-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8PG9CX7Y/iekTonqJQl4WtlkG5vS+SsvJH7DiYrYjQ6skmN4N8007bi7PMbJg5u iMrpUBupUQkjw/PceYHsew== /in/edgar/work/20000821/0000950131-00-005026/0000950131-00-005026.txt : 20000922 0000950131-00-005026.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950131-00-005026 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000821 GROUP MEMBERS: GRCR FUND VII, L.P. GROUP MEMBERS: GTCR CAPITAL PARTNERS, L.P. GROUP MEMBERS: GTCR GOLDER RAUNER LLC GROUP MEMBERS: GTCR MEZZANINE PARTNERS, L.P. GROUP MEMBERS: GTCR PARTNERS VI, L.P. GROUP MEMBERS: GTCR PARTNERS VII, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SYNAGRO TECHNOLOGIES INC CENTRAL INDEX KEY: 0000895565 STANDARD INDUSTRIAL CLASSIFICATION: [4953 ] IRS NUMBER: 760511324 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-46945 FILM NUMBER: 706397 BUSINESS ADDRESS: STREET 1: 1800 BERING STE 1000 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7133691700 MAIL ADDRESS: STREET 1: 1800 BERING STE 1000 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: N-VIRO RECOVERY INC DATE OF NAME CHANGE: 19940531 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GTCR GOLDER RAUNER LLC CENTRAL INDEX KEY: 0001105021 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 364208852 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 6100 SEARS TOWER CITY: CHICAGO STATE: IL ZIP: 60606-6402 BUSINESS PHONE: 3123822200 MAIL ADDRESS: STREET 1: 6100 SEARS TOWER CITY: CHICAGO STATE: IL ZIP: 60606-6402 SC 13D/A 1 0001.txt SCHEDULE 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* Synagro Technologies, Inc. - ------------------------------------------------------------------------------ (Name of Issuer) Common Stock - ------------------------------------------------------------------------------ (Title of Class of Securities) 871562203 ------------------------------------ (CUSIP Number) David A. Donnini GTCR Golder Rauner, L.L.C. 6100 Sears Tower Chicago, Illinois 60606-6402 (312) 382-2200 - ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 14, 2000 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S)240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 13D - ----------------------- --------------------- CUSIP NO. 871562203 Page 2 OF 14 Pages - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR FUND VII, L.P. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 WC - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) 5 [_] - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 23,779,360 (See Item 5) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 0 (See Item 5) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 23,779,360 (See Item 5) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 (See Item 5) - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 23,779,360 (See Item 5) - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 55.0% (See Item 5) - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - ------------------------------------------------------------------------------ 13D - ----------------------- --------------------- CUSIP NO.871562203 Page 3 of 14 Pages - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR Partners VII, L.P. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [x] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 Not Applicable - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 0 (See Item 5) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 23,779,360 (See Item 5) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 0 (See Item 5) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 23,779,360 (See Item 5) - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 23,779,360 (See Item 5) - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 55.0% (See Item 5) - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - ------------------------------------------------------------------------------ 13D - ----------------------- --------------------- CUSIP NO.871562203 Page 4 of 14 Pages - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR Golder Rauner, L.L.C. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [x] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 Not Applicable - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 0 (See Item 5) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 25,497,436 (See Item 5) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 0 (See Item 5) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 25,497,436 (See Item 5) - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 25,497,436 (See Item 5) - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 56.7% (See Item 5) - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 00 - ------------------------------------------------------------------------------ 13D - ----------------------- --------------------- CUSIP NO.871562203 Page 5 of 14 Pages - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR Capital Partners, L.P. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [x] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 WC - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 1,718,076 (See Item 5) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 (See Item 5) OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 1,718,076 (See Item 5) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 (See Item 5) - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,718,076 (See Item 5) - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 8.1% (See Item 5) - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - ------------------------------------------------------------------------------ - ------------------- ------------------ CUSIP NO. 871562203 13D PAGE 6 OF 14 PAGES - ------------------- ------------------ - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR Mezzanine Partners, L.P. - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [x] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 Not applicable - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) [_] 5 - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - -------------------------------------------------------------------------------- SOLE VOTING POWER 7 NUMBER OF 0 (See Item 5) SHARES ------------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,718,076 (See Item 5) ------------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 0 (See Item 5) PERSON ------------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,718,076 (See Item 5) - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,718,076 (See Item 5) - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 8.1% (See Item 5) - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - -------------------------------------------------------------------------------- 13D - ----------------------- --------------------- CUSIP NO. 871562203 PAGE 7 OF 14 PAGES - ----------------------- --------------------- - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) GTCR Partners VI, L.P. - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [x] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 Not applicable - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) or 2(E) 5 [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - -------------------------------------------------------------------------------- SOLE VOTING POWER 7 NUMBER OF 0 (See Item 5) SHARES ------------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,718,076(See Item 5) ------------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 0 (See Item 5) PERSON ------------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,718,076(See Item 5) - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,718,076(See Item 5) - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 8.1%(See Item 5) - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - -------------------------------------------------------------------------------- Item 1. Security and Issuer This statement relates to the common stock, par value $.002 per share (the "Common Stock") of Synagro Technologies, Inc. (the "Issuer") with its principal executive offices at 1800 Bering Drive, Suite 1000, Houston, TX 77057. Item 2. Identify and Background (a) This statement is filed jointly by each of the following persons pursuant to Rule 13d-1(a) promulgated by the Securities and Exchange Commission (the "SEC") under Section 13 of the Securities Exchange Act of 1934, as amended (the "Act"): (i) GTCR Fund VII, L.P., a Delaware limited partnership (the "Fund VII"), by virtue of its direct beneficial ownership of Common Stock; (ii) GTCR Partners VII, L.P., a Delaware limited partnership ("GTCR Partners VII"), by virtue of it being the general partner of Fund VII; (iii) GTCR Capital Partners, L.P., a Delaware limited partnership ("GTCR Capital"), by virtue of its direct beneficial ownership of Common Stock; (iv) GTCR Mezzanine Partners, L.P., a Delaware limited partnership ("GTCR Mezzanine Partners"), by virtue of it being the general partner of GTCR Capital; (v) GTCR Partners VI, L.P., a Delaware limited partnership ("GTCR Partners VI"), by virtue of it being the general partner of GTCR Mezzanine Partners; and (vi) GTCR Golder Rauner, L.L.C., a Delaware limited liability company ("GTCR LLC"), by virtue of it being the general partner of GTCR Partners VII and GTCR Partners VI. Fund VII, GTCR Partners VII, GTCR Capital, GTCR Mezzanine Partners, GTCR Partners VI and GTCR LLC are sometimes referred to herein individually as a "Reporting Person" and collectively as the "Reporting Persons." Information with respect to each of the Reporting Persons is given solely by such Reporting Person, and no Reporting Person assumes responsibility for the accuracy or completeness of information by another Reporting Person. The Reporting Persons may be deemed to constitute a "group" for purposes of Section 13(d)(3) of the Act. The Reporting Persons expressly disclaim that they have agreed to act as a group other than as described in this statement. Certain information required by this Item 2 concerning the executive officers and members of GTCR LLC is set forth on Schedule A attached hereto, which is incorporated herein by reference. GTCR LLC is managed by its members. (b) The address of the principal business and principal office of each of the Reporting Persons is 233 S. Wacker Drive, Suite 6100, Chicago, Illinois 60606. (c) The principal business of GTCR Capital, GTCR Mezzanine Partners, GTCR Partners VI (as general partner of GTCR Mezzanine Partners) and GTCR LLC (as general partner of GTCR Partners VI) is to lend money on a subordinated basis to business organizations, with the principal objective being interest income and the return of capital. The principal business of each of the other Reporting Persons, including GTCR LLC as general partner of GTCR Partners VII, is to make investments in common and preferred stock and other interests in business organizations, domestic or foreign, with the principal objective of appreciation of capital invested. (d) During the past five years, none of the Reporting Persons nor, to the best knowledge of such persons, any of the persons named in Schedule A to this statement, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, none of the Reporting Persons nor, to the best knowledge of such persons, any of the persons named in Schedule A to this statement, was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 8 of 14 (f) All individuals named in Schedule A to this statement are citizens of the United States. Item 3. Source and Amount of Funds or Other Consideration On January 27, 2000, Fund VII acquired 17,358.824 shares of the Issuer's Series C Convertible Preferred Stock (the "Series C Preferred") and 2,641.176 shares of the Issuer's Series D Convertible Preferred Stock (the "Series D Preferred") in connection with a Purchase Agreement among Fund VII and the Issuer, dated as of January 27, 2000 (the "Purchase Agreement"). On February 4, 2000, Fund VII purchased an additional 419.4 shares of Series C Preferred pursuant to the Purchase Agreement. On March 24, 2000, Fund VII purchased an additional 225 shares of Series C Preferred pursuant to the Purchase Agreement. On March 27, 2000, Fund VII purchased an additional 1,260 shares of Series C Preferred pursuant to the Purchase Agreement. The purchase price for each of such shares was $1,000.00. On June 15, 2000, Fund VII purchased an additional 6,840 shares of the Issuer's Series E Convertible Preferred Stock (the "Series E Preferred") pursuant to the Purchase Agreement and received a warrant to purchase 1,285.5 shares of Series E Preferred, which Fund VII exercised on June 15, 2000. On August 14, 2000, Fund VII purchased an additional 25,768.744 shares of Series E Preferred pursuant to an Amended and Restated Purchase Agreement among Fund VII, GTCR Co-Invest Fund, 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., TCW Leveraged Income Trust IV, L.P. (all TCW entities collectively, the "TCW Entities") and the Issuer, dated as of August 14, 2000 (the "Restated Purchase Agreement"), and received a warrant to purchase 2,589.635 shares of Series E Preferred, which Fund VII exercised on August 14, 2000. The source of the funds used to acquire such shares was internal capital of Fund VII. Each share of Series C Preferred is nonvoting and is convertible into a share of Series D Preferred after the occurrence of certain events set forth in the certificate of designation establishing the Series C Preferred (the "Series C Preferred Certificate of Designation"). On April 3, 2000, Fund VII converted the 19,263.224 shares of Series C Preferred of which it was the direct beneficial owner to 19,263.224 shares of Series D Preferred. Each share of Series D Preferred and Series E Preferred is convertible into the number of shares of Common Stock obtained by dividing (1) the sum of (a) $1,000 and (b) any accrued and unpaid dividends by (2) $2.50 (the "Conversion Price"). The Conversion Price is subject to adjustment pursuant to the terms of the Series D Preferred and Series E Preferred. On January 27, 2000, GTCR Capital and the Issuer entered into a senior subordinated loan agreement (the "Subordinated Loan Agreement") pursuant to which GTCR Capital loaned $20,000,000 to the Issuer. In connection with the Subordinated Loan Agreement, the Issuer and GTCR Capital entered into a Warrant Agreement dated as of January 27, 2000 (the "Warrant Agreement") pursuant to which the Issuer issued GTCR Capital a warrant to purchase 2,857.143 shares of Series D Preferred, which GTCR Capital exercised on January 27, 2000. On February 4, 2000, GTCR Capital loaned $419,400 to the Issuer pursuant to the Subordinated Loan Agreement and received a warrant to purchase 59.915 shares of Series C Preferred, which GTCR Capital exercised on February 4, 2000. On March 24, 2000, GTCR Capital loaned $225,000 to the Issuer pursuant to the Subordinated Loan Agreement and received a warrant to purchase 32.143 shares of Series C Preferred, which GTCR Capital exercised on March 24, 2000. On March 27, 2000, GTCR Capital loaned $1,260,000 to the Issuer pursuant to the Subordinated Loan Agreement and received a warrant to purchase 180 shares of Series C Preferred, which GTCR Capital exercised on March 27, 2000. On April 3, 2000, GTCR Capital converted the 272.058 shares of Series C Preferred of which it was the direct beneficial owner to 272.058 shares of Series D Preferred. On June 15, 2000, GTCR Capital loaned $4,476,000 to the Issuer pursuant to the Subordinated Loan Agreement