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EXHIBIT 2.2
AMENDMENT NO. 1 TO THE
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT (this "Amendment")
is entered into this 24th day of March, 2000 between Synagro Technologies, Inc.,
a Delaware corporation (the "Purchaser"), and Whiteford Construction Co., Inc.,
a Maryland corporation (the "Seller"). The Purchaser and the Seller are each a
"Party" and, collectively, they are sometimes referred to as the "Parties."
WHEREAS, the Parties hereto entered into an Asset Purchase Agreement
dated as of October 26, 1999 (the "Agreement"), whereby Seller agreed to sell to
Purchaser substantially all of the assets and contract rights (to the extent
such contract rights are assignable) used by Seller in connection with the
operation of its biosolids division (the "Business");
WHEREAS, the Parties hereby agree to amend the Agreement and the
Schedules attached thereto in certain respects as set forth below; and
WHEREAS, capitalized terms not defined herein shall have the meanings
given to them in the Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties hereto agree as follows:
1. AMENDMENTS, ADDITIONS AND DELETIONS TO THE AGREEMENT.
(a) The Parties agree that Xxxxxxx X. Xxxxxxxxx should not be
a Party and signatory to the Agreement and the Parties agree to amend
the Agreement by deleting the following sentence in the first paragraph
of the Agreement:
"XXXXXXX X. XXXXXXXXX ("Shareholder") has joined this
Agreement as guarantor of Seller's obligations under
Article X of this Agreement as further set forth on
the signature page of this Agreement."
(b) The Parties agree that the word "Shareholder" in the first
WHEREAS paragraph of the Agreement should be deleted and the following
words should be inserted in lieu thereof: "Xxxxxxx X. Xxxxxxxxx
("Shareholder")".
(c) The Parties agree to amend Section 2.3(a) of the Agreement
in its entirety to read as follows:
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"(a) The aggregate purchase price (the
"Purchase Price") for the purchase of the Acquisition
Assets and the representations, warranties, covenants
and agreements referenced herein shall be an amount
paid in cash at Closing equal to One Million Five
Hundred Thousand Dollars ($1,500,000), plus the
additional consideration referenced in Section 2.9,
and less the Indebtedness. For purposes of this
Agreement, "Indebtedness" means the indebtedness and
other long-term liabilities of Seller (determined in
accordance with GAAP) listed on Schedule 2.3."
(d) The Parties agree to amend Section 2.5 of the Agreement in
its entirety to read as follows:
"SECTION 2.5. CLOSING. Subject to the terms
and provisions of Article VIII and IX, the closing of
the purchase and sale (the "Closing") provided for in
this Agreement shall take place at the law offices of
Xxxx X. Xxxxxx, as promptly as practicable (but in
any event on or before March 27, 2000), or at such
other time and place as the Parties shall agree. The
date on which the Closing occurs is referred to in
this Agreement as the "Closing Date."
(e) The Parties agree to delete Section 2.6(b)(iv) of the
Agreement in its entirety.
(f) The Parties hereby agree to add a new Section 2.9 to read
in its entirety as follows:
"SECTION 2.9. ADDITIONAL CONSIDERATION. (a)
The capitalized terms used in this Section shall have
the following meanings:
1. "Covenant Period" means the period
commencing on the Closing Date and ending on
the date three (3) years after the Closing
Date.
2. "New Business" means any new event work,
contracts, purchase orders, jobs,
commitments or other agreements arising
during the Covenant Period that are
performed by Synagro Mid-Atlantic, Inc., a
Delaware corporation and an affiliate of the
Purchaser ("SMA"). New Business shall not
include any work performed during the
Covenant Period on existing contracts, event
work,
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purchase orders, jobs, commitments or other
agreements of SMA in effect as of the
Closing Date (including, but not limited to,
the Contracts transferred as part of the
Acquisition Assets).
3. "New Acquisition Asset Revenues" means
revenues collected by SMA that are directly
attributable to the Acquisition Assets, or
their replacements, utilized in the New
Business.
(b) Subject to clause (d) below, as additional
consideration for the Acquisition Assets (and shall
be allocated to goodwill and intangibles), the
Purchaser shall pay to Seller (i) four percent (4%)
of the New Acquisition Asset Revenues resulting from
any New Business (the "New SMA Consideration") and
(ii) thirty percent (30%) of the revenues collected
by SMA (or its designee) that are directly
attributable to contract number S 319 between the
Seller and the Massachusetts Water Resources
Authority ("MWRA Consideration"), including, but not
limited to, revenues that may be collected by SMA (or
its designee) if such contract is assigned to SMA (or
its designee). The New SMA Consideration and the MWRA
Consideration are collectively referred to herein as
the "Additional Consideration". In the event the New
Business arises during the Covenant Period but is not
completed until after the end of the Covenant Period,
the four percent (4%) payment will survive and
continue to accrue to the benefit of the Seller until
completion of the New Business.
