiaries.
"Bio Gro Acquisition Agreement" means the Stock Purchase Agreement,
-----------------------------
dated as of April 28, 2000, by and among Resco Holdings, Inc., a Delaware
corporation, Waste Management Holdings, Inc., a Delaware corporation, Waste
Management, Inc., a Delaware corporation, and the Company, as amended from time
to time.
"Business Day" means any day excluding Saturday, Sunday and any day
------------
which is a legal holiday under the laws of the States of Illinois or Texas or is
a day on which banking institutions located in Chicago, Illinois or Houston,
Texas are authorized or required by law or other governmental action to close.
"Capital Lease" means, with respect to any Person, any lease of (or
-------------
other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.
"Cash Equivalent Investment" means, at any time, (a) any evidence of
--------------------------
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by a Bank or its holding company) rated at
least A-l by Standard & Poor's Ratings Group or P-l by Xxxxx'x Investors
Service, Inc., (c) any certificate of deposit (or time deposits represented by
such certificates of deposit) or bankers acceptance, maturing not more than one
year after such time, or overnight Federal Funds transactions that are issued or
sold by a commercial banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of not less
than $500,000,000, (d) any repurchase agreement entered into with any Bank (or
other commercial banking institution of the stature referred to in clause (c))
----------
which (i) is secured by a fully perfected security interest in any obligation of
the type described in any of clauses (a) through (c) and (ii) has a market value
----------- ---
at the time such repurchase agreement is entered into of not less than 100% of
the repurchase obligation of such Bank (or other commercial banking institution)
thereunder and (e) investments in short-term asset management accounts offered
by any Bank for the purpose of investing in loans to any corporation (other than
the Company or an Affiliate of the Company), state or municipality, in each case
organized under the laws of any state of the United States or of the District of
Columbia.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended, or any other Environmental and Safety
Requirements.
"Certificates of Designation" means, collectively, the Series C
---------------------------
Certificate of Designations, the Series D Certificate of Designations, the
Series E Certificate of Designation and, once they have been filed with the
Delaware Secretary of State, all New Series Certificates of Designation.
-34-
"Closing" means, collectively, the August 2000 Closing and each
-------
Subsequent Closing.
"Controlled Group" means all members of a controlled group of
----------------
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
"Credit Agreement" means the Second Amended and Restated Credit
----------------
Agreement, dated as of the date hereof, by and among the Company, various
financial institutions (together with their respective successors and assigns
(the "Senior Lenders") and Bank of America, N.A., individually and as
--------------
administrative agent for the Senior Lenders, and related documents pursuant to
which the Senior Lenders have extended term and revolving loans to the Company
and its Subsidiaries on a senior secured basis, together with any schedules,
exhibits, appendices or other attachments thereto, as such agreement may be
amended, restated, extended, renewed, supplemented, refinanced, replaced or
otherwise modified from time to time (including, without limitation, by
increasing the amount of available borrowings thereunder or adding any direct or
indirect Subsidiaries of the Company as additional borrowers or guarantors
thereunder) and whether by the same or any other agent, lender or group of
lenders.
"Credit Documents" means, collectively, the Credit Agreement, the
----------------
related security agreements, guarantees, pledge agreements, notes and the other
documents executed in connection therewith, the Intercreditor Agreement, and
each other document or instrument executed by the Company, any Subsidiary of the
Company or any other obligor under any such documents, including any schedules,
exhibits, appendices or other attachments thereto.
"Debt" of any Person means, without duplication, (a) all indebtedness
----
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such Person as
lessee under Capital Leases which have been or should be recorded as liabilities
on a balance sheet of such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such indebtedness, the
amount of the Debt of such Person in connection therewith shall be limited to
the lesser of the face amount of such indebtedness or the fair market value of
all property of such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person (including the letters of credit), (f) all Hedging Obligations of
such Person, (g) all Suretyship Liabilities of such Person, (h) all Debt of any
partnership in which such Person is a general partner, and (i) all Disqualified
Stock. The amount of any Person's Debt in respect of any obligation to pay the
deferred purchase price of property or services where such obligation (including
any such obligation evidenced by a note or similar instrument) is contingent
upon sales, revenues, the
-35-
achievement of a particular business goal or any similar test shall be the
maximum amount which (at any date of determination) is reasonably expected to be
paid in respect of such obligation as estimated by the Company (subject to the
approval of the GTCR Purchasers, which shall not be unreasonably withheld).