and received a warrant to purchase 609.3 shares of Series E Preferred, which GTCR Capital exercised on June 15, 2000, and GTCR Capital also received a warrant on June 15, 2000 to purchase 114.5 shares of Series E Preferred, which GTCR Capital exercised on June 15, 2000. On August 14, 2000, GTCR Capital received a warrant to purchase 296.504 shares of Series E Preferred, which GTCR Capital exercised on August 14, 2000. On August 14, 2000, GTCR Capital entered into an Amended and Restated Senior Subordinated Loan Agreement among GTCR Capital, the TCW Entities and the Issuer (the "Restated Loan Agreement") and an Amended and Restated GTCR Warrant Agreement, dated as of August 14, 2000 (the "Restated Warrant Agreement"), between GTCR Capital and the Issuer. The Series C Preferred, Series D Preferred and Series E Preferred acquired by Fund VII and GTCR Capital are collectively referred to herein as the "Shares". A copy of the Purchase Agreement, the Subordinated Loan Agreement, the Warrant Agreement, the Series C Preferred Certificate of Designation, the certificate of designation establishing the Series D Preferred, the certificate of designation establishing the Series E Preferred, the Restated Purchase Agreement, the Restated Loan Agreement and the Restated Warrant Agreement are filed as exhibits hereto and are incorporated herein by reference. The summary of these agreements and documents and the agreements referred to elsewhere in this statement and incorporated herein by reference are not intended to be complete and are qualified in their entirety by reference to the detailed provisions of such agreements and documents. Item 4. Purpose of Transaction Fund VII and GTCR Capital hold the Shares for investment purposes. Depending on market conditions and other factors (including evaluation of the Issuer's businesses and prospects, availability of funds, alternative uses of funds and general economic conditions), Fund VII and GTCR Capital may from time to time acquire additional securities of the Issuer or dispose of all or a portion of their investment in the Issuer. Any acquisition of additional securities by Fund VII or GTCR Capital will be pursuant to the terms of the Restated Purchase Agreement and the Restated Loan Agreement, respectively. The Issuer is a party to a Stock Purchase Agreement, dated April 28, 2000 (the "Stock Purchase Agreement"), with Resco Holdings, Inc., Waste Management Holdings, Inc. and Waste Management, Inc., pursuant to which the Issuer has acquired the capital stock of certain subsidiaries of the sellers. The transactions contemplated by the Stock Purchase Agreement were consummated on August 14, 2000 (the "Stock Purchase Agreement Closing"). As set forth in further detail in Items 3 and 5, Fund VII acquired shares of Series E Preferred in connection with the Stock Purchase Agreement Closing, following which Fund VII is the direct beneficial owner of an amount of Preferred Stock convertible in the aggregate into approximately 55.0% of the Issuer's outstanding Common Stock. As set forth in greater detail in Items 3 and 5, GTCR Capital also acquired shares of Series E Preferred pursuant a warrant issued in connection with the Stock Purchase Agreement Closing. The holders of the Series D Preferred, the Series E Preferred and future series of convertible preferred stock issued pursuant to the Restated Purchase Agreement ("Future Convertible Preferred" and, together with the Series D Preferred and Series E Preferred, the "Preferred Stock") have the right to vote as if they were holders of Common Stock. In connection with its holdings of Preferred Stock, Fund VII may seek to appoint one or more persons to the Issuer's board of directors. Page 9 of 14 The Issuer, Fund VII, GTCR Co-Invest Fund, L.P., GTCR Capital and the TCW Entities have entered into an Amended and Restated Registration Agreement, dated as of August 14, 2000 (the "Restated Registration Agreement"), pursuant to which the non-Issuer parties thereto have the right in certain circumstances to require the Issuer to register their shares of Common Stock for resale under the Securities Act. Except in limited circumstances, the Issuer is obligated to pay all expenses in connection with such registration. A copy of the Restated Registration Agreement is filed as an exhibit hereto and is incorporated herein by reference. On August 14, 2000, Fund VII, GTCR Capital, GTCR Co-Invest Fund, L.P., the TCW Entities and the Issuer entered into a Shareholders Agreement (the "Shareholders Agreement"), which is filed as an exhibit hereto and is incorporated by reference. The Shareholders Agreement contains certain rights, including pre-emptive rights, rights pursuant to which non-Issuer parties to the Shareholders Agreement may request participation in sales of the Issuer's securities by other non-Issuer parties, and rights of certain non-Issuer parties to compel participation of other non-Issuer parties in a sale of the Issuer. Pursuant to the Shareholders Agreement, Fund VII, GTCR Capital, GTCR Co-Invest Fund, L.P. and the TCW Entities may be deemed to constitute a "group" for purposes of Section 13(d)(3) of the Act. The Reporting Persons expressly disclaim that they have agreed to act as a group other than as described in this statement. Except as described in this statement, none of the Reporting Persons or, to the best knowledge of such persons, the persons named in Schedule A to this statement, presently has any plans or proposals which relate to or would result in any of the transactions described in paragraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer (a) Fund VII is the direct beneficial owner of 21,904.4 shares of Series D Preferred and 36,483.879 shares of Series E Preferred, convertible in the aggregate into 23,779,360 shares of Common Stock, or approximately 55.0% of the Common Stock as of the date of this statement (assuming there are 19,435,780 shares of Common Stock outstanding). GTCR Capital is the direct beneficial owner of 3,129.201 shares of Series D Preferred and 1,020.304 shares of Series E Preferred, convertible in the aggregate into approximately 1,718,076 shares of Common Stock, or approximately 8.1% of the Common Stock as of the date of this statement. By virtue of the relationship between Fund VII and GTCR Partners VII described in Item 2, GTCR Partners VII may be deemed to possess indirect beneficial ownership of the shares of Common Stock beneficially owned by Fund VII. By virtue of the relationship among GTCR Capital, GTCR Mezzanine Partners and GTCR Partners VI described in Item 2, GTCR Mezzanine Partners and GTCR Partners VI may be deemed to possess indirect beneficial ownership of the shares of Common Stock beneficially owned by GTCR Capital. Due to GTCR LLC's relationship with (a) Fund VII and GTCR Partners VII as described in Item 2 and (b) GTCR Capital, GTCR Mezzanine Partners and GTCR Partners VI as described in Item 2, GTCR LLC may be deemed to possess indirect beneficial ownership of the Common Stock owned by both Fund VII and GTCR Capital. The filing of this statement by GTCR Partners VII, GTCR Mezzanine Partners, GTCR Partners VI and GTCR LLC shall not be construed as an admission that any of such parties is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this statement. (b) Fund VII has the sole power to vote or direct the vote and the sole power to dispose of or direct the disposition of 23,779,360 shares of Common Stock, or approximately 55.0% of the Common Stock as of the date of this statement. GTCR Capital has the sole power to vote or direct the vote and the sole power to dispose of or direct the disposition of 1,718,076 shares of Common Stock, or approximately 8.1% of the Common Stock as of the date of this statement. By virtue of the relationship between Fund VII and GTCR Partners VII described in Item 2, GTCR Partners VII may be deemed to indirectly share the power to vote or direct the vote and indirectly share the power to dispose of or direct the disposition of the shares of Common Stock beneficially owned by Fund VII. By virtue of the relationship among GTCR Capital, GTCR Mezzanine Partners and GTCR Partners VI described in Item 2, GTCR Mezzanine Partners and GTCR Partners VI may be deemed to indirectly share the power to vote or direct the vote and indirectly share the power to dispose of or direct the disposition of the shares of Common Stock beneficially owned by GTCR Capital. Due to GTCR LLC's relationship with (a) Fund VII and GTCR Partners VII as described in Item 2 and (b) GTCR Capital, GTCR Mezzanine Partners and GTCR Partners VI as described in Item 2, GTCR LLC may be deemed to indirectly share the power to vote or direct the vote and indirectly share the power to dispose of or direct the disposition of the shares of Common Stock beneficially owned by Fund VII and GTCR Capital. Page 10 of 14 The filing of this statement by GTCR Partners VII, GTCR Mezzanine Partners, GTCR Partners VI and GTCR LLC shall not be construed as an admission that any of such parties is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this statement. (c) Except as otherwise set forth in this statement, none of the Reporting Persons or, to the best knowledge of such persons, the persons named in Schedule A to this statement, has effected any transactions in the Common Stock during the past 60 days. (d) No person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock reported as being beneficially owned by such Reporting Persons. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. As described in Item 4, the Reporting Persons are parties to a Restated Registration Agreement with respect to the Common Stock. A copy of the Restated Registration Agreement has been filed and is incorporated herein by reference. Also as described in Item 4, the Reporting Persons are parties to a Shareholders Agreement with respect to the Issuer's stock. A copy of the Shareholders Agreement has been filed and is incorporated herein by reference. Except as set forth in this statement, to the best knowledge of the Reporting Persons, no contracts, arrangements, understandings or relationships (legal or otherwise) exist among the persons named in Item 2 or between such persons and any other person with respect to any securities of the Issuer. Item 7. Material to Be Filed as Exhibits Exhibit 1 Joint Filing Agreement among the Reporting Persons dated as of August 18, 2000. * Exhibit 2 Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on January 26, 2000. * Exhibit 3 Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on January 26, 2000. * Exhibit 4 Purchase Agreement dated as of January 27, 2000 by and between Synagro Technologies, Inc. and GTCR Fund VII, L.P. * Exhibit 5 Senior Subordinated Loan Agreement dated as of January 27, 2000 by between Synagro Technologies, Inc. and GTCR Capital Partners, L.P. * Exhibit 6 Warrant Agreement dated as of January 27, 2000 by and between Synagro Technologies, Inc. and GTCR Capital Partners, L.P. * Exhibit 7 Registration Rights Agreement, dated as of January 27, 2000 among Synagro Technologies, Inc., GTCR Fund VII, L.P. and GTCR Capital Partners, L.P. **Exhibit 8 Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on June 14, 2000. Exhibit 9 Amended and Restated Purchase Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 10 Amended and Restated Senior Subordinated Loan Agreement, dated as of August 14, 2000, among GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 11 Amended and Restated GTCR Warrant Agreement, dated as of August 14, 2000, between GTCR Capital Partners, L.P. and Synagro Technologies, Inc. Exhibit 12 Amended and Restated Registration Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, L.P., GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 13 Shareholders Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, L.P., GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. * Previously filed with the Statement on Schedule 13D on February 7, 2000. ** Previously filed with the Statement on Schedule 13D on June 20, 2000. Page 11 of 14 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 18, 2000 GTCR FUND VII, L.P. By: GTCR Partners VII, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini --------------------------------------------- Name: David A. Donnini Its: Principal GTCR PARTNERS VII, L.P. By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini --------------------------------------------- Name: David A. Donnini Its: Principal GTCR GOLDER RAUNER, L.L.C. By: /s/ David A. Donnini --------------------------------------------- Name: David A. Donnini Its: Principal GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P., its General Partner By: GTCR Partners VI, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ---------------------------------------------- Name: David A. Donnini Its: Principal GTCR MEZZANINE PARTNERS, L.P. By: GTCR Partners VI, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ---------------------------------------------- Name: David A. Donnini Its: Principal GTCR PARTNERS VI, L.P. By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ---------------------------------------------- Name: David A. Donnini Its: Principal Page 12 of 14 EXHIBIT INDEX Exhibit No. Exhibit 1 Joint Filing Agreement among the Reporting Persons dated as of August 18, 2000. * Exhibit 2 Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on January 26, 2000. * Exhibit 3 Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on January 26, 2000. * Exhibit 4 Purchase Agreement dated as of January 27, 2000 by and between Synagro Technologies, Inc. and GTCR Fund VII, L.P. * Exhibit 5 Senior Subordinated Loan Agreement dated as of January 27, 2000 by and between Synagro Technologies, Inc. and GTCR Capital Partners, L.P. * Exhibit 6 Warrant Agreement dated as of January 27, 2000 by and between Synagro Technologies, Inc. and GTCR Capital Partners, L.P. * Exhibit 7 Registration Rights Agreement, dated as of January 27, 2000 among Synagro Technologies, Inc., GTCR Fund VII, L.P. and GTCR Capital Partners, L.P. **Exhibit 8 Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock of Synagro Technologies, Inc. filed with the Delaware Secretary of State on June 14, 2000. Exhibit 9 Amended and Restated Purchase Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 10 Amended and Restated Senior Subordinated Loan Agreement, dated as of August 14, 2000, among GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 11 Amended and Restated GTCR Warrant Agreement, dated as of August 14, 2000, between GTCR Capital Partners, L.P. and Synagro Technologies, Inc. Exhibit 12 Amended and Restated Registration Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, L.P., GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. Exhibit 13 Shareholders Agreement, dated as of August 14, 2000, among GTCR Fund VII, L.P., GTCR Co-Invest Fund, L.P., GTCR Capital Partners, 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., TCW Leveraged Income Trust IV, L.P. and Synagro Technologies, Inc. * Previously filed with the Statement on Schedule 13D on February 7, 2000. ** Previously filed with the Statement on Schedule 13D on June 20, 2000. Page 13 of 14 SCHEDULE A The following table sets forth the names and principal occupations of the executive officers and members of GTCR Golder Rauner, L.L.C. Each such person is a citizen of the United States. Unless otherwise specified, the business address of each person listed below is 233 South Wacker Drive, Suite 6100, Chicago, IL 60606.