For example, if SMA obtains New Business
during the Covenant Period worth $100,000, and the
Acquisition Assets are the only assets utilized for
the entire project (i.e., no assets of the Purchaser
or any of its affiliates were used with respect to
the New Business), the Seller shall receive 4% of the
revenues collected by SMA. Therefore, if SMA collects
the entire $100,000, Seller shall be entitled to
receive $4,000. Similarly, if SMA obtains New
Business during the Covenant Period worth $100,000
and the Acquisition Assets utilized for the project
accounted for only one-half of the revenues, the
Seller shall be entitled to receive 4% of one-half of
the revenues collected by SMA with respect to the
project. Therefore, if SMA collects the entire
$100,000, Seller shall be entitled to receive $2,000.
(c) During the Covenant Period, SMA shall utilize the
Acquisition Assets in the following order: (i) first,
to any existing
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contracts, event work, purchase orders, jobs,
commitments or other agreements purchased by
Purchaser as part of the Acquisition Assets
(including, but not limited to, the Contracts
transferred as part of the Acquisition Assets); and
(ii) second, for any New Business, provided that such
Acquisition Assets are appropriate to substantially
and efficiently perform the New Business in full
compliance with SMA's obligations. If the Acquisition
Assets are not being utilized by SMA for any reason
(including, but not limited to the fact that there is
no New Business), Purchaser and/or its affiliates may
utilize the Acquisition Assets on other projects not
involving SMA, and Purchaser shall not be required to
make any payments to Seller with respect to revenues
collected on such projects; provided, however, if any
New Business is generated and SMA cannot use the
Acquisition Assets because of the diversion, Seller
shall be paid the New SMA Consideration it would have
received had the Acquisition Assets been used for the
New Business. SMA shall continue to solicit job
opportunities in the states that the Seller and SMA
have worked in the past (the "New Business Area"). If
a project or lead arises in an area outside of the
New Business Area and no other affiliate of Purchaser
has indicated to Purchaser's corporate or regional
office a desire to bid on such project or lead, SMA
will be free to pursue such project or lead. If
nationwide leads for event jobs that cannot be
performed or are not of interest to any of
Purchaser's affiliates become known to Purchaser's
corporate office, Purchaser shall use its best
efforts to refer the lead to SMA, but SMA shall be
under no duty or obligation to pursue such lead.
(d) SMA shall determine the New SMA Consideration
within thirty (30) days after April 1, 2001, April 1,
2002 and April 1, 2003 of each year. SMA's
methodology for the determination of the New SMA
Consideration and the results thereof shall be
forwarded to the Seller. SMA shall provide Seller
with access to the data it used to determine the New
SMA Consideration upon request. The Seller shall
review the calculation of the New SMA Consideration
within fifteen (15) business days after delivery
thereof and notify SMA in writing of any disagreement
with such calculation. If within such fifteen (15)
business days following delivery Seller does not
object in writing thereto, then SMA's determination
of the New SMA Consideration shall be conclusive. If
Seller objects in writing to SMA's computation, then
SMA and Seller shall negotiate in good faith and
attempt to resolve their disagreement. Should such
negotiation not result in an agreement within twenty
(20) business days of receipt by SMA of Seller's
objection, then
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the matter shall be submitted to an independent
accounting firm of national reputation mutually
acceptable to the Seller and SMA (the "Neutral
Auditor"). If the Seller and SMA are unable to agree
on the Neutral Auditor, then they shall request the
American Arbitration Association to appoint the
Neutral Auditor. All fees and expenses relating to
appointment of the Neutral Auditor and the work, if
any, to be performed by the Neutral Auditor will be
borne equally by the Seller and SMA. The Neutral
Auditor will deliver to the Seller and SMA a written
determination (such determination to include a
worksheet setting forth all material calculations
used in arriving at such determination and to be
based solely on information provided to the Neutral
Auditor by the Seller and SMA, or their respective
affiliates) of the disputed items within 30 days of
receipt of the disputed items, which determination
will be final, binding and conclusive on the parties.
Purchaser shall pay the New SMA Consideration to the
Seller within five (5) business days following
agreement on or delivery of the final, binding and
conclusive calculation of the New SMA Consideration.
Purchaser shall pay the MWRA Consideration
within 30 days following the date the MWRA
Consideration is collected by Purchaser. Any disputes
involving the Amount of MWRA Consideration due to
Seller shall be resolved in the manner set forth
above in this clause (d)."
(g) The Parties agree to delete the words "and Shareholder" in
the parenthetical in the first paragraph of Section 3.1 of the
Agreement.
(h) The Parties agree to amend Section 5.3(a) by deleting the
words "and Shareholder" in the final two (2) places such words appear.