"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Disqualified Stock" means any preferred capital stock issued by the
------------------
Company and its Subsidiaries which, by the terms thereof, could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration prior to the Maturity Date, other
than preferred capital stock (a) which is issued in connection with a Public
Offering or Sale of the Company, (b) which by its terms does not require
mandatory sinking fund payments, redemption or other acceleration prior to the
Maturity Date unless the loans under the Subordinated Loan Agreement have been
paid in full or (c) which is issued pursuant to or in connection with the
Documents.
"Documents" means this Agreement, the Credit Documents, the
---------
Subordinated Loan Documents, the GTCR Fund VII Warrant Agreement, the Bio Gro
Acquisition Agreement, the GTCR Warrant Agreement, the TCW Warrant Agreement,
the Warrants, the Registration Agreement, the Stockholders Agreement, the
Monitoring Agreement, the Professional Services Agreement and all documents,
certificates and agreements delivered with respect thereto, in each case,
together with any schedules, exhibits, appendices or other attachments thereto.
"Environmental Claims" means all claims, however asserted, by any
--------------------
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release of Hazardous Substances or injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed and enforceable duties, licenses, authorizations
and permits of, and agreements with, any governmental authority, in each case
relating to environmental matters.
"Environmental Lien" shall mean any Lien, whether recorded or
------------------
unrecorded, in favor of any governmental entity, relating to any liability of
the Company or any Subsidiary arising under any Environmental and Safety
Requirements.
"Environmental and Safety Requirements" shall mean all federal, state,
-------------------------------------
local and foreign statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including, without limitation, all those relating
to the presence, use,
-36-
production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened
Release, control or cleanup of any hazardous or otherwise regulated materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation).
"EPIC" means Environmental Protection & Improvement Co., a New Jersey
----
corporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, or any successor statute.
"Event of Default" has the meaning set forth in Section 7 of the
---------------- ---------
Subordinated Loan Agreement.
"Event of Noncompliance" has the meaning set forth in the Series D
----------------------
Certificate of Designations.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
--------------
"Fiscal Year" means the fiscal year of the Company and its
-----------
Subsidiaries, which period shall be the 12-month period ending on December 31 of
each year. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1999") refer to the Fiscal Year ending on
December 31 of such calendar year.
"Funding Letter" means the letter agreement, dated as of August 11,
--------------
2000, by and among GTCR Fund VII and Bank of America, N.A., as agent, entered
into in connection with the Credit Agreement.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"GTCR Warrant Agreement" means the Amended and Restated GTCR Warrant
----------------------
Agreement, dated as of the date of this Agreement, by and between the Initial
Lender and the Company, as amended from time to time.
"Hazardous Substances" means any hazardous waste, as defined by 42
--------------------
U.S.C. (S)6903(5), any hazardous substance as defined by 42 U.S.C. (S)9601(14),
any pollutant or contaminant
-37-
as defined by 42 U.S.C. (S)9601(33) or any toxic substance, oil or hazardous
material or other chemical or substance regulated by any Environmental Law,
excluding household hazardous waste.
"Hedging Obligations" means, with respect to any Person, all
-------------------
liabilities of such Person under interest rate, currency and commodity swap
agreements, cap agreements and collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates, currency exchange rates or commodity prices.
"Intercreditor Agreement" has the meaning set forth in the
-----------------------
Subordinated Loan Agreement.
"Intellectual Property Rights" means all (i) patents, patent
----------------------------
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Lien" means, with respect to any Person, any interest granted by such
----
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
"Initial Lender" means GTCR Capital Partners, L.P., a Delaware limited
--------------
partnership.
"Investor Preferred" means (i) the Preferred Stock issued hereunder
------------------
(including, without limitation, pursuant to Section 1C, the GTCR Fund VII
----------
Warrant Agreement and the Purchaser Warrants) and (ii) any Preferred Stock
issued or issuable with respect to the Preferred Stock referred to in clause (i)
above by way of stock dividends or stock splits or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares of Investor Preferred, such shares
shall cease to be Investor Preferred when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar rule then in force).
-38-
"Investment" means, relative to any Person, (a) any loan or advance
----------
made by such Person to any other Person (excluding any commission, travel or
similar advances made to directors, officers and employees of the Company or any
of its Subsidiaries), (b) any Suretyship Liability of such Person, (c) any
ownership or similar interest held by such Person in any other Person and (d)
deposits and the like relating to prospective acquisitions of businesses.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
reference to any particular IRC Section shall be interpreted to include any
revision of or successor to that Section regardless of how numbered or
classified.