NAME PRINCIPAL OCCUPATION - ------------------------ ----------------------------- Philip A. Canfield Principal and Member David A. Donnini Principal and Member Donald J. Edwards Principal and Member Edgar D. Jannotta, Jr. Principal and Member William C. Kessinger Principal and Member Joseph P. Nolan Principal and Member Bruce V. Rauner Principal and Managing Member Steven I. Ross Chief Financial Officer
Page 14 of 14 EX-99.1 2 0002.txt JOINT FILING AGREEMENT Exhibit 1 JOINT FILING AGREEMENT The undersigned hereby agree as follows: (i) Each of them agrees that the Schedule 13D to which this Agreement is attached as an exhibit is filed on behalf of each of them. (ii) Each of them is responsible for the timely filing of such Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of them is responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate. Dated: August 18, 2000 GTCR FUND VII, L.P. By: GTCR Partners VII, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal GTCR PARTNERS VII, L.P. By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal GTCR GOLDER RAUNER, L.L.C. By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P., its General Partner By: GTCR Partners VI, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal Page 1 [CONTINUATION OF SIGNATURE PAGE TO JOINT FILING AGREEMENT] GTCR MEZZANINE PARTNERS, L.P. By: GTCR Partners VI, L.P., its General Partner By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal GTCR PARTNERS VI, L.P. By: GTCR Golder Rauner, L.L.C., its General Partner By: /s/ David A. Donnini ------------------------------------------------- Name: David A. Donnini Its: Principal Page 2 EX-99.9 3 0003.txt AMENDED & RESTATED PURCHASE AGREEMENT 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
Page ---- Section 1. Authorizations and Closings....................................... 2 --------------------------- 1A. Authorization of the Stock...................................... 2 -------------------------- 1B. August 2000 Closing............................................. 2 ------------------- 1C. Subsequent Closings............................................. 3 ------------------- Section 2. Conditions of Purchasers' Obligation at the August 2000 Closing... 4 --------------------------------------------------------------- 2A. General Conditions.............................................. 4 ------------------ 2B. Subordinated Loan Agreement..................................... 4 --------------------------- 2C. Registration Agreement.......................................... 4 ---------------------- 2D. Stockholders Agreement.......................................... 4 ----------------------- 2E. Warrant......................................................... 4 ------- 2F. Fees and Expenses............................................... 5 ----------------- Section 3. General Conditions to Purchasers' Obligation to Make Purchases.... 5 -------------------------------------------------------------- 3A. Representations and Warranties.................................. 5 ------------------------------ 3B. No Default...................................................... 5 ---------- 3C. Approved Use.................................................... 5 ------------ 3D. Acquisitions.................................................... 5 ------------ 3E. Certificates of Designation..................................... 6 --------------------------- 3F. Opinion of Counsel to the Company............................... 6 --------------------------------- 3G. Opinion of Company General Counsel.............................. 6 ---------------------------------- 3H. Acquisition Opinions............................................ 6 -------------------- 3I. Authorization; Listing.......................................... 6 ---------------------- 3J. Closing Documents............................................... 6 ----------------- 3K. Compliance with Applicable Laws................................. 7 ------------------------------- Section 4. Covenants......................................................... 7 --------- 4A. Financial Statements and Other Information...................... 7 ------------------------------------------ (i) Audit Report............................................. 7 ------------ (ii) Quarterly Reports........................................ 8 ---------------- (iii) Monthly Reports.......................................... 8 --------------- (iv) Reports to SEC and to Shareholders....................... 8 ---------------------------------- (v) Notice of Default, Litigation and ERISA Matters.......... 8 ----------------------------------------------- (vi) Management Reports....................................... 9 ------------------ (vii) Projections.............................................. 9 ----------- (viii) Other Information........................................ 9 ----------------- 4B Inspection of Property.......................................... 9 ---------------------- 4C. Listing......................................................... 10 ------- 4D. Section 203 of the DGCL......................................... 10 ----------------------
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Page ---- 4E. [Reserved]..................................................... 10 ---------- 4F. Restrictions................................................... 10 ------------ 4G. Affirmative Covenants.......................................... 15 --------------------- 4H. Current Public Information..................................... 15 -------------------------- 4I. Public Disclosures............................................. 15 ------------------ 4J. Unrelated Business Taxable Income.............................. 16 --------------------------------- 4K. Hart-Scott-Rodino Compliance................................... 16 ---------------------------- 4L. Rights Agreement............................................... 16 ---------------- 4M. [Reserved]..................................................... 16 ---------- 4N. [Reserved]..................................................... 16 ---------- 4O. Board of Director Nominations.................................. 16 ----------------------------- Section 5. Transfer of Restricted Securities................................ 16 --------------------------------- Section 6. Representations and Warranties of the Company.................... 17 -------------------------------------------- 6A Shareholders Consent........................................... 17 -------------------- 6B. Waiver of Vesting Upon Change in Control....................... 18 ---------------------------------------- 6C. Organization, Corporate Power and Licenses..................... 18 ------------------------------------------ 6D. Capital Stock and Related Matters.............................. 18 --------------------------------- 6E. Subsidiaries; Investments...................................... 19 ------------------------- 6F. Authorization; No Breach....................................... 19 ------------------------ 6G. Financial Statements........................................... 20 -------------------- 6H. Absence of Undisclosed Liabilities............................. 21 ---------------------------------- 6I. No Material Adverse Change..................................... 21 -------------------------- 6J. Absence of Certain Developments................................ 21 ------------------------------- 6K. Assets......................................................... 23 ------ 6L. Real Property.................................................. 23 ------------- (a) Owned Properties.......................................... 23 ---------------- (b) Leased Properties......................................... 23 ----------------- (c) Real Property Disclosure.................................. 24 ------------------------ 6M. Tax Matters.................................................... 24 ----------- 6N. Contracts and Commitments...................................... 25 ------------------------- 6O. Intellectual Property Rights................................... 26 ---------------------------- 6P. Litigation, etc................................................ 27 --------------- 6Q. Brokerage...................................................... 28 --------- 6R. Governmental Consent, etc...................................... 28 ------------------------- 6S. Insurance...................................................... 28 --------- 6T. Employees...................................................... 28 --------- 6U. Employee Benefit Plans......................................... 29 ---------------------- 6V. Compliance with Laws........................................... 30 -------------------- 6W. Environmental and Safety Matters............................... 30 -------------------------------- 6X. Affiliated Transactions........................................ 31 ----------------------- 6Y. Real Property Holding Corporation Status....................... 32 ----------------------------------------
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Page ---- 6Z. Customers and Suppliers........................................ 32 ----------------------- 6AA. Reports with the Securities and Exchange Commission............ 32 --------------------------------------------------- 6BB. Investment Company............................................. 32 ------------------ 6CC. Section 203 of the DGCL; Takeover Statute...................... 32 ----------------------------------------- 6DD. Rights Agreement............................................... 33 ---------------- 6EE. Purchaser Warrants............................................. 33 ------------------ 6FF. Disclosure..................................................... 33 ---------- Section 7. Definitions...................................................... 34 ----------- Section 8. Miscellaneous.................................................... 46 ------------- 8A. Expenses....................................................... 46 -------- 8B. Remedies....................................................... 47 -------- 8C. Purchaser's Investment Representations......................... 47 -------------------------------------- 8D. Funding Letter................................................. 48 -------------- 8E. Consent to Amendments.......................................... 48 --------------------- 8F. Survival of Representations and Warranties..................... 48 ------------------------------------------ 8G. Successors and Assigns......................................... 49 ---------------------- 8H. Generally Accepted Accounting Principles....................... 49 ---------------------------------------- 8I. Severability................................................... 49 ------------ 8J. Counterparts................................................... 49 ------------ 8K. Entire Agreement............................................... 49 ---------------- 8L. Descriptive Headings; Interpretation........................... 49 ------------------------------------ 8M. Governing Law.................................................. 50 ------------- 8N. Notices........................................................ 50 ------- 8O. Indemnification................................................ 51 --------------- (a) General.................................................. 51 ------- (b) Environmental Liabilities................................ 52 ------------------------- 8P. Standstill..................................................... 53 ---------- 8Q. Amendment and Restatement...................................... 53 -------------------------
-iii- AMENDED AND RESTATED PURCHASE AGREEMENT ------------------ THIS AMENDED AND RESTATED PURCHASE AGREEMENT (this "Agreement") dated --------- 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 ------- --------- VII"), GTCR Co-Invest, L.P., a Delaware limited partnership ("GTCR Co-Invest - --- -------------- Fund" and together with GTCR Fund VII, the "GTCR Purchasers"), and the - ---- --------------- TCW/Crescent Lenders (as defined herein) (each of the GTCR Purchasers and the TCW/Crescent Lenders a "Purchaser" and collectively, the "Purchasers"). Except --------- ---------- as otherwise indicated herein, capitalized terms used herein are defined in Section 7 hereof. - --------- RECITALS WHEREAS, the Company and GTCR Fund VII are parties to a Purchase Agreement dated as of January 27, 2000 (the "Original Purchase Agreement"); --------------------------- 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"); ------------------------------- 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 ------------ 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. --------------------------- 1A. Authorization of the Stock. The Company shall authorize the -------------------------- 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 ------------------- 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 ------------------------------------------------- heading "Shares of Series E Preferred Purchased at August 2000 Closing". In consideration for such shares and the Purchaser Warrants referred to in Section ------- 2E, each Purchaser shall deliver to the Company the aggregate amount set forth - -- 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 ---------- ----------- Closing") shall take place at the offices of Kirkland & Ellis, 200 East Randolph - ------- Drive, Chicago, Illinois 60601 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. -2- 1C. Subsequent Closings. ------------------- (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 ----------- as approved by the Board of Directors of the Company (the "Board") and the GTCR ----- Purchasers (an "Approved Use"). In order to implement the foregoing, the GTCR ------------ 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 ------------------ 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 --------- 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 ---------- 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. ------------------------------------------------- (b) Simultaneously with any purchase by the GTCR Purchasers of Preferred Stock at such Subsequent Closing pursuant to Section 1C(a) above, the ------------- 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, -------- ------- 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 ------------- 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 ------------- $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 -3- "TCW/Crescent Allocations" on the Schedule of Purchasers to the August 2000 ----------------------------------------- Closing. For the avoidance of doubt, for all purposes hereof, each purchase of - ------- Preferred Stock by the TCW/Lenders pursuant to this Section 1C(b) will be deemed ------------- 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 --------------------- take place at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601 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 ------------------------------------------------------- Closing. The obligation of each Purchaser to purchase and pay for the Series E - ------- 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 ------------------ ------- 3 shall have been satisfied with respect to the August 2000 Closing. - - 2B. Subordinated Loan Agreement. The Company and the Purchasers --------------------------- 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 ---------------------- have entered into the amended and restated registration agreement, dated as of the date of this Agreement, (the "Registration Agreement"), and the Registration ---------------------- Agreement shall be in full force and effect as of the August 2000 Closing. 2D. Stockholders Agreement. The Company and the Purchasers shall ---------------------- 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 ------- 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 ----------------------------- August 2000 Closing under the heading "Shares of Series E Preferred Granted - ------------------- 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 ----------------- Purchaser for its fees and expenses as provided in Section 8A hereof. ---------- -4- Any condition specified in this Section 2 may be waived only if such waiver is --------- set forth in a writing executed by each of the Purchasers. Section 3. General Conditions to Purchasers' Obligation to Make ---------------------------------------------------- Purchases. The obligation of each Purchaser to purchase the Preferred Stock at - --------- 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 ------------------------------ 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 - ---------- required to be provided to the Purchasers pursuant to Section 4A hereof, ---------- 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 ---------- 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 ------------ 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 ------------ 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 --------------------------- 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 -5- of certificate of designation attached hereto as Exhibit A except that the --------- 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 ------------- ---------------------- of Designations"), and 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 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 --------------------------------- 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 ---------------------------------- received an opinion from Alvin L. Thomas II, 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 -------------------- 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 ---------------------- 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 ------ official notice of issuance. 