(i) The Parties agree to amend Section 5.3(b) by deleting the
words "and Shareholder" in each of the two (2) places such words
appear, and by deleting the words "or Shareholder" in each of the four
(4) places such words appear.
(j) The Parties agree to amend Section 5.3(c) by deleting the
words "and Shareholder" in each of the two (2) places such words
appear.
(k) The Parties agree to amend Section 7.2 by deleting the
words "Shareholder shall, and shall cause Seller to," and the words
"Seller shall" shall be inserted in lieu thereof.
(l) The Parties agree to amend Section 7.5 by deleting ",
Shareholder".
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(m) The Parties agree to amend Section 7.9 by deleting
"Shareholder,".
(n) The Parties agree to amend Section 8.3(g) by deleting the
words "set forth on Schedule" and inserting the words "Subject to
Section 2.8," in the beginning of the sentence.
(o) The Parties agree to amend Section 8.3(h) by deleting such
provision in its entirety.
(p) The Parties hereby agree to amend clause (ii) of Section
9.1(a) to read in its entirety as follows:
"(ii) if the transactions contemplated hereby are not
completed by March 27, 2000;"
(q) The Parties hereby agree to amend clause (ii) of Section
9.1(b) to read in its entirety as follows:
"(ii) if the transactions contemplated hereby are not
completed by March 27, 2000; or"
(r) The Parties agree to amend Section 9.2(a) by deleting the
last sentence in Section 9.2(a).
(s) The Parties agree to amend Section 9.2(b) by deleting "or
Shareholder".
(t) The Parties agree to amend Section 10.1 of the Agreement
in its entirety to read as follows:
"SECTION 10.1 SELLER'S INDEMNITY
OBLIGATIONS. Seller shall indemnify and hold harmless
Purchaser and its respective officers, directors,
stockholders, employees, agents, representatives and
Affiliates (each a "Purchaser Indemnified Party")
from and against any and all claims (including
without limitation, Environmental Claims), actions,
causes of action, arbitrations, proceedings, losses,
damages, remediations, liabilities, strict
liabilities, judgments, fines, penalties and expenses
(including, without limitation, reasonable attorneys'
fees) (collectively, the "Indemnified Amounts") paid,
imposed on or incurred by a Purchaser Indemnified
Party, (i) relating to, resulting from or arising out
of (a) any breach or misrepresentation in any of the
representations and warranties made by or on behalf
of Seller in this Agreement, including without
limitation with respect to
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environmental matters, or any certificate or
instrument delivered in connection with this
Agreement, (b) any violation or breach by Seller and
Shareholder of or default by Seller and Shareholder
under the terms of this Agreement or any certificate
or instrument delivered in connection with this
Agreement, (c) any liability of Seller or Shareholder
not assumed by Purchaser, including without
limitation the Excluded Liabilities; or (ii) relating
to, resulting from or arising out of any allegation
of a third party of the events described in Sections
10.1(a), (b) or (c) above. For purposes of this
Section 10.1, Indemnified Amounts shall include
without limitation those Indemnified Amounts ARISING
OUT OF THE STRICT LIABILITY (INCLUDING BUT NOT
LIMITED TO STRICT LIABILITY ARISING PURSUANT TO
ENVIRONMENTAL LAWS) OF ANY PARTY, INCLUDING ANY
PURCHASER INDEMNIFIED PARTY."
(u) The Parties agree to amend clause (a) of Section 10.4 of
the Agreement in its entirety to read as follows:
"(a) Notwithstanding anything to the
contrary contained in Article X, the aggregate
liability of Seller for any event or occurrence
giving rise to Seller being required to indemnify
Purchaser Indemnified Parties pursuant to Section
10.1 of this Agreement shall be limited to
$1,500,000."
(v) The Parties agree to amend Section 11.1 by deleting "and
Shareholder".
(w) The Parties agree to amend Section 11.2(b) by deleting
"P.A., Suite 311" and insert in lieu thereof "LLC, Suite 205".
(x) The Parties agree to amend Section 11.11 by adding the
following sentence at the end of Section 11.11:
"Purchaser shall reimburse to Seller the
cost of renewing any tags and title registration on
any Motor Vehicle whose tags are not registered in
the name of Purchaser prior to April 25, 2000 (such
costs to be reimbursed by Purchaser to Seller include
but are not limited to costs to purchase tags,
registration, etc. and the costs incurred by Seller
to transfer the Motor Vehicle from the particular job
site in which the Motor Vehicle is being utilized to
the place of registration, and the costs to deliver a
replacement Motor Vehicle to such job site)."
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(y) The Parties agree to amend the Signature Page by deleting
"and Shareholder", and also deleting the following:
"Xxxxxxx X. Xxxxxxxxx hereby executes this
Asset Purchase Agreement solely to evidence his
agreement to guarantee the performance of all of
Seller's obligations under Article X of this Asset
Purchase Agreement."