"Lenders" means, collectively, GTCR Capital Partners, L.P. and the
-------
TCW/Crescent Lenders.
"Majority Holders" means the holders of a majority of the Investor
----------------
Preferred.
"Material Adverse Effect" means a material adverse change in, or a
-----------------------
material adverse effect on, (a) the business, assets, property, operations,
results, prospects or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement or any of the other Documents or the rights or remedies, taken as a
whole, of the Purchasers thereunder.
"Maturity Date" has the meaning set forth in the Subordinated Loan
-------------
Agreement.
"Monitoring Agreement" means that certain Amended and Restated
--------------------
Monitoring Agreement, dated as of the date hereof, between the Company, the
TCW/Crescent Lenders and GTCR Xxxxxx Xxxxxx, L.L.C., as amended from time to
time.
"Multiemployer Pension Plan" means a multiemployer plan, as such term
--------------------------
is defined in Section 4001(a)(3) of ERISA, and to which the Company or any
------------------
member of the Controlled Group may have any liability.
"Officer's Certificate" means a certificate signed by the Company's
---------------------
president or its chief financial officer on behalf of the Company, stating that
(i) the Company has made or has caused to be made such investigations as are
necessary in order to verify the accuracy of the information set forth
in such certificate and (ii) to the best of the Company's knowledge,
such certificate does not misstate any material fact and does not omit
to state any fact necessary to make the certificate not misleading.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
------------
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
------------
Multiemployer Pension Plan), and to
-39-
which the Company or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
------------
years, or by reason of being deemed to be a contributing sponsor under Section
-------
4069 of ERISA.
----
"Permitted Encumbrances" means (a) statutory liens for current taxes
----------------------
or other governmental charges with respect to the Real Property not yet due and
payable or the amount or validity of which is being contested in good faith by
appropriate proceedings by the Company and for which appropriate reserves have
been established in accordance with GAAP; (b) mechanics, carriers workers,
repairers and similar statutory liens arising or incurred in the ordinary course
of business for amounts which are not delinquent and which are not, individually
or in the aggregate, material to the operation of the Company's or its
Subsidiaries' business; (c) zoning, entitlement, building and other land use
regulations imposed by governmental agencies having jurisdiction over the Real
Property which are not violated by the current use and operation of the Real
Property; and (d) covenants, conditions, restrictions, easements and other
similar matters of record affecting title to the Real Property which do not
materially impair the occupancy or use of the Real Property for the purposes for
which it is currently used in connection with the Company's or its Subsidiaries'
business.
"Permitted Refinancing Debt" means any Debt issued in exchange for, or
--------------------------
the net proceeds of which are used to refinance, renew, replace, defease or
refund the Senior Indebtedness (including, without limitation, the stated
amounts of letters of credit and all unused commitments); provided that: (1) the
-------- ----
principal amount of such Debt does not exceed the Maximum Senior Indebtedness
(including, without limitation, the stated amounts of letters of credit and all
unused commitments) at the time of such refinancing renewal, replacement,
defeasance or refunding (plus the amount of reasonable fees and expenses
incurred in connection therewith); (2) such Debt has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of the
Senior Indebtedness being refinanced, renewed, replaced, defeased or refunded
and such Debt has a final maturity equal to or greater than the Senior
Indebtedness being refinanced, renewed, replaced, defeased or refunded; (3) such
Debt is ranked superior in right of payment to the Loans on terms at least as
favorable to the holders of the Loans as those, if any, contained in the
documentation governing the Senior Indebtedness (including the Intercreditor
Agreement); (4) the annual interest rate with respect to such Debt (x) if it is
a fixed rate, it is not more than 2% per annum more than, and such interest is
payable no more frequently than, that of the Senior Indebtedness as in effect on
the date hereof and (y) if it is a variable rate, the index used for the
calculation of the annual interest rate is substantially similar to and the
margins applied to such index are not more than 2% per annum more than, and such
interest is payable no more frequently than, that of the Senior Indebtedness as
in effect on the date hereof; (5) such Debt is incurred by the Company; and (6)
such Debt satisfies the provisions of the subsection of Section 6.9(a) of the
--------------
Subordinated Loan Agreement pursuant to which the Debt being refinanced was
incurred.
-40-
"Person" means an individual, a partnership, a limited liability
------
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means, collectively, the Series D Preferred, the
---------------
Series E Preferred and each New Series.
"Professional Services Agreement" means that certain Professional
-------------------------------
Services Agreement, dated as of January 27, 2000, between the Company and GTCR
Xxxxxx Xxxxxx, L.L.C., as amended from time to time.