3J. Closing Documents. The Company shall have delivered to the ----------------- 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, ----------- -- 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 -6- (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 ------------------------------- 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 --------- 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 --------- give notice thereof to the other Purchasers in accordance with Section 8M ---------- hereof. Section 4. Covenants. --------- 4A. Financial Statements and Other Information. The Company shall ------------------------------------------ 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 ------------ 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 Arthur Andersen 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 ----------------- 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 -7- 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 --------------- 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 ---------------------------------- 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 ----------------------------------------------- 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. Hart-Scott-Rodino Compliance. In connection with any transaction ---------------------------- in which the Company is involved (an "HSR Transaction") which is required to be --------------- reported under the Hart-Scott-Rodino 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 Kirkland & Ellis 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 Kirkland & Ellis 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 Moody's 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 Golder Rauner, 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 Golder Rauner, 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 Golder Rauner, 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. 1800 Bering Drive, Suite 1000 Houston, TX 77057 Attention: Chief Financial Officer Telecopier No.: (713) 369-1760 With a copy to: -------------- Locke Liddell & Sapp LLP 3400 Chase Tower 600 Travis Street Houston, TX 77002-3095 Attention: Michael T. Peters Telecopier No.: (713) 223-3717 If to the Purchasers: -------------------- GTCR Fund VII, L.P. c/o GTCR Golder Rauner, L.L.C. 6100 Sears Tower Chicago, IL 60606 Attention: David A. Donnini Telecopier No.: (312) 382-2201 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. c/o TCW/Crescent Mezzanine, L.L.C. 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attention: Timothy P. Costello -49- Telecopier: (214) 740-7382 With a copy to: -------------- Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attention: Stephen L. Ritchie Telecopier No.: (312) 861-2200 and Gardere & Wynne, L.L.P. 3000 Thanksgiving Tower 1601 Elm Street Dallas, TX 75201 Attention: Gary B. Clark Telecopier No.: (214) 999-4667 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/ Ross M. Patten ------------------------------- Name: Ross M. Patten ------------------------------- Its: Chairman/CEO ------------------------------- GTCR FUND VII, L.P. By: GTCR Partners VII, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------- Name: David A. Donnini Its: Principal GTCR CO-INVEST, L.P. By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------- Name: David A. Donnini 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/ Timothy P. Costello ----------------------------------- Name: Timothy P. Costello Title: Managing Director TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisors (Bermuda), Limited as general partner By: /s/ Darryl L. Schall ------------------------------------ Name: Darryl L. Schall Title: Managing Director By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello -------------------------------- Name: Timothy P. Costello Title: Managing Director TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as general partner By: TCW Advisors (Bermuda), Ltd., as general partner By: /s/ Darryl L. Schall -------------------------------- Name: Darryl L. Schall Title: Managing Director By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello -------------------------------- Name: Timothy P. Costello Title: Managing Director TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company, as investment advisor By: /s/ Darryl L. Schall ----------------------------- Name: Darryl L. Schall Title: Managing Director By: /s/ Timothy P. Costello ----------------------------- Name: Timothy P. Costello Title: Managing Director By: TCW (LINC IV), L.L.C., as general partner By: TCW Asset Management Company, as its managing member By: /s/ Darryl L. Schall ----------------------------- Name: Darryl L. Schall Title: Managing Director By: /s/ Timothy P. Costello ----------------------------- Name: Timothy P. Costello 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
EX-99.10 4 0004.txt AMENDED & RESTATED SENIOR SUBORDINATED LOAN AGREEMENT Exhibit 10 FINAL ______________________________________________________________________________ AMENDED AND RESTATED SENIOR SUBORDINATED LOAN AGREEMENT Dated as of August 14, 2000 Among SYNAGRO TECHNOLOGIES, INC., as Borrower, CERTAIN SUBSIDIARY GUARANTORS, as Guarantors, and GTCR CAPITAL PARTNERS, 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. TCW LEVERAGED INCOME TRUST IV, L.P., as Lenders ________________________________________________________________________________ TABLE OF CONTENTS
Page(s) SECTION 1. DEFINITIONS............................................................. 2 1.1 Certain Defined Terms........................................................ 2 ---------------------- 1.2 Accounting Terms............................................................. 2 ---------------- SECTION 2. MAKING AND BORROWING OF LOANS........................................... 3 2.1 Making and Borrowing of Loans................................................ 3 ----------------------------- 2.2 Making of Loans; Notice...................................................... 3 ----------------------- 2.3 Use of Proceeds.............................................................. 4 --------------- 2.4 The Closing.................................................................. 4 ----------- SECTION 3. TERMS OF THE LOANS...................................................... 4 3.1 The Notes.................................................................... 4 --------- 3.2 Interest on the Loans........................................................ 4 --------------------- 3.3 Payment of Loans............................................................. 5 ---------------- 3.4 Voluntary Prepayments........................................................ 5 --------------------- 3.5 Mandatory Prepayments........................................................ 5 --------------------- 3.6 Application of Prepayments................................................... 6 -------------------------- 3.7 Prepayments During Two Year Period After Closing............................. 6 ------------------------------------------------ 3.8 Manner and Time of Payment................................................... 7 -------------------------- SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 8 4.1 Organization, Corporate Power and Licenses................................... 8 ------------------------------------------ 4.2 Capital Stock and Related Matters............................................ 8 --------------------------------- 4.3 Subsidiaries; Investments.................................................... 9 ------------------------- 4.4 Authorization; No Breach..................................................... 9 ------------------------ 4.5 Financial Statements......................................................... 10 -------------------- 4.6 Absence of Undisclosed Liabilities........................................... 10 ---------------------------------- 4.7 No Material Adverse Change................................................... 11 -------------------------- 4.8 Absence of Certain Developments.............................................. 11 ------------------------------- 4.9 Assets....................................................................... 12 ------ 4.10 Real Property................................................................ 13 ------------- 4.11 Tax Matters.................................................................. 13 ----------- 4.12 Contracts and Commitments.................................................... 14 ------------------------- 4.13 Intellectual Property Rights................................................. 16 ---------------------------- 4.14 Litigation, etc.............................................................. 17 --------------- 4.15 Brokerage.................................................................... 18 --------- 4.16 Governmental Consent, etc.................................................... 18 -------------------------
i 4.17 Insurance.................................................................... 18 --------- 4.18 Employees.................................................................... 18 --------- 4.19 Employee Benefit Plans....................................................... 18 ---------------------- 4.20 Compliance with Laws......................................................... 20 -------------------- 4.21 Environmental and Safety Matters............................................. 20 -------------------------------- 4.22 Affiliated Transactions...................................................... 21 ----------------------- 4.23 Real Property Holding Corporation Status..................................... 21 ---------------------------------------- 4.24 Customers and Suppliers...................................................... 21 ----------------------- 4.25 Reports with the Securities and Exchange Commission.......................... 22 --------------------------------------------------- 4.26 Investment Company........................................................... 22 ------------------ 4.27 Section 203 of the DGCL; Takeover Statute.................................... 22 ----------------------------------------- 4.28 Public Utility Holding Company Act........................................... 22 ---------------------------------- 4.29 Regulation U................................................................. 22 ------------ 4.30 Solvency, etc................................................................ 22 ------------- 4.31 Stockholder Consent.......................................................... 23 -------------------- 4.32 Disclosure................................................................... 23 ---------- SECTION 5. CONDITIONS TO LENDERS' OBLIGATION TO MAKE LOANS......................... 24 5.1 Conditions to Lenders' Obligation to Make the Bio Gro Loan................... 24 ---------------------------------------------------------- 5.2 Conditions to Lenders' Obligations to Make Subsequent Loans After the --------------------------------------------------------------------- Closing Date................................................................. 27 ------------ SECTION 6. COVENANTS............................................................... 28 6.1 Performance of Documents; etc................................................ 28 ----------------------------- 6.2 Securities Laws.............................................................. 28 --------------- 6.3 Reports, Certificates and Other Information.................................. 29 ------------------------------------------- 6.4 Books, Records and Inspections............................................... 31 ------------------------------ 6.5 Insurance.................................................................... 31 --------- 6.6 Compliance with Laws, Material Contracts; Payment of Taxes and -------------------------------------------------------------- Liabilities.................................................................. 32 ----------- 6.7 Maintenance of Existence, etc................................................ 32 ----------------------------- 6.8 Financial Covenants.......................................................... 32 ------------------- 6.9 Limitations on Debt.......................................................... 34 ------------------- 6.10 Liens........................................................................ 35 ----- 6.11 Reserved..................................................................... 36 --------- 6.12 Restricted Payments.......................................................... 36 ------------------- 6.13 Mergers, Consolidations, Sales............................................... 36 ------------------------------ 6.14 Further Assurances........................................................... 36 ------------------ 6.15 Transactions with Affiliates................................................. 37 ---------------------------- 6.16 Employee Benefit Plans....................................................... 37 ---------------------- 6.17 Environmental Laws........................................................... 37 ------------------ 6.18 Unconditional Purchase Obligations........................................... 37 ----------------------------------
ii 6.19 Inconsistent Agreements...................................................... 37 ----------------------- 6.20 Business Activities.......................................................... 37 ------------------- 6.21 Advances and Other Investments............................................... 37 ------------------------------ 6.22 Other Subordinated Debt...................................................... 38 ----------------------- 6.23 Foreign Subsidiaries......................................................... 39 -------------------- 6.24 Reserved..................................................................... 39 -------- 6.25 Amendments to Certain Documents.............................................. 39 ------------------------------- 6.26 Listing...................................................................... 39 ------- 6.27 Current Public Information................................................... 39 -------------------------- 6.28 Section 203 of the DGCL...................................................... 39 ----------------------- 6.29 Fiscal Year.................................................................. 39 ----------- 6.30 Board........................................................................ 40 ----- SECTION 7. EVENTS OF DEFAULT....................................................... 40 7.1 Events of Default............................................................ 40 ----------------- 7.2 Payment Default.............................................................. 40 --------------- 7.3 Other Debt................................................................... 40 ---------- 7.4 Other Material Obligations................................................... 41 -------------------------- 7.5 Non-Compliance with Provisions of This Agreement............................. 41 ------------------------------------------------ 7.6 Breach of Representations or Warranties...................................... 41 --------------------------------------- 7.7 Involuntary Bankruptcy, Appointment of Receiver, etc......................... 41 ---------------------------------------------------- 7.8 Voluntary Bankruptcy, Appointment of Receiver, etc........................... 42 -------------------------------------------------- 7.9 Judgments.................................................................... 42 --------- 7.10 Dissolution.................................................................. 42 ----------- 7.11 Solvency..................................................................... 42 -------- 7.12 Injunction................................................................... 42 ---------- 7.13 ERISA; Pension Plans......................................................... 42 -------------------- 7.14 Invalidity of Subordinated Loan Documents.................................... 42 ----------------------------------------- 7.15 Change in Control............................................................ 43 ----------------- 7.16 Consequences of Default...................................................... 43 ----------------------- SECTION 8. SUBORDINATION........................................................... 44 SECTION 9. THE GUARANTEES.......................................................... 44 9.1 The Guarantees............................................................... 44 -------------- 9.2 Guaranteed Obligations Unconditional......................................... 44 ------------------------------------ 9.3 Reinstatement................................................................ 45 ------------- 9.4 Subrogation.................................................................. 45 ----------- 9.5 Contribution................................................................. 45 ------------ 9.6 Remedies..................................................................... 47 -------- 9.7 Continuing Guarantee......................................................... 47 -------------------- 9.8 Subordination of Guaranteed Obligations...................................... 47 ---------------------------------------
iii SECTION 10. TRANSFERS OF NOTE; LEGENDS.............................................. 47 10.1 Assignments of Notes......................................................... 47 -------------------- 10.2 Investment Representations; Restrictive Legend............................... 48 ---------------------------------------------- 10.3 Termination of Restrictions.................................................. 49 --------------------------- 10.4 Notes Legend relating to Subordination....................................... 49 --------------------------------------- 10.5 Notes Legend relating to Original Issue Discount............................. 49 ------------------------------------------------ SECTION 11. MISCELLANEOUS........................................................... 49 11.1 Expenses..................................................................... 49 -------- 11.2 Indemnity.................................................................... 50 --------- 11.3 Amendments and Waivers....................................................... 51 ---------------------- 11.4 Independence of Covenants.................................................... 52 ------------------------- 11.5 Notices...................................................................... 52 ------- 11.6 Survival of Warranties and Certain Agreements................................ 54 --------------------------------------------- 11.7 Failure or Indulgence Not Waiver; Remedies Cumulative........................ 54 ----------------------------------------------------- 11.8 Severability................................................................. 54 ------------ 11.9 Heading...................................................................... 54 ------- 11.10 Applicable Law............................................................... 54 -------------- 11.11 Successors and Assigns; Subsequent Holders................................... 54 ------------------------------------------ 11.12 Consent to Jurisdiction and Service of Process............................... 55 ---------------------------------------------- 11.13 Waiver of Jury Trial......................................................... 55 -------------------- 11.14 No Personal Obligations...................................................... 55 ----------------------- 11.15 Counterparts; Effectiveness.................................................. 56 --------------------------- 11.16 Entirety..................................................................... 56 -------- 11.17 Amendment and Restatement.................................................... 56 ------------------------- 11.18 TCW Representative........................................................... 56 ------------------