-----------------------------------------
XXXXXXX X. XXXXXXXXX"
(z) The Parties agree to amend SCHEDULE 2.1(i) (EQUIPMENT) of
the Agreement by deleting the following:
"317 DRED'G SPECIAL MODEL 800 SPREADER 20,
100 Sep. 96".
(aa) The Parties agree to amend SCHEDULE 2.1(ii) (MOTOR
VEHICLES) of the Agreement by deleting the following:
"210 0000 XXXXXXXXXXX, XXXX BOX, 850 , May -91".
(bb) The Parties agree to amend SCHEDULE 2.1(iv) (CONTRACTS)
of the Agreement by deleting the following:
"Name Contract # or Date Assignability
--------------------------------------------------------------------------
City of Baltimore MD BP-16699 Assignable
MUN. Auth. of
Xxxxxxxxxxxx Co. R052-00 Assignable
Dept. of the Navy
Indian Head, MD N62477-99-M3508 Novation
Agreement"
and inserting the following Contracts in lieu thereof
"Massachusetts Water
Resources Authority S 319 Assignable
only with
written
consent
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Bradford City
Water Authority 99-2 Assignable
only with
written
consent"
(cc) The Parties agree to amend SCHEDULE 2.1(vi) (PERMITS) of
the Agreement by adding the following:
"S--99--12--4603--A
S--99--12--4620--A"
(dd) The Parties agree to amend SCHEDULE 2.4. (ALLOCATIONS) of
the Agreement in its entirety to read as follows:
"SCHEDULE 2.4.
ALLOCATIONS
Vehicles and Equipment $ 165,000
Goodwill and Intangibles $1,315,000*
Covenant Not To Compete $ 20,000
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PURCHASE PRICE $1,500,000*
* plus any amounts to be paid for Additional
Consideration"
(ee) The Parties agree to amend SCHEDULE 5.5 (FINANCIAL
STATEMENTS) of the Agreement by deleting the current Schedule and
inserting the financial statements attached as Exhibit A hereto.
(ff) The Parties agree to amend SCHEDULE 5.7. (ABSENCE OF
CERTAIN CHANGES OR EVENTS) of the Agreement by deleting the word "None"
and adding the following: "Xxxxx Xxxxxx was no longer an employee of
Whiteford Construction Co., Inc. as of January 2000. Xxx Xxxxx'x weekly
salary was increased from $600 to $673.08. A bonus for calendar year
1999 was paid in full on March 23, 2000 to the following employees:
Xxxx X. Xxxxxx $49,565.50; Xxxxxxx Xxxxx $49,565.50; and Xxxxx Xxxxxx
$49,565.50, and the net income of the Business for calendar year 1999
was approximately $281,000."
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(gg) The Parties agree to amend SCHEDULE 5.13. (EMPLOYEE
BENEFIT PLANS) of the Agreement by adding the following: "Xxxxx Xxxxxx
was no longer an employee of Whiteford Construction Co., Inc. as of
January 2000".
(hh) The Parties agree to amend SCHEDULE 5.18. (CONTRACTS,
AGREEMENTS, PLANS AND COMMITMENTS) of the Agreement by adding the
following:
"Rain For Rent - Rental of Storage Tank for $30.00 a
day.
Xxxxxxx Pumps -- Rental of following equipment
a. Control Panel for $99.00 per month
b. Electric Pump for $945.00 per month
c. 100KW Generator for $1,890.00 per month
d. 40KW Generator for $1,485.00 per month
Hazco Total Safety - Rental of Air Meter for $325.00
per month"
2. XXXXXXX MONEY. The Parties agree that the xxxxxxx money has been
retained by Seller pursuant to Section 9.4. of the Agreement as an extension fee
and as reimbursement for costs and expenses incurred by Seller in connection
with the negotiation and execution of the Agreement. The Parties agree that
there was not any material breach by Seller or Purchaser or failure of Seller or
Purchaser to fulfill any obligation under or in connection with the Agreement
being the cause of the extension. The Parties agree that the xxxxxxx money shall
not be applied against the Purchase Price at Closing.
3. RATIFICATION. Except as expressly amended by this Amendment, the
Agreement and the exhibits and schedules thereto shall remain in full force and
effect. None of the rights, interests and obligations existing and to exist
under the Agreement are hereby released, diminished or impaired, and the parties
hereby reaffirm all covenants, representations and warranties in the Agreement.
4. EXECUTION IN COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Amendment is hereby duly executed by each
Party hereto as of the date first written above.
SYNAGRO TECHNOLOGIES, INC.
By: /s/ Xxxx X. Rome
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Xxxx X. Rome, Executive Vice President
WHITEFORD CONSTRUCTION CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx, President
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