"Public Offering" means any offering by the Company of its capital
---------------
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"Purchaser Warrant" means each Warrant granted by the Company pursuant
-----------------
to Section 2E hereof to each Purchaser in the form of Exhibit C attached hereto.
---------- ---------
"Real Property" means the Owned Real Property and Leased Real
-------------
Property.
"Release" shall have the meaning set forth in CERCLA.
-------
"Restricted Securities" means (i) the Preferred Stock issued hereunder
---------------------
and the Purchaser Warrants issued in connection herewith, (ii) the shares of
Preferred Stock issuable upon exercise of the Purchaser Warrants and shares of
Common Stock issuable upon conversion of the Preferred Stock and (iii) any
securities issued with respect to the securities referred to in clause (i) or
(ii) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in Section 8C have been delivered by the Company
----------
in accordance with Section 5(ii). Whenever any particular securities cease to
-------------
be Restricted Securities, the holder thereof shall be entitled to receive from
the Company, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 8C.
----------
"Rhode Island Facility" means the facility and related equipment
---------------------
constructed and/or purchased for the Rhode Island Project.
"Rhode Island Non-Recourse Debt" means Debt incurred for the purpose
------------------------------
of constructing or purchasing equipment for the Rhode Island Project which is
non-recourse to the
-41-
Company and its Subsidiaries (except for customary warranties given in
connection with non-recourse Debt).
"Rhode Island Project" means the proposed project pursuant to which
--------------------
Providence Soils, LLC would develop a soil manufacturing facility for the
processing of biosolids to be located in Johnstown, Rhode Island for which a
proposal was submitted in respect to a request for proposals by the Rhode Island
Resource Recovery Corporation.
"Rights Agreement" means the Rights Agreement, dated as of December
----------------
20, 1996, between the Corporation and Intercontinental Registrar & Transfer
Agency, Inc., as Rights Agent.
"Sale of the Company" means any transaction or series of transactions
-------------------
pursuant to which any Person or group of related Persons, other than GTCR Fund
VII and its Affiliates, in the aggregate acquires (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default or breach) to elect a majority of the Company's board of
directors (whether by merger, consolidation, reorganization, combination, sale
or transfer of the Company's capital stock, shareholder or voting agreement,
proxy, power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended, or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Senior Indebtedness" means all obligations of the Company now or
-------------------
hereafter incurred pursuant to the Credit Documents, including any increase,
refinancing, refunding, renewal, extension or replacement thereof permitted
hereunder, whether for principal, premium (if any), interest, fees or expenses
payable thereon or pursuant thereto.
"Senior Lenders" is defined in the definition of Credit Agreement.
--------------
"Series A Preferred" means the Company's Series A Junior Participating
------------------
Preferred Stock, par value $.002 per share.
"Series B Preferred" means the Company's Series B Redeemable Preferred
------------------
Stock, par value $.002 per share.
-42-
"Series C Preferred" means the Company's Series C Convertible
------------------
Preferred Stock, par value $.002 per share, having the rights and preferences
set forth in the Series C Certificate of Designations.
"Series D Preferred" means the Company's Series D Convertible
------------------
Preferred Stock, par value $.002 per share, having the rights and preferences
set forth in the Series D Certificate of Designations.
"Series E Preferred" means the Company's Series E Convertible
------------------
Preferred Stock, par value $.002 per share, having the rights and preferences
set forth in the Series E Certificate of Designations.
"Series C Certificate of Designations" means the Certificate of
------------------------------------
Designations, Preferences and Rights of Series C Convertible Preferred Stock of
Synagro Technologies, Inc., approved by the Board and filed with the Secretary
of State of Delaware on January 26, 2000.
"Series D Certificate of Designations" means the Certificate of
------------------------------------
Designations, Preferences and Rights of Series D Convertible Preferred Stock of
Synagro Technologies, Inc., approved by the Board and filed with the Secretary
of State of Delaware on January 26, 2000.
"Series E Certificate of Designations" means the Certificate of
------------------------------------
Designations, Preferences and Rights of Series E Convertible Preferred Stock of
Synagro Technologies, Inc., approved by the Board and filed with the Secretary
of State of Delaware on June 14, 2000.
"Shareholders Consent" means the action on written consent approved by
--------------------
a majority of the Company's shareholders on or about January 17, 2000 approving
(a) the conversion of Series C Preferred to Series D Preferred, (b) the issuance
of the Common Stock issuable upon conversion of all of the shares of Preferred
Stock and all of the Warrant Shares, in each case whether issued on or prior to
the date hereof or in the future and (c) the amendment to Company's Restated
Certificate of Incorporation as set forth in Exhibit E to the Original Purchase
---------
Agreement.