iv AMENDED AND RESTATED SENIOR SUBORDINATED LOAN AGREEMENT THIS AMENDED AND RESTATED SENIOR SUBORDINATED LOAN AGREEMENT (this "Agreement") is made as of August 14, 2000, by and among (i) Synagro - ---------- Technologies, Inc., a Delaware corporation (the "Company"), as borrower, (ii) ------- the Guarantors (as defined hereafter) which appear on the signature pages hereto or otherwise execute a counterpart hereto, as guarantors, and (iii) GTCR Capital Partners, L.P., a Delaware limited partnership ("GTCR Capital") and the ------------ TCW/Crescent Lenders (as defined hereafter) as lenders (individually, a "Lender" ------ and collectively, the "Lenders"). ------- RECITALS WHEREAS, the Company and GTCR Capital are parties to a Senior Subordinated Loan Agreement dated as of January 27, 2000 (the "Original Loan ------------- Agreement") pursuant to which GTCR Capital has loaned $26,380,400 (the "Existing - --------- -------- GTCR Debt") to the Company prior to the date of this Agreement; - --------- WHEREAS, the Company has entered into a Stock Purchase Agreement, dated as of April 28, 2000 (the "Bio Gro Acquisition Agreement"), with Resco ----------------------------- Holding, Inc., Waste Management Holdings, Inc. and Waste Management, Inc.; WHEREAS, the Company has entered into a Second Amended and Restated Credit Agreement (the "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 (the "Agent"), 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; WHEREAS, the Company has entered into an Amended and Restated Purchase Agreement (the "Purchase Agreement"), dated as of the date hereof, with GTCR ------------------ Fund VII, L.P., a Delaware limited partnership, GTCR Co-Invest, L.P., a Delaware limited partnership, and the TCW/Crescent Lenders for the purpose of financing a part of the Bio Gro Acquisition and to provide future financing to the Company; WHEREAS, the Company, GTCR Capital and the TCW/Crescent Lenders have agreed to enter into this Agreement in order, among other things, to: (a) amend and restate the Original Loan Agreement in its entirety and (b) join the TCW/Crescent Lenders as parties hereto; WHEREAS, the Lenders intend to make available or arrange for Loans to the Company in the aggregate amount of up to $125,000,000 (including the Existing GTCR Debt and the amount of the Loan made on the Closing Date), and such Loans will be available to the Company -1- from time to time on and after the Closing Date on the terms and subject to the conditions set forth in this Agreement; WHEREAS, the Guarantors are wholly-owned Subsidiaries of the Company and desire that the Lenders enter into this Agreement for their mutual benefit; WHEREAS, prior to the date hereof the Company has issued to GTCR Capital Warrants (as defined herein) to purchase 3,853.001 shares of the Company's Preferred Stock; WHEREAS, on the Closing Date in connection with the Bio Gro Loan (as defined hereafter) and from time to time thereafter in connection with the borrowing of subsequent loans hereunder, the Company shall issue to the Lenders Warrants to purchase shares of the Company's Preferred Stock; WHEREAS, the Lenders, as holders of the Warrants, will enter into an Amended and Restated Registration Agreement (the "Registration Agreement"), ---------------------- dated as of the date hereof, by and among the Company, the Lenders, GTCR Fund VII, L.P., and others; 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 Loan Agreement, but merely a restatement of and, where applicable, an amendment to the terms governing such obligations. AGREEMENT NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the Original Loan Agreement is amended and restated in its entirety, and the parties hereto, intending to be legally bound, hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. Capitalized terms used in this Agreement shall --------------------- have the meanings set forth in Exhibit A hereto. --------- 1.2 Accounting Terms. All accounting terms not specifically defined ---------------- herein shall be construed, all accounting determinations hereunder shall be made, and all financial statements required to be delivered pursuant hereto shall be prepared, in accordance with GAAP. No Accounting Changes shall affect the financial covenants, standards or terms contained in this Agreement; provided, that, the Company shall include a description in each Borrowers' - -------- Certificate and other financial reports required to be delivered hereunder which explains the differences between the financial statements delivered (which reflect such Accounting Changes) and the basis for calculating financial covenant compliance (without reflecting such Accounting Changes). -2- SECTION 2. MAKING AND BORROWING OF LOANS 2.1 Making and Borrowing of Loans. Subject to the terms and conditions of ----------------------------- this Agreement and on the basis of the representations and warranties set forth herein, the Lenders may make loans (each a "Loan," and collectively, the ---- "Loans") to the Company as set forth in Section 2.2, and the Company may borrow, ----- ----------- prepay and repay such Loans hereunder in accordance with the terms of this Agreement, at any time and from time to time on any Business Day prior to the termination of this Agreement. Loans that are prepaid or repaid may not be reborrowed. The obligation of the Company to repay any Loan made by the Lenders and borrowed by the Company shall be evidenced by the Company's execution and delivery to each Lender of a Note described in Section 3.1 below. ----------- 2.2 Making of Loans; Notice. ----------------------- 2.2.1. Minimum Amount. Each Loan borrowed by the Company hereunder -------------- shall be in a minimum aggregate principal amount of $100,000 or an integral multiple thereof. 2.2.2. Bio Gro Loan. The Loan that shall be made on the date hereof ------------ shall be in the amount of $26,379,992.75 (the "Bio Gro Loan"). The Bio Gro Loan ------------ shall be allocated as follows: GTCR Capital shall loan zero dollars and the TCW/Crescent Lenders shall loan $26,379,992.75. 2.2.3. Allocation of Loans. After the funding of the Bio Gro Loan, ------------------- each Loan shall be funded by the Lenders in the respective percentages set forth on Schedule 2.2.3 hereto, with the presumption being that GTCR Capital and the -------------- TCW/Crescent Lenders shall each fund 50% of each Loan. If the TCW/Crescent Lenders elect not to fund an Approved Use (as defined below), GTCR Capital will fund 100% of the Loan. Regardless of whether the TCW/Crescent Lenders ever elect not to fund an Approved Use, the TCW/Crescent Lenders shall have the option to fund 50% of each Loan made under this Agreement after the funding of the Bio Gro Loan. 2.2.4. Future Loans; Approved Uses. Subject to the terms and --------------------------- conditions hereof, the Lenders may make or arrange for up to an aggregate of $125,000,000 in Loans (including the Existing GTCR Debt) to the Company as subordinated debt financing necessary to finance a portion of the purchase price of the Bio Gro Acquisition on the Closing Date and to finance in part one or more future acquisitions and such other uses as GTCR Capital approves in writing (the "Future Acquisitions"), in each case as approved by the Board and GTCR ------------------- Capital (in each case, an "Approved Use"). In order to implement the foregoing, ------------ each Lender, acting individually, may, but is not obligated to, make Loans to the Company from time to time after the Closing, upon the written request of the Board (with at least ten Business Days' prior notice), solely for purposes of an Approved Use and subject to the fulfillment of all applicable conditions set forth in this Agreement. Each Lender shall pay or deliver the proceeds of any Loan to be made by it in immediately available funds to or upon the order of the Company at a commercial bank designated by the Company in a notice of borrowing delivered to such Lender. -3- 2.3 Use of Proceeds. The proceeds of any Loans made hereunder and of the --------------- Warrants pursuant to the Warrant Agreement shall be used solely for the Approved Use. No portion of the proceeds of any Loans made hereunder or the Warrants pursuant to the Warrant Agreements shall be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any "margin stock" within the meaning of any regulation, interpretation or ruling of the FRB, all as from time to time in effect, refunding of any indebtedness incurred for such purpose, or making any investment prohibited by foreign trade regulations. Without limiting the foregoing, the Company agrees that in no event shall any proceeds of any Loans made hereunder or from the sale of the Warrants pursuant to the Warrant Agreements be used in any manner which might cause the Loans, the Warrants or the application of such proceeds to violate any of Regulations U or X of the FRB or any other regulation of the FRB, or to violate the Exchange Act, in each case as in effect as of the Closing and as of such use of proceeds. 2.4 The Closing. Subject to the satisfaction of the conditions thereto ----------- set forth in this Agreement, the closing of the Bio Gro Loan made by the Lenders and borrowed by the Company hereunder (the "Closing") shall take place at 10:00 ------- a.m. Chicago time as of the date of this Agreement, at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, or at such other date, time and/or location(s) or by such other means, including transmission of signature pages by telecopy as may be agreed upon by the parties hereto (the "Closing Date"). - ------------- SECTION 3. TERMS OF THE LOANS 3.1 The Notes. The obligation of the Company to repay the aggregate --------- unpaid principal amount of the Existing GTCR Debt, the Bio Gro Loan and subsequent Loans made hereunder by any Lender shall be evidenced by a promissory note in the form attached hereto as Exhibit B (each, a "Note" and together, the --------- ---- "Notes"), dated the date hereof, payable as specified in this Section 3, made to ----- --------- the order of the applicable Lender, or its nominee, in the respective amounts set forth on Schedule 3.1 hereto, and bearing interest and maturing as provided ------------ in this Agreement. Each Lender shall, and is hereby authorized by the Company to, endorse on the schedules annexed to the Notes an appropriate notation evidencing the date and amount of each Loan made by such Lender as well as the date and amount of each payment of principal and interest by the Company with respect thereto and which notations shall be presumed correct until the contrary is established; provided that the failure to make or any error in making any -------- ---- such notation shall not limit or expand or otherwise affect the obligations of the Company hereunder or under the Notes. The existing promissory note issued to GTCR Capital in the amount of $125,000,000 under the Original Loan Agreement shall be replaced by a Note in the amount of $98,620,007.25 (as set forth on Schedule 3.1). - ------------ 3.2 Interest on the Loans. --------------------- 3.2.1. The Loans shall bear interest at a rate equal to 12% per annum on the unpaid principal amount thereof from and including the Closing Date until the principal amount shall be paid in full, such interest to be payable in cash in the manner specified in Section 3.7. Notwithstanding the foregoing, upon the ----------- occurrence of an Event of Default hereunder and for so long -4- as an Event of Default is continuing, the interest rate, to the extent permitted by law, on the unpaid principal amount of the Loans shall increase to 14%. 3.2.2. Interest shall be payable with respect to the Loans, in arrears, on the last day of each Interest Period, upon any prepayment of the Loans (to the extent of accrued interest on the principal amount of the Loans so prepaid) and at maturity of the Loans. The "Interest Period" means (i) --------------- initially, the period commencing (a) on the date such loans were made (with respect to the Existing GTCR Debt), (b) on the Closing Date (with respect to the Bio Gro Loan) or (c) on the date any subsequent Loan is made (with respect to subsequent Loans) and ending on the next succeeding Interest Payment Date and (ii) thereafter, each quarterly period ending on March 25, June 25, September 25, or December 25, as applicable (each such date for an interest payment, an "Interest Payment Date"); provided, that, no Interest Period shall extend beyond --------------------- -------- ---- the Maturity Date. 3.2.3. Interest on the Loans shall be computed on the basis of a 360- day year of twelve 30-day months. In computing such interest, the date or dates of the making of the Loans shall be included and the date of payment shall be excluded. 3.3 Payment of Loans. The unpaid principal amount of the Loans plus all ---------------- accrued and unpaid interest thereon and all other amounts owed thereunder with respect thereto shall be paid in full in cash on the Maturity Date. 3.4 Voluntary Prepayments. Subject to the terms and conditions of the --------------------- Credit Documents, the Loans may be prepaid, at the Company's option, at any time and from time to time, in whole or in part, without premium, fee or penalty except to the extent provided in Section 3.7 below, (a) upon not less than five ----------- (5) Business Days and not more than thirty (30) Business Days prior written notice to the Lenders (which notice shall be irrevocable) and (b) in an aggregate minimum amount of $1,000,000 and integral multiples of $250,000 in excess of that amount. 3.5 Mandatory Prepayments. --------------------- 3.5.1. Asset Sales. Subject to the terms and conditions of the ----------- Credit Documents (which do require application of proceeds), concurrently with the receipt by the Company or any Subsidiary of any Applicable Asset Sale Proceeds, the Company shall make a prepayment of the Loans in an amount equal to 100% of such Applicable Asset Sale Proceeds (rounded down, if necessary, to an integral multiple of $100,000); provided that no such prepayment shall be -------- required unless the aggregate amount of Applicable Asset Sale Proceeds so received together with all Applicable Asset Sale Proceeds previously received and not previously applied to prepay the Loans pursuant to this clause 3.5.1 ------------ exceeds $100,000. 3.5.2. Debt Issuances. Subject to terms and conditions of the Credit -------------- Documents, concurrently with the receipt by the Company or any Subsidiary of any Net Cash Proceeds from the issuance of any Debt (other than Debt permitted by Section 6.9(a) or (c) and the Loans hereunder), - --------------------- -5- the Company shall make a prepayment of the Loans in an amount equal to 100% of such Net Cash Proceeds. 3.5.3. Equity Issuances. Subject to the terms and conditions of the ---------------- Credit Documents, concurrently with the receipt by the Company of any Net Cash Proceeds (other than pursuant to sales of Purchased Preferred pursuant to the Purchase Agreement) from the issuance of any equity securities of the Company, the Company shall make a prepayment of the Loans in an amount equal to 100% of such Net Cash Proceeds; provided that no such prepayment shall be required with -------- respect to the sale of stock or granting of stock options (or the exercise thereof) to officers, directors and employees of the Company and its Subsidiaries for an aggregate of $2,000,000. 3.5.4. Notice. The Company shall notify the Lenders of any event ------ which could reasonably be expected to give rise to any prepayment to be made pursuant to Sections 3.5.1 through 3.5.3 as soon as practicable prior to such -------------- ----- prepayment date. 3.5.5. Calculation of Net Proceeds Amounts. Concurrently with any ----------------------------------- prepayment of the Loans pursuant to Sections 3.5.1 through 3.5.3, the Company -------------- ----- shall deliver to the Lenders a Borrowers' Certificate demonstrating the calculation of the amount of the proceeds that gave rise to such prepayment. 3.6 Application of Prepayments. All prepayments (whether voluntary or -------------------------- mandatory) shall include, notwithstanding Section 3.2.2 above, the payment in ------------- cash of accrued and unpaid interest on the principal amount of the Loans so prepaid and shall be applied first to payment of accrued interest and then to principal. 