"Subordinated Loan Agreement" means the Amended and Restated Senior
---------------------------
Subordinated Loan Agreement, dated as of the date of this Agreement, by and
among the Company, certain Subsidiary guarantors, GTCR Capital Partners, L.P.
and the TCW/Crescent Lenders, as amended from time to time.
"Subordinated Loan Documents" means, collectively, the Subordinated
---------------------------
Loan Agreement, any related notes and guaranties, including all exhibits,
schedules and other attachments thereto.
"Subsidiary" means any corporation of which the securities having a
----------
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the
Company either directly or through one or more Subsidiaries.
-43-
"Suretyship Liability" means any agreement, undertaking or arrangement
--------------------
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
"Tax" or "Taxes" means federal, state, county, local, foreign or other
--- -----
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Return" means any return, information report or filing with
----------
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
"TCW/Crescent Lenders" means, collectively, (i) TCW/Crescent Mezzanine
--------------------
Partners II, L.P., a Delaware limited partnership, (ii) TCW/Crescent Mezzanine
Trust II, a Delaware business trust, (iii) TCW Leveraged Income Trust, L.P., a
Delaware limited partnership, (iv) TCW Leveraged Income Trust II, L.P., a
Delaware limited partnership and TCW Leveraged Income Trust IV, L.P., a Delaware
limited partnership.
"TCW Warrant Agreement" means the TCW Warrant Agreement, dated as of
---------------------
the date of this Agreement, by and between the Company and the TCW/Crescent
Lenders, as amended from time to time.
"Transactions" means those transactions contemplated by the Documents.
------------
"Treasury Regulations" means the United States Treasury Regulations
--------------------
promulgated under the Code, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"Warrant Agreements" means the GTCR Warrant Agreement, the TCW Warrant
------------------
Agreement and the GTCR Fund VII Warrant Agreement.
"Warrants" means the warrants to purchase shares of Preferred Stock
--------
(the "Warrant Shares") issued by the Company to the Initial Lender and the TCW
--------------
Crescent Lenders in connection
-44-
with the making of loans under the Subordinated Loan Agreement and the Purchaser
Warrants, in each case pursuant to the applicable Warrant Agreement.
"Warrant Shares" is defined in the definition of Warrants.
--------------
"Weighted Average Life to Maturity" means, when applied to any Debt at
---------------------------------
any date, the number of years obtained by dividing (a) the sum of the products
obtained by multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (y) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (b) the then outstanding principal amount of such
Debt.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
-----------------------
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
Section 8. Miscellaneous.
-------------
8A. Expenses. The Company agrees to pay, and hold each Purchaser and
--------
all holders of Investor Preferred harmless against liability for the payment of,
(i) the reasonable fees and expenses of their counsels arising in connection
with the negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement (including, without limitation, fees
and expenses arising with respect to any subsequent purchase of Preferred Stock
pursuant to Section 1C hereof and the fees and expenses of counsel in connection
----------
with any required filings by a Purchaser under state and federal securities
laws), (ii) the reasonable fees and expenses incurred with respect to any
amendments or waivers (whether or not the same become effective) under or in
respect of this Agreement, the Registration Agreement, the Stockholders
Agreement, the Professional Services Agreement, the Monitoring Agreement, the
other agreements contemplated hereby and the Certificates of Designation, (iii)
stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
shares of Preferred Stock purchased hereunder or in accordance with Section 1C
----------
hereof, (iv) the fees and expenses incurred with respect to the interpretation
or enforcement of the rights granted under this Agreement, the Registration
Agreement, the Stockholders Agreement, the Professional Services Agreement, the
Monitoring Agreement, the other agreements contemplated hereby, the Certificates
of Designation and the Company's bylaws and (v) such reasonable travel expenses,
rating agency fees, legal fees and other out-of-pocket fees and expenses as have
been or may be incurred by each Purchaser, its Affiliates and its Affiliates'
directors, officers and employees in connection with any Company-related
financing and in connection with the rendering of any other services by a
Purchaser or its Affiliates (including, but not limited to, fees and expenses
incurred in attending board of directors or other Company-related meetings).