3.7 Prepayments During Two Year Period After Closing. Notwithstanding any ------------------------------------------------ other provision of this Agreement, if the Loans are prepaid pursuant to either Section 3.4 or 3.5, in whole or in part, prior to the second anniversary of the - ------------------ Closing, a portion of the repayment that would otherwise have been payable to the holder of holders of the GTCR Capital Note equal to the result of (a) the product of (1) the Prepayment Factor (as defined below) and (2) the percent of the outstanding Loans held by the TCW/Crescent Lenders multiplied by (b) the ------------- amount of the prepayment shall instead be paid to the holders of the TCW/Crescent Lenders' Notes. The amount otherwise payable to the holders of the GTCR Capital Notes shall be proportionately reduced by such adjustment amount. The "Prepayment Factor" shall be 5% through the first anniversary of the Closing ----------------- (the "First Anniversary") and shall be 4% from (but not including) the First ----------------- Anniversary through the second anniversary of the Closing, provided that in the -------- event that the prepayment occurs as a result of a Sale of the Company or a Public Offering, the Prepayment Factor shall be 2%. Notwithstanding the actual amounts that are repaid pursuant to this Section 3.7, the balances on the Notes ----------- held by the Lenders shall be reduced without giving effect to this Section 3.7. ----------- This Section 3.7 shall not apply after the second anniversary of the Closing. ----------- -6- 3.8 Manner and Time of Payment. -------------------------- 3.8.1. All payments by the Company under the Notes of principal and interest and fees hereunder shall be made without defense, set-off or counterclaim, in same day funds and delivered to each holder of a Note not later than 12:00 noon (Chicago time) on the date such payment is due by wire transfer of immediately available funds to the following accounts or such other place as any such holder may from time to time designate: For GTCR Capital: ---------------- ABA No.: 07100505 Account Number: 5800151556 Account Name: GTCR Capital Partners, L.P. LaSalle National Bank 135 S. LaSalle Chicago, IL 60603 Reference: Synagro Technologies, Inc. For the TCW/Crescent Lenders: ---------------------------- Bank of New York One Wall Street New York, New York 10005 ABA No.: 021-000-018 BNF: IOC 565 BBI: A/C No. 355-744 Account Name: Mezzanine Master Wire Account Attn: Sharon Jackson (213) 630-6420 provided, that, funds received by any such holder after 12:00 noon (Chicago - -------- time) shall be deemed to have been paid by the Company on the next succeeding Business Day. 3.8.2. Whenever any payment to be made hereunder or under the Notes shall be stated to be due on a day which is not a Business Day, the payment shall be made on the next succeeding Business Day and such additional period shall be included in the computation of the payment of interest hereunder or under the Notes. 3.9 Pro Rata Payment. Except as expressly provided in Sections 3.7 and ---------------- ---------------- 7.16.1, all payments to the holders of the Notes (whether of principal, interest - ------ or otherwise) shall be made pro rata among such holders based upon the aggregate unpaid principal amount of the Notes held by each such holder. If any holder of a Note obtains any payment (whether voluntary or involuntary) of principal, interest or other amount with respect to any Note in excess of such holder's pro rata share of such payments obtained by all holders of the Notes (other than as expressly provided in Sections -------- -7- 3.7 and 7.16.1), by acceptance of a Note each such holder agrees to purchase - --------------- from the other holders of the Notes a participation in the Notes held by them as is necessary to cause such holders to share the excess payment ratably among each of them as provided in this paragraph. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY In order to induce the Lenders to enter into this Agreement and to make Loans to the Company hereunder, the Company and each of the Guarantors represent, warrant and agree for the benefit of the Lenders that: 4.1 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 transac tions contemplated by this Agreement. The copies of the Company's and each Subsidiary's charter documents and bylaws which have been furnished to the Lenders' special counsel reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete. 4.2 Capital Stock and Related Matters. --------------------------------- 4.2 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." 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 attached 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 and the expiration date. 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. -8- 4.2.2. 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 Purchased Preferred or the issuance of the Common Stock issuable upon conversion of the Warrant Shares or the Purchase Preferred 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 Purchased Preferred 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 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. ----------------------- 4.3 Subsidiaries; Investments. The attached "Subsidiary Schedule" ------------------------- ------------------- correctly sets forth the name of each Subsidiary, the jurisdiction of its incorporation and the Persons owning the out standing 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. 4.4 Authorization; No Breach. The execution, delivery and performance of ------------------------ the Documents and all other agreements contemplated hereby to which the Company is a party and the filing of the Certificate of Designation have been duly authorized by the Company. The Documents and the Certificate of Designation and all other agreements contemplated hereby to which the Company is a party 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 the Documents and all other agreements contemplated hereby to which the Company is a party, the offering, sale and issuance of the Purchased Preferred, the issuance of the Common Stock upon conversion of the Preferred Stock, the issuance of Warrants pursuant to the Warrant Agreements and the Purchase Agreement, the issuance of the Warrant Shares upon exercise of Warrants, the filing of the Certificate of Designation 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 -9- 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. 4.5 Financial Statements. Attached hereto as the "Financial Statements -------------------- -------------------- Schedule" are the following financial statements: - -------- 4.5.1. 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, 1996, 1997, 1998 and 1999; and 4.5.2. 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 June 30, 2000, which gives effect to the Transactions and the Bio Gro Acquisition, 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. 4.6 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 -10- 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 contracts not required to be disclosed on the Contracts Schedule. ------------------ 4.7 No Material Adverse Change. Except as set forth on the attached -------------------------- "Adverse Change Schedule" or, without duplication, as a result of the Special - ------------------------ Charges, 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. 4.8 Absence of Certain Developments. ------------------------------- 4.8.1. 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; -11- (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; (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 Future Acquisitions approved by the Board and the Lenders; 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. 4.8.2. 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 . 4.9 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 -12- 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. 4.10 Real Property. ------------- 4.10.1. 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 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. 4.10.2. 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 by the documents delivered to the Lenders; and (vii) neither the Company nor any of it Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease. 4.10.3. 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. 4.11 Tax Matters. ----------- 4.11.1 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 -13- 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 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. 4.11.2. 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. 4.12 Contracts and Commitments. ------------------------- 4.12.1. 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 -14- 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; (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; -15- (m) contract or agreement prohibiting it from freely engaging in any business or competing anywhere in the world; (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. 4.12.2 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 any Subsidiary is subject; neither the Company nor any Subsidiary has any present expectation or intention of not fully performing all such obligations; and 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. 4.13 Intellectual Property Rights. ---------------------------- 4.13.1. The attached "Intellectual Property Schedule" contains a ------------------------------ complete and accurate list of all (a) patented or registered Intellectual Property Rights owned or used by the Company or any Subsidiary, (b) pending patent applications and applications for registrations of other Intellectual Property Rights filed by the Company or any Subsidiary, (c) unregistered trade names and corporate names owned or used by the Company or any Subsidiary and (d) 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 -16- 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. 4.13.2. (a) 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, (b) 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, (c) neither the Company nor any Subsidiary has received any notices of, and is not aware of any facts which indicate a likelihood of, any infringe ment 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), (d) the conduct of the Company's and each Subsidiary's business has not infringed, misappropriated or conflicted with and does not infringe, 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 (e) 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. ------------------------------ 4.14 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. -17- 4.15 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 Lenders 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. 4.16 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 execu tion, 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. 4.17 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 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. 4.18 Employees. The Company is not aware that any of the persons set forth --------- in the "Schedule of Key Employees" 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. 4.19 Employee Benefit Plans. ---------------------- 4.19.1. 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"), ------------ -18- 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. 4.19.2. 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 Closing Date, transferred out of the Company's Controlled Group. 4.19.3. None of the Benefits Plans is a multiemployer plan (as defined in Section 3(37) of ERISA). 4.19.4. 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). 4.19.5. 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. 4.19.6. 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 Buyer, 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. 4.19.7. 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. -19- 4.19.8. 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. 4.20 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. 4.21 Environmental and Safety Matters. -------------------------------- 4.21.1 Except as set forth on the attached "Environmental Schedule": ---------------------- (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; -20- (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. 4.22 Affiliated Transactions. 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. 4.23 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. 4.24 Customers and Suppliers. ----------------------- 4.24.1. 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. 4.224.2. 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, -21- 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. 4.25 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 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. 4.26 Investment Company. The Company is not an "investment company" as ------------------ defined under the Investment Company Act of 1940. 4.27 Section 203 of the DGCL; Takeover Statute. The Board has taken all ----------------------------------------- actions necessary or advisable so that the restrictions contained in Section 203 of the Delaware General Corporate Law (the "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 Preferred Stock, the Warrants and all future issuances 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. 4.28 Public Utility Holding Company Act. Neither the Company nor any ---------------------------------- Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935. 4.29 Regulation U. The Company is not engaged principally, or as one of ------------ its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. 4.30 Solvency, etc. On the Closing Date and the date of each subsequent -------------- Loan hereunder (or, in the case of any Person which becomes a Guarantor after the Closing Date, on the date such Person becomes a Guarantor), and immediately prior to and after giving effect to each borrowing hereunder and under the Credit Agreement and the use of the proceeds thereof (and after giving effect to any right of contribution and subrogation), (a) each of the Company's and each Guarantor's assets will exceed its liabilities and (b) each of the Company and each Guarantor will be solvent, will be able to pay its debts as they mature, will own property with fair saleable value greater than the -22- amount required to pay its debts and will have capital sufficient to carry on its business as then constituted. 4.31 Stockholder Consent. The Stockholders 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"). 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 Stockholders 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. 4.32 Disclosure. All information heretofore or contemporaneously herewith ---------- furnished in writing by the Company or any Subsidiary to each Lender 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 each Lender 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 Lenders 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 Lenders in writing and of which any of its officers, directors or executive employees is aware (other than general economic and industry conditions) and which has had or would reasonably be expected to have a Material Adverse Effect. On the Closing Date and the date of each subsequent Loan hereunder, 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 borrowing hereunder and under the Credit Agreement and the application of the proceeds therefrom including the Bio Gro Acquisition or any Future Acquisitions as if said acquisition had at that time been made. Without limiting the foregoing, to the extent representations and warranties are being made in connection with a Loan the proceeds of which will be used to consummate the Bio Gro Acquisition or a Future Acquisition, the Company's "Subsidiaries" in such representations and warranties shall include the entities and businesses being acquired pursuant to the Bio Gro Acquisition or Future Acquisitions. 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, -23- shall not constitute a breach hereof; provided that any such amendment or -------- supplement shall be approved by GTCR Capital and shall be in a form satisfactory to GTCR Capital; and further provided that no such amendment or supplement shall ------- -------- cure a Default or Event of Default hereunder. SECTION 5. CONDITIONS TO LENDERS' OBLIGATION TO MAKE LOANS 5.1 Conditions to Lenders' Obligation to Make the Bio Gro Loan. The ---------------------------------------------------------- obligation of each Lender to make the Bio Gro Loan on the Closing Date is subject to the satisfaction of the following conditions, each as of the Closing Date and any of which may be waived (in whole or in part) by such Lender: 5.1.1. Equity Funding. The Purchasers (as defined in the Purchase -------------- Agreement) shall have purchased from the Company for cash Preferred Stock pursuant to the Purchase Agreement in an amount equal to at least $29,002,531. 5.1.2. Representations and Warranties; No Default. ------------------------------------------ (a) All representations and warranties of the Company and the Guarantors 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). (b) No Default or Event of Default shall exist as of the Closing Date or would result from the consummation of the borrowings made by the Company on the Closing Date. 5.1.3. Documents Satisfactory; Transactions Consummated. Each of the ------------------------------------------------ Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect. All of the terms, conditions and provisions of each of such documents shall be satisfactory to the Lenders in all respects in form and substance, and no term, condition or provision thereof shall have been supplemented, amended, modified or waived without the Lenders' consent. 5.1.4. Opinion of Counsel to the Company. The Lenders shall have --------------------------------- received an opinion from Locke, Liddell & Sapp LLP special counsel for the Company, which shall be addressed to the Lenders, dated the Closing Date and in form and substance reasonably satisfactory to the Lenders. 