-45-
8B. Remedies. Each holder of Investor Preferred shall have all
--------
rights and remedies set forth in this Agreement and the Certificates of
Designation and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
8C. Purchaser's Investment Representations. Each of the GTCR
--------------------------------------
Purchasers and the TCW/Crescent Lenders hereby represents as to itself (i) that
it is acquiring the Restricted Securities purchased hereunder or acquired
pursuant hereto for its own account with the present intention of holding such
securities for purposes of investment, and that it has no intention of selling
such securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws, (ii) that it is an "accredited
investor" and a sophisticated investor for purposes of applicable U.S. federal
and state securities laws and regulations, (iii) that this Agreement and each of
the other agreements contemplated hereby constitutes (or will constitute) the
legal, valid and binding obligation of such Purchaser, enforceable in accordance
with its terms, and (iv) that the execution, delivery and performance of this
Agreement and such other agreements by such Purchaser does not and will not
violate any laws, and does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which such Purchaser is
subject. Notwithstanding the foregoing, nothing contained herein shall prevent
the Purchasers and subsequent holders of Restricted Securities from transferring
such securities in compliance with the provisions of Section 5 hereof. Each
---------
certificate for Restricted Securities shall be imprinted with a legend in
substantially the following form:
"The securities represented by this certificate were
originally issued on [date of issuance] and have not been
registered under the Securities Act of 1933, as amended. The
transfer of the securities represented by this certificate
is subject to the conditions specified in the Amended and
Restated Purchase Agreement, dated as of August 14, 2000 by
and among the issuer (the "Company") and certain investors,
and the Company reserves the right to refuse the transfer of
such securities until such conditions have been fulfilled
with respect to such transfer. A copy of such conditions
shall be furnished by the Company to the holder hereof upon
written request and without charge."
8D. Funding Letter.
--------------
(a) If GTCR Fund VII or GTCR CI are required to contribute cash to
the Company to fund a Shortfall pursuant to the Funding Letter, the TCW/Crescent
Lenders shall be obligated to contribute an amount of cash to the Company to
fund such Shortfall on a pro rata basis with GTCR Fund VII and GTCR CI based on
the proportion of Preferred Stock purchased by or issued to (including, without
limitation, issued upon exercise of a Purchaser Warrant) the
-46-
TCW/Crescent Lenders pursuant to this Agreement in relation to the
aggregate Preferred Stock purchased by or issued to (including,
without limitation, issued upon exercise of Purchaser Warrants) all of
the Purchasers pursuant to this Agreement.
(b) If a Purchaser is required to contribute cash to the Company in
connection with a Shortfall (as defined in the Funding Letter) pursuant to the
Funding Letter or Section 8D(a) hereof (in either case, a "Funding Obligation"),
------------- ------------------
the Company hereby agrees to provide a written request for such investment from
the Board to such Purchaser and such investment shall be made at a Subsequent
Closing subject to the terms and conditions set forth in this Agreement. In
addition, with respect to a Subsequent Closing in connection with a Funding
Obligation, the Company hereby agrees to use reasonable best efforts to satisfy
the conditions precedent to such Subsequent Closing. Any funds received by the
Company from the Purchasers pursuant to a contribution by them in connection
with a Funding Obligation shall be applied by the Company to repay outstanding
debt under the Credit Agreement. In connection with any Subsequent Closing in
connection with a Funding Obligation, each Purchaser purchasing Preferred Stock
at such Subsequent Closing shall be entitled to receive from the Company a
Purchaser Warrant exercisable for a number of shares of the series of Preferred
Stock to be purchased at such Subsequent Closing equal to the number of shares
of Preferred Stock to be purchased by such Purchaser at such Subsequent Closing
multiplied by 0.111.
8E. Consent to Amendments. Except as otherwise expressly provided
---------------------
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Majority Holders and, if any such amendment or action would materially and
adversely affect the TCW/Crescent Lenders in a manner different from the GTCR
Purchasers, the TCW/Crescent Lenders. No other course of dealing between the
Company and the holder of any Preferred Stock or any delay in exercising any
rights hereunder or under the Certificates of Designation shall operate as a
waiver of any rights of any such holders. For purposes of this Agreement,
shares of Preferred Stock held by the Company or any Subsidiaries shall not be
deemed to be outstanding.
8F. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive until the earlier of (i) the redemption of the Preferred
Stock and (2) a period of four (4) years from the Closing or from any subsequent
closing of additional issuances of Preferred Stock hereunder, as applicable,
regardless of any investigation made by any Purchaser or on its behalf (the
"Survivability Period").
---------------------
8G. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchasers' benefit as a
purchaser or holder of
-47-
Preferred Stock are also for the benefit of, and enforceable by, any subsequent
holder of such Preferred Stock. The rights and obligations of the GTCR
Purchasers under this Agreement and the agreements contemplated hereby may be
assigned by the GTCR Purchasers at any time, in whole or in part, to any
investment fund managed by GTCR Xxxxxx Xxxxxx, L.L.C., or any successor thereto.
The rights and obligations of the TCW/Crescent Lenders under this Agreement and
the agreements contemplated hereby may not be assigned, except to their
Affiliates, without the prior written consent of the GTCR Purchasers.
8H. Generally Accepted Accounting Principles. Where any accounting
----------------------------------------
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with GAAP, consistently applied, except that if
because of a change in GAAP the Company would have to alter a previously
utilized accounting method or policy in order to remain in compliance with GAAP,
such determination or calculation shall continue to be made in accordance with
the Company's previous accounting methods and policies.
8I. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
8J. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
8K. Entire Agreement. This Agreement, those documents expressly
----------------
referred to herein and other documents of even date herewith embody the complete
agreement among the parties and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
8L. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
8M. Governing Law. The corporate law of Delaware shall govern all
-------------
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
-48-
8N. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and delivered personally, mailed by certified or registered mail,
return receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
If to the Company:
-----------------
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
With a copy to:
--------------
Xxxxx Liddell & Xxxx LLP
3400 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
If to the Purchasers:
--------------------
GTCR Fund VII, L.P.
c/o GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
and
TCW/Crescent Mezzanine Partners II, L.P.
TCW/Crescent Mezzanine Trust II
TCW Leveraged Income Trust, L.P.
TCW Leveraged Income Trust II, L.P.
TCW Leveraged Income Trust IV, L.P.
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
-49-
Telecopier: (000) 000-0000
With a copy to:
--------------
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
and
Gardere & Xxxxx, L.L.P.
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that, the failure to deliver copies of notices as indicated above
-------- ----
shall not affect the validity of any notice. Any such communication shall be
deemed to have been received (i) when delivered, if personally delivered or sent
by nationally recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
8O. Indemnification.
---------------
(a) General. In consideration of each Purchaser's execution and
-------
delivery of this Agreement and acquiring the Preferred Stock hereunder and in
addition to all of the Company's other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless each Purchaser and
each other holder of Preferred Stock and all of their officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes of action,
-----------
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Indemnified
-----------
Liabilities"), incurred by the Indemnitees or any of them as a result of, or
-----------
arising out of, or relating to (i) third parties claims relating to (x) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Preferred Stock or (y) the
execution, delivery, performance or enforcement of this Agreement and any other
instrument, document or agreement executed pursuant hereto by any of the
Indemnitee,
-50-
(ii) a breach of a representation or warranty by the Company of any Subsidiary
hereunder in any respect, in the case of representations or warranties qualified
by a materiality standard, including, without limitation, a "material adverse
effect" qualifier, or in any respect which is material to the business, assets,
property, operations, results or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, in the case of all other
representations and warranties or (iii) a breach of a covenant by the Company or
any Subsidiary under this Agreement or any instrument or other document executed
in connection with the transactions contemplated hereby. Notwithstanding the
foregoing, Indemnified Liabilities shall not include costs and expenses incurred
by any Indemnitee in connection with (i) any violations of law or governmental
regulations by such Indemnitee, (ii) any acts of willful misconduct or gross
negligence by such Indemnitee or (iii) any actions against such Indemnitee by
creditors of such Indemnitee or shareholders or creditors of such Indemnitee's
parent companies. THIS INDEMNITY INDEMNIFIES THE INDEMNITEES AGAINST THEIR OWN
NEGLIGENCE. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
(b) Environmental Liabilities. Without limiting the generality
-------------------------
of the indemnity set out in Section 8O(a) above, the Company shall defend,
-------------
protect, indemnify and hold harmless each Purchaser and all other Indemnitees
from and against any and all actions, causes of action, suits, losses,
liabilities, damages, injuries, penalties, fees, costs, expenses and claims of
any and every kind whatsoever paid, incurred or suffered by, or asserted
against, each Purchaser or any other Indemnitee for, with respect to, or as a
direct or indirect result of, the past, present or future environmental
condition of any property owned, operated or used by the Company, any
Subsidiary, their predecessors or successors or of any offsite treatment,
storage or disposal location associated therewith, including, without
limitation, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release into, onto or from, any such
property or location of any toxic, chemical or hazardous substance, material or
waste (including, without limitation, any losses, liabilities, damages,
injuries, penalties, fees, costs, expenses or claims asserted or arising under
CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal,
state, local or foreign statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to or imposing liability or standards on conduct
concerning, any toxic, chemical or hazardous substance, material or waste),
regardless of whether caused by, or within the control of, the Company or any
Subsidiary.