5.1.5. Opinion of Company General Counsel. The Lenders shall have ---------------------------------- received an opinion from Alvin L. Thomas II, general counsel for the Company, which shall be addressed to the Lenders, dated the Closing Date and in form and substance reasonably satisfactory to the Lenders. -24- 5.1.6. Delivery of Documents. Each Lender shall have received the --------------------- following items, each of which shall be in form and substance reasonably satisfactory to such Lender: (a) Executed copies of this Agreement, a Note issued in the name of such Lender, the Warrant Agreements and the Warrants issued in the name of such Lender. (b) Resolutions of the Board and each board of directors of each Subsidiary of the Company approving the transactions contemplated by the Documents, and approving and authorizing the execution, delivery and performance of each Document to which it is a party and approving and authorizing the borrowing of the Loans, the execution, delivery and payment of the Notes of the obligations thereunder, in each case certified as of the Closing Date by the secretary or an assistant secretary of the Company as being in full force and effect without modification or amendment. (c) A copy of the certificate of incorporation of the Company certified by the secretary of State of Delaware, together with a good standing certificate from the secretary of state of Delaware as to the Company, to be dated a recent date prior to the Closing Date. (d) A certificate of the Company, signed on its behalf by a duly authorized officer, dated the Closing Date (the statements made in which certificate shall be true on and as of such date) certifying as to (A) a true and correct copy of the charter of such Person and any amendments thereto, (B) a true and correct copy of the by-laws of such Person as in effect on the Closing Date, and (C) the completeness and accuracy of the representations and warranties contained in Documents as of the Closing Date, including the absence of any event occurring and continuing, or resulting from the Transactions, that constitutes a Default or an Event of Default. (e) A certificate of the secretary of the Company certifying the names and true signatures of the officers of the Company, as applicable, executing the Documents. (f) True and correct copies of all of the Documents. (g) Copies of all third party and governmental consents, approvals and filings required in connection with the consummation of the Transactions. (h) A certificate of the chief financial officer of the Company as to (a) consolidated financial statements for the Bio Gro Acquisition and its Subsidiaries for the periods required under Rule 3-05 of Regulation S-X of the SEC, including balance sheets, income statements and cash flow statements audited by independent public accountants of recognized national standing and prepared in conformity with GAAP (provided that unaudited financial statements may be supplied if the Company agrees to provide audited financial statements as of, and for the years ended, December 31, 1998 and 1999 within 75 days after the Closing Date), (b) a pro forma balance sheet of the Company and its -25- Subsidiaries as of the Closing Date after giving effect to the Bio Gro Acquisition and the transactions contemplated hereby and reflecting estimated purchase accounting adjustments, prepared by the chief financial officer of the Company and (c) the business plan and financial projections of the Company and its Subsidiaries for Fiscal Years 2000 through 2004. (i) A Borrower's Certificate in a form reasonably satisfactory to the Lenders, dated the Closing Date, stating that the conditions specified in Sections 5.1.1 through 5.1.3 (inclusive) and Sections 5.1.9 through ---------------------------- ---------------------- 5.1.14 (inclusive) have been satisfied. ------ 5.1.7. Corporate/Capital Structure. The Lenders shall be satisfied --------------------------- with the ownership, corporate and legal structure and capitalization of the Company and its Subsidiaries, including, without limitation, the terms and conditions of their respective charters and by-laws, the terms of the Company's and such Subsidiaries' capital stock, options, warrants or other securities and any agreements related thereto. 5.1.8. Lenders' Equity. Each Lender shall have received the Warrants --------------- to be issued to it pursuant to the applicable Warrant Agreement and the Purchase Agreement. 5.1.9. No Material Adverse Change. Nothing shall have occurred (and -------------------------- the Lenders shall not be aware of any facts or conditions not previously known) which the Lenders shall determine has or reasonably could be expected to have, a Material Adverse Effect. 5.1.10. Litigation. There shall exist no action, suit, investigation, ---------- litigation or proceeding affecting the Company or any of its Subsidiaries or any of their respective properties pending or, to the knowledge of the Company, threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of the Documents or the consummation of the transactions contemplated hereby and thereby. No order, judgment or decree of any court, arbitrator or governmental authority shall enjoin or restrain the Lenders from making the Loans. 5.1.11. Certain Fees. On the Closing Date, the Company shall pay all ------------ expenses of the Lenders (including, without limitation, legal fees and expenses) incurred in connection with the negotiation and execution of this Agreement and the other Documents. 5.1.12. No Violation of Regulations U or X. The making of the Loans ---------------------------------- shall not violate Regulations U or X of the FRB. 5.1.13. Monitoring Agreement. The Company shall have entered into the -------------------- Monitoring Agreement, the Monitoring Agreement shall be in full force and effect, and any fees due thereunder shall have been paid in full. -26- 5.1.14. Authorization; Listing. The Company's shares issuable upon ---------------------- conversion of the Convertible Preferred shall have been duly authorized and reserved for issuance and such shares shall have been approved for listing on Nasdaq, subject to official notice of issuance. 5.2 Conditions to Lenders' Obligations to Make Subsequent Loans After the --------------------------------------------------------------------- Closing Date. The obligation of each Lender to make subsequent Loans to the - ------------ Company hereunder after the Closing Date is subject to the satisfaction of the following conditions, each as of the date of each such subsequent Loan (a "Subsequent Closing Date") and any of which (except as set forth in Section ----------------------- ------- 5.2.2) may be waived (in whole or in part) by such Lender: - ----- 5.2.1. Representations and Warranties. All representations and ------------------------------ 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 subsequent Loan, before and after giving effect to such Loan 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 Lenders pursuant to Section ------- 6.3 hereof and the latest consolidated balance sheet of the Company required to - --- be provided to the Lenders pursuant to Section 6.3 hereof, respectively, and (b) ----------- references to the date of this Agreement, the Closing Date and the like shall be deemed to refer to the Subsequent Closing Date. 5.2.2. No Default. No Default or Event of Default shall exist as of ---------- the date of such subsequent Loan or would result from the consummation of the borrowings made by the Company on the Subsequent Closing Date. If an Event of Default under Section 7.2 or as result of a failure to comply with Section 6.8 ----------- ----------- shall exist as of the date of such subsequent Loan or would result from the consummation of the borrowings made by the Company on the Subsequent Closing Date, all of the Lenders must waive such Default or Event of Default in order for any Lender to make such subsequent Loan. 5.2.3. Approved Use. The Lenders shall have received evidence ------------ satisfactory to them that the proceeds of such subsequent Loan will be used for the Approved Use. GTCR Capital shall have approved any Future Acquisition being financed therewith and the Lenders shall have received such documents and deliveries in connection therewith as reasonably requested by the Lenders. 5.2.4. Acquisitions. No default or material breach of performance ------------ shall have occurred under the agreements related to the Future Acquisition, if any, for which the Loan is being made, and all of the buyers' material conditions to closing thereunder shall have been satisfied and not waived (except with the Lenders' consent). -27- 5.2.5. Opinion of Counsel to the Company. The Lenders shall have --------------------------------- received an opinion from the special counsel for the Company, which shall be addressed to the Lenders, dated the Subsequent Closing Date and in form and substance reasonably satisfactory to the Lenders. 5.2.6. Opinion of Company General Counsel. The Lenders shall have ---------------------------------- received an opinion from Alvin L. Thomas II, general counsel for the Company, or his successor, if any, which shall be addressed to the Lenders, dated the Subsequent Closing Date and in form and substance reasonably satisfactory to the Lenders. 5.2.7. Acquisition Opinions. To the extent the Company or any of its -------------------- Subsidiaries receives (or is otherwise entitled to rely on) an opinion of counsel in connection with any Future Acquisition, such opinion shall also be addressed to the Lenders or the Lenders shall otherwise be entitled to rely thereon. 5.2.8. Payment of Fees and Expenses. The Company shall have ---------------------------- delivered to each of the Lenders entitled thereto or to such other persons as such Lender shall direct, concurrently with the funding of such subsequent Loan, by intra-bank or Federal funds bank wire transfer of same day funds, payment of the fees due pursuant to the Monitoring Agreement and payment for any reasonable and documented out-of-pocket expenses for which such Lender is entitled to reimbursement pursuant to Section 11.1. ------------ At the time of making an additional borrowing under a subsequent Loan hereunder, the Company shall deliver a Borrower's Certificate to the Lenders stating that the conditions specified in Sections 5.2.1 through 5.2.4 (inclusive) have been ---------------------------- fully satisfied as of such time. SECTION 6. COVENANTS The Company covenants and agrees that so long as the Notes or any Loan Obligations remain outstanding it shall take, or refrain from taking, as the case may be, the following actions: 6.1 Performance of Documents; etc. Comply with all of the covenants, ----------------------------- agreements and conditions contained in the Subordinated Loan Documents and the Other Documents (other than the Credit Documents) to which it is party. 6.2 Securities Laws. --------------- 6.2.1. Integration. Take all action that is appropriate or ----------- necessary to assure that its offerings of other securities will not be integrated for purposes of the Securities Act with the offerings of the Notes by the Company to the Lenders in any manner that would require the registration of such offering of the Notes under the Securities Act. -28- 6.2.2. Available Information. While any Note is a "restricted --------------------- security" within the meaning of Rule 144(a)(3) under the Securities Act, during any period in which it is not subject to Section 13 or 15(d) of the Exchange ---------- ----- Act, make available to the holders thereof in connection with any sale thereof and, subject to the provisions of Section 15(d), any prospective purchaser of ------------- such Note, in each case as soon as is reasonably practicable upon written request of such holder, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act (or any successor thereto). 6.3 Reports, Certificates and Other Information. Furnish to the Lenders: ------------------------------------------- 6.3.1. Audit Report. Promptly when available and in any event ------------ 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 Arthur Andersen LLP or other independent auditors of recognized standing selected by the Company and reasonably acceptable to the Lenders, 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. 6.3.2. Quarterly Reports. Promptly when available and in any 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 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. 6.3.3. Monthly Reports. Promptly when available and in any 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. 6.3.4. Compliance Certificates. Contemporaneously with the ----------------------- furnishing of a copy of each annual audit report pursuant to Section 6.3.1 and ------------- of each set of quarterly statements pursuant to Section 6.6.2, (a) a duly ------------- completed compliance certificate in the form of Exhibit C, with appropriate --------- insertions, dated the date of such annual report or such quarterly statements and signed -29- by the chief financial officer of the Company, containing a computation of each of the financial ratios and restrictions set forth in Section 6.8 and to the ----------- effect that such officer has not become aware of any Event of Default or Default that has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it; and (b) an updated organizational chart listing all Subsidiaries and the locations of their businesses. 6.3.5. Reports to SEC and to Shareholders. Promptly upon the 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 Lenders 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. 6.3.6. Notice of Default, Litigation and ERISA Matters. Promptly ----------------------------------------------- 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; (b) any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Company to the Lenders 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 plan is or may be terminated, or that any such plan is or may become insolvent; (d) any cancellation (without replacement) or material change in any insurance maintained by the Company or any Subsidiary thereof; -30- (e) any event (including any violation of any Environmental Law or the assertion of any Environmental Claim) which has had or 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. 6.3.7. Subsidiaries. Promptly upon any change in the list of its ------------ Subsidiaries from that set forth on the Subsidiary Schedule (or in the most ------------------- recent notice pursuant to this Section), notification of such change. 6.3.8. Management Reports. Promptly upon the request of the Lenders, ------------------ 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. 6.3.9. 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 the Lenders prior to the Closing Date. 6.3.10. Other Information. From time to time such other information ----------------- concerning the Company and its Subsidiaries as the Lenders may reasonably request. 6.4 Books, Records and Inspections. Keep, and cause each Subsidiary to ------------------------------ keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each Subsidiary to permit, the Lenders or any representative thereof upon reasonable prior notice to inspect the properties and operations of the Company and of such Subsidiary; and permit, and cause each Subsidiary to permit, at any reasonable time during normal business hours and with reasonable notice (or at any time without notice if an Event of Default exists), the Lenders or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors (and the Company hereby authorizes such independent auditors to discuss such financial matters with the Lenders or any representative thereof whether or not any representative of the Company or any Subsidiary is present), and to examine (and, at the expense of the Company or the applicable Subsidiary, photocopy extracts from) any of its books or other corporate records. 6.5 Insurance. Maintain, and cause each Subsidiary to maintain, with --------- responsible insurance companies, such insurance as may be required by any law or governmental regulation or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated; and, upon -31- request of the Lenders, furnish to the Lenders a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Company and its Subsidiaries. 6.6 Compliance with Laws, Material Contracts; Payment of Taxes and -------------------------------------------------------------- Liabilities. (a) Comply, and cause each Subsidiary to comply, in all material - ----------- respects with all material applicable laws (including Environmental Laws), rules, regulations, decrees, orders, judgments, licenses, material contracts and permits; and (b) pay, and cause each Subsidiary to pay, prior to delinquency, all Federal taxes and all other material taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, might become a Lien on any of its property; provided that the foregoing -------- shall not require the Company or any Subsidiary to pay any such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP. 6.7 Maintenance of Existence, etc. Maintain and preserve, and (subject ------------------------------ to Section 6.13) cause each Subsidiary to maintain and preserve, (a) its ------------ existence and good standing in the jurisdiction of its incorporation and (b) its qualification and good standing as a foreign corporation in each jurisdiction where the nature of its business makes such qualification necessary (except in those instances in which the failure to be qualified or in good standing does not have a Material Adverse Effect). 6.8 Financial Covenants. ------------------- 6.8.1. Fixed Charge Coverage Ratio. So long as GTCR Capital and its --------------------------- Affiliates hold at least 50% of the outstanding interests in the Notes, not permit the Fixed Charge Coverage Ratio at any time to be less than the applicable ratio set forth below: Computation Fixed Charge Period Ending: Coverage Ratio -------------- -------------- Closing Date through 3/31/01 0.85 to 1.0 4/01/01 through 12/31/01 0.95 to 1.0 1/01/02 through 12/31/02 1.00 to 1.0 1/01/03 and thereafter 1.05 to 1.0. 6.8.2. Minimum Interest Coverage. Not permit the Interest Coverage ------------------------- Ratio as of the last day of any Computation Period to be less than the applicable ratio set forth below: Computation Interest Period Ending: Coverage Ratio -------------- -------------- Closing Date through 3/31/01 1.49 to 1.0 4/01/01 through 12/31/01 1.70 to 1.0 1/01/02 and thereafter 1.91 to 1.0 -32- 6.8.3. Total Leverage Ratio. Not permit the Total Leverage Ratio as -------------------- of the last day of any Computation Period to exceed the applicable ratio set forth below: Computation Period Ending: Total Leverage Ratio -------------- -------------------- Closing Date through 3/31/01 5.18 to 1.0 4/01/01 through 12/31/01 4.89 to 1.0 1/01/02 through 12/31/02 4.60 to 1.0 1/01/03 through 12/31/03 4.31 to 1.0 1/01/04 and thereafter 4.03 to 1.0. 6.8.4. Senior Leverage Ratio. Not permit the Senior Leverage Ratio as --------------------- of the last day of any Computation Period to exceed the applicable ratio set forth below: Computation Period Ending: Senior Leverage Ratio -------------- --------------------- Closing Date through 3/31/01 4.03 to 1.0 4/01/01 through 12/31/01 3.74 to 1.0 1/01/02 through 12/31/02 3.45 to 1.0 1/01/03 through 12/31/03 3.16 to 1.0 1/01/04 and thereafter 2.88 to 1.0. 6.8.5. Debt to Capitalization Ratio. Not permit the ratio of (a) ---------------------------- Funded Debt to (b) the sum of Funded Debt plus Net Worth at any time to exceed the applicable percentage set forth below during any period set forth below: Debt to Capitalization Period: Percentage ------ --------------- Closing Date through 12/31/00 75% 1/01/01 through 12/31/01 70% 1/01/02 and thereafter 65% 6.8.6. Capital Expenditures. The Company will not permit the -------------------- aggregate amount of all Capital Expenditures (excluding (x) amounts, if any, paid to consummate Future Acquisitions approved by GTCR Capital which constitute Capital Expenditures and (y) Capitalized Leases relating to Rhode Island Non- Recourse Debt) made by the Company and its Subsidiaries during any period of 12 consecutive months to exceed the product of (i) 1.50 multiplied by (ii) the depreciation of the Company and its Subsidiaries during the preceding period of 12 consecutive months -33- (calculated on a pro forma basis giving effect to acquisitions and sales and --- ----- other dispositions made subsequent to such preceding 12 months). 6.9 Limitations on Debt. Not, and not permit any Subsidiary to, create, ------------------- incur, assume or suffer to exist any Debt, except: (a) 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") (i) $30,000,000 of revolving --------------------------- Senior Indebtedness, (ii) $150,000,000 of term Senior Indebtedness, (iii) $50,000,000 of Acquisition Loans, and (iv) $30,000,000 of additional Senior Indebtedness (whether revolving or term), in each case with respect to this Section 6.9 less the aggregate principal amount of any permanent reductions ----------- of commitments for revolving Senior Indebtedness or 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 hereof) and ----------- guaranties in respect of Debt described in the foregoing clauses (i), (ii), (iii) and (iv); (b) unsecured seller Debt which represents all or part of the purchase price payable in connection with a Future Acquisition approved by GTCR Capital and the existing 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 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; (c) Debt arising under Capital Leases, Debt secured by Liens permitted by subsection 6.10(c) or (d), 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; (d) Debt of Subsidiaries owed to the Company; (e) Hedging Obligations of the Company for the hedging of interest payments on the Senior Indebtedness to the extent required by the Credit Agreement; (f) unsecured Debt of the Company to Subsidiaries; (g) the Loans made hereunder; -34- (h) 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; (i) the Baltimore Bonds; and (j) Suretyship Liabilities with respect to performance and payments bonds issued for the benefit of customers of the Company and its Subsidiaries, in the ordinary course of business. 6.10 Liens. Not, and not permit any Subsidiary to, create or permit to ----- exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except: (a) Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law and (ii) Liens incurred in connection with worker's compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any deposits or advances or borrowed money or the deferred purchase price of property or services, and, in each case, for which it maintains adequate reserves; (c) Liens identified in the attached "Liens Schedule"; -------------- (d) subject to the limitation set forth in Section 6.9(c), (i) Liens -------------- existing on property at the time of the acquisition thereof by the Company or any Subsidiary (and not created in contemplation of such acquisition) and (ii) Liens that constitute purchase money security interests on any property securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien -------- attaches to such property within 60 days of the acquisition thereof and such Lien attaches solely to the property so acquired; (e) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $1,000,000 arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; -35- (f) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Company or any Subsidiary; and (g) Liens in favor of the Senior Lenders arising under the Credit Documents. 6.11 Reserved. -------- 6.12 Restricted Payments. Not, and not permit any Subsidiary to, (a) ------------------- declare or pay any dividends on any of its capital stock (other than stock dividends), (b) purchase or redeem any such stock or any warrants, units, options or other rights in respect of such stock, (c) make any other distribution to shareholders, or (d) set aside funds for any of the foregoing; provided that any Subsidiary may declare and pay dividends to the Company or to - -------- any other Wholly-Owned Subsidiary. 6.13 Mergers, Consolidations, Sales. Not, and not 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, or after the acquisition will be, engaged in the business activities permitted by Section 6.20; (2) immediately before or ------------ after giving effect to such purchase or acquisition, no Event of Default or Default 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; and (5) the proceeds of any of the Loans ----------- hereunder are not used to finance such transactions. 6.14 Further Assurances. Take, and cause each Subsidiary to take, such ------------------ actions as are necessary, or as the Lenders may reasonably request, from time to time to ensure that the obligations of the Company and the Guarantors hereunder and under the other Subordinated Loan Documents are enforceable in accordance with their terms and are guaranteed by all of the Subsidiaries of the Company (including, promptly upon the acquisition or creation thereof, the execution by any Subsidiary acquired or created after the date hereof of a counterpart to this Agreement); provided that no Foreign Subsidiary shall have an obligation to -------- execute a counterpart hereto; and provided further -------- ------- -36- that, so long as the Baltimore Bonds have not been defeased, Wheelabrator Water Technologies Baltimore L.L.C. shall have no obligation to execute a counterpart hereto. 6.15 Transactions with Affiliates. Not, and not 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) or GTCR Golder Rauner, LLC or any of its Affiliates (other than the Documents and the Professional Services Agreement) which is on terms which are less favorable than are obtainable from any Person which is not one of its Affiliates or GTCR Golder Rauner, LLC or any of its Affiliates. 6.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to ---------------------- maintain, each Pension Plan in substantial compliance with all applicable requirements of law and regulations. 6.17 Environmental Laws. Conduct, and cause each Subsidiary to conduct, ------------------ its operations and keep and maintain its property in material compliance with all Environmental Laws (other than Immaterial Laws). 6.18 Unconditional Purchase Obligations. Not, and not permit any ---------------------------------- Subsidiary to, enter into or be a party to any contract for the purchase of materials, supplies or other property or services, if such contract requires that payment be made by it regardless of whether or not delivery is ever made of such materials, supplies or other property or services; provided that the foregoing shall not prohibit the Company or any Subsidiary from entering into options for the purchase of particular assets or businesses. 6.19 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter ----------------------- into any agreement containing any provision which would be violated or breached by any borrowing by the Company hereunder or by the performance by the Company or any Subsidiary of any of its obligations hereunder or under any other Subordinated Loan Document (other than (i) any prohibition with respect to an asset subject to a purchase money security interest securing Debt permitted by Section 6.9(c), (ii) existing prohibitions in the existing documentation - -------------- relating to the Baltimore Bonds and (iii) any provision in the documentation for the Rhode Island Non-Recourse Debt which prohibits a second Lien on the Rhode Island Facility). 6.20 Business Activities. Not, and not permit any Subsidiary to, engage in ------------------- any line of business other than the management, processing, collection, handling and disposal of non-hazardous bio-solid waste, animal manures, and green or other organic waste or similar non-hazardous waste-related business activities. 6.21 Advances and Other Investments. Not, and not permit any Subsidiary ------------------------------ to, make, incur, assume or suffer to exist any Investment in any other Person, except (without duplication) the following: -37- (a) equity Investments existing on the Closing Date in Wholly-Owned Subsidiaries identified on the Subsidiary Schedule; ------------------- (b) equity Investments in Subsidiaries organized or acquired after the Closing Date in connection with transactions approved by the Lenders including approved Future Acquisitions (unless not required to be approved pursuant to Section 6.13); ------------- (c) 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; (d) 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; ----------- (e) Suretyship Liabilities permitted by Section 6.9; ----------- (f) 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; (g) loans to officers and employees the proceeds of which are used to purchase the Company's stock; (h) good faith deposits and escrow accounts in connection with prospective acquisitions of stock or assets for Future Acquisitions approved by GTCR Capital; (i) Cash Equivalent Investments; and (j) 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 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 (b), (c), (d), (e), - -------- ---------- --- --- --- (f) or (g) shall be permitted to be made if, immediately before or after giving - --- --- effect thereto, any Event of Default or Default shall have occurred and be continuing. 6.22 Other Subordinated Debt. The Company shall not and shall not permit ----------------------- any of its Subsidiaries to, directly or indirectly, incur, create, or suffer to exist any Debt that by its express terms -38- is subordinate or junior in right of payment (to any extent) to any Debt of the Company or a Guarantor unless, by its terms or by the terms of the instrument creating or evidencing it, such Debt (A) has a maturity and Weighted Average Life to Maturity longer than the Loans and (B) is subordinate or junior in right of payment to the Loans (or, in the case of a Guarantor, to the Guaranty). 6.23 Foreign Subsidiaries. Not at any time permit more than 10% of its -------------------- consolidated assets to be owned by, or more than 10% of its consolidated revenues for any Fiscal Quarter to be earned by, Foreign Subsidiaries. 6.24 Reserved. -------- 6.25 Amendments to Certain Documents. The Company shall not make or agree ------------------------------- to any amendment to or modification of, or waive any of its rights under, any of the terms of the Credit Agreement or any other agreement or instrument governing any document relating to Debt which would (a) have the effect of (i) breaching the covenant set forth in Section 6.9(a) hereof, (ii) increasing the principal -------------- amount payable thereon or redemptions thereof, or (iii) providing for earlier payment in respect of principal or redemptions or otherwise or (b) otherwise adversely affect the interest of any Lender. 6.26 Listing. The Company shall use its reasonable best efforts to continue ------- to have the Common Stock listed on the NASDAQ SmallCap Market ("Nasdaq") or a ------ national securities exchange for so long as any of the Preferred Stock or any shares into which the Preferred Stock is convertible are outstanding. Prior to the Closing, the Company shall prepare and submit to Nasdaq a listing application covering the shares of Common Stock issuable upon conversion of the Preferred Stock and shall obtain approval for the listing of such shares, subject to official notice of issuance. 6.27 Current Public Information. The Company shall file all reports -------------------------- required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder and shall take such further action as any holder or holders of the Preferred Stock may reasonably request, all to the extent required to enable such holders to sell the Preferred Stock pursuant to Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC. Upon request, the Company shall deliver to any holder of the Preferred Stock a written statement as to whether it has complied with such requirements. 6.28 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 GTCR Capital and GTCR Fund VII which would adversely affect or otherwise impair their rights thereunder. 6.29 Fiscal Year. The Company will not change its Fiscal Year from that ----------- currently in effect. -39- 6.30 Board. So long as GTCR Capital or any of the TCW/Crescent Lenders is ----- a Lender, the Lender Representatives shall have the right to be present (whether in person or by telephone) at all meetings of the Board and all meetings of the Executive Committee of the Board if one is ever created; provided that the -------- Lender Representatives shall not be entitled to vote at such meetings; and further provided that the Lender Representatives may shall not be entitled to - ------- -------- attend such meetings if the Board determines that the attendance of the Lender Representatives would jeopardize the attorney-client privilege or if highly confidential material information is being discussed at such meeting. The Company shall send to such representatives all of the notices, information and other materials that are distributed to the directors of the Company including copies of the minutes of all meetings of the Board and all notices, information and other materials that are distributed by or to the directors of the Company with respect to the meetings of the Executive Committee of the Board; provided, -------- however, that upon the request of either Lender Representative, the Company - ------- shall refrain from sending such notices, information and other materials for so long as such representative shall request. If the Company proposes to take any action by written consent in lieu of a meeting of the Board, the Company shall give notice thereof to each of the Lender Representatives at the same time and in the same manner as notice is given to the directors of the Company. Each Lender shall provide to the Company the identity and address of, or any change with respect to the identity or address of, their Lender Representative. The Company shall reimburse each Lender Representative for the reasonable out-of- pocket expenses of such representative incurred in connection with the attendance at such meetings. SECTION 7. EVENTS OF DEFAULT 7.1 Events of Default. If one or more of the following events set forth ----------------- in Sections 7.2 through 7.15 hereof shall occur and be continuing it shall ------------------------- constitute an event of default hereunder (the "Events of Default"). ----------------- 7.2 Payment Default. The Company shall fail to pay (i) any principal of --------------- the Notes when the same becomes due and payable, whether upon maturity, prepayment, acceleration or otherwise, (ii) any interest on the Notes, for a period of five (5) days after the same shall become due and payable or (iii) any other amount due hereunder within five (5) days after the same shall become due and payable; or 7.3 Other Debt. (i) The Company shall fail to pay in excess of $2,000,000 ---------- in the aggregate of Senior Indebtedness (including interest and fees) when due (whether upon maturity, prepayment, acceleration or otherwise); (ii) the maturity of the Senior Indebtedness shall have been accelerated (whether by having become due and payable by its terms or by having been declared due and payable prior to its stated maturity); (iii) the Company shall fail to pay in excess of $2,000,000 in the aggregate (less the aggregate amount of any payments on the Senior Indebtedness which have not as of such time been paid when due) of other Debt (including interest and fees) of the Company or any Subsidiary when due (whether upon maturity, prepayment, acceleration or otherwise); or (iv) in -40- excess of $2,000,000 in the aggregate (less the aggregate amount of any payments on the Senior Indebtedness which have not as of such time been paid when due) of other Debt of the Company or any Subsidiary shall have been accelerated (whether by having become due and payable by its terms or by having been declared due and payable prior to its stated maturity); or 7.4 Other Material Obligations. Default in the payment when due, or in -------------------------- the performance or observance of, any material obligation of, or condition agreed to by, the Company or any Subsidiary with respect to any material purchase or lease of goods or services where such default, singly or in the aggregate with other such defaults might reasonably be expected to have a Material Adverse Effect (except only to the extent that the existence of any such default is being contested by the Company or such Subsidiary in good faith and by appropriate proceedings and appropriate reserves have been made in respect of such default); or 7.5 Non-Compliance with Provisions of This Agreement. (a) Failure by the ------------------------------------------------ Company or its Subsidiaries to comply with or to perform any covenant set forth in Sections 6.7 through 6.15 or Sections 6.25, 6.28 or 6.29; or (b) failure by ------------ ---- ------------- ---- ---- the Company or its Subsidiaries to comply with or to perform any other provision of this Agreement (and not constituting an Event of Default under any of the other provisions of this Section 7) and continuance of such failure for 30 days --------- after notice thereof to the Company from the Lenders; or 7.6 Breach of Representations or Warranties. Any representation or --------------------------------------- warranty made by the Company in this Agreement or in any statement or certificate at any time given by them in writing pursuant hereto or in connection herewith or therewith is false or misleading (i) in any respect, in the case of representations or warranties qualified by a materiality standard including, without limitation, a "material adverse effect" qualifier, or (ii) in any respect which is material to the business, assets, property, operations, results, prospects or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, in the case of all