8P. Standstill. During the term of this Agreement, each Purchaser,
----------
together with any 13d Group (as hereinafter defined) of which it is a part,
shall not at any time (i) purchase, offer or agree to purchase, announce an
intention to purchase, or otherwise beneficially own, directly or indirectly,
any securities or material assets of the Company or any of its Subsidiaries
other than the Investor Preferred or shares of Common Stock to be issued upon
conversion of such shares or the exercise of the Warrants, (ii) publicly
disclose any intention, plan or arrangement inconsistent with the foregoing or
(iii) form, join or in any way participate in a 13d Group in connection with any
of
-51-
the foregoing. The term "13d Group" means a group within the meaning of Section
13(d)(3) of the Securities Exchange Act, but not including any person entitled
to file a statement on Schedule 13G.
8Q. Amendment and Restatement. Effective as of the date hereof, the
-------------------------
Original Purchase Agreement is hereby amended and restated in its entirety and,
from and after the date hereof, all references herein to "hereunder," "hereof,"
"herein" or words of like import shall mean and be a reference to the Original
Purchase Agreement, as amended hereby.
* * * * *
-52-
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Purchase Agreement on the date first written above.
SYNAGRO TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
-------------------------------
Its: Chairman/CEO
-------------------------------
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Its: Principal
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/Crescent Mezzanine II, L.P.
as general partner or managing owner
By: TCW/Crescent Mezzanine, L.L.C.,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Limited
as general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (XXXX XX), L.P.
as general partner
By: TCW Advisors (Bermuda), Ltd.,
as general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
TCW LEVERAGED INCOME TRUST IV, L.P.
By: TCW Asset Management Company,
as investment advisor
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
By: TCW (XXXX XX), L.L.C., as general partner
By: TCW Asset Management Company,
as its managing member
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
LIST OF EXHIBITS
----------------
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Stockholders Agreement
Exhibit C - Form of Purchaser Warrant
LIST OF SCHEDULES
-----------------
Schedule of Purchasers to the August 2000 Closing
Subsidiary Schedule
Unsecured Seller Debt Schedule
Capital Lease Debt Schedule
Shareholders Consent Schedule
Capitalization Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Adverse Change Schedule
Developments Schedule
Assets Schedule
Owned Real Property Schedule
Leased Property Schedule
Taxes Schedule
Contracts Schedule
Employee Benefits Schedule
Intellectual Property Schedule
Litigation Schedule
Consents Schedule
Insurance Schedule
Key Employees Schedule
Environmental Schedule
Affiliated Transactions Schedule
Customer Schedule
Schedule of Purchasers to the August 2000 Closing
-------------------------------------------------
Shares of Shares of
--------- ---------
Series E Preferred Consideration for Series E Preferred Subsequent
------------------ ----------------- ------------------ ----------
Purchased at Series E Preferred Granted Under Closings
------------ ------------------ ------------- --------
Name of Purchaser August 2000 Closing and Warrants Purchaser Warrant Allocations
----------------- ------------------- ------------ ----------------- -----------
GTCR
----
Allocations
-----------
GTCR FUND VII, L.P. 25,768.744 $25,768,744.07 2,589.635 99.092800%
GTCR CO-INVEST, L.P. 0.000 $ 0.00 0.000 0.907200%
----------------------------------------------------------------------------------
Total for GTCR Purchasers 25,768.744 $25,768,744.07 2,589.635 100.000000%
TCW/Crescent
------------
Allocations
-----------
TCW/CRESCENT MEZZANINE PARTNERS II, L.P. 2,082.284 $ 2,082,283.46 148.024 64.391497%
TCW/CRESCENT MEZZANINE TRUST II 504.746 $504,745.87 35.881 15.608503%
TCW LEVERAGED INCOME TRUST, L.P. 215.586 $215,585.95 15.325 6.666667%
TCW LEVERAGED INCOME TRUST II, L.P. 215.586 $215,585.95 15.325 6.666667%
TCW LEVERAGED INCOME TRUST IV, L.P. 215.586 $215,585.95 15.325 6.666667%
----------------------------------------------------------------------------------
Total for TCW/Crescent Lenders 3,233.788 $ 3,233,787.18 229.880 100.00000%
--------------------------------------------------------------
Total for all Purchasers 29,002.532 $29,002,531.25 2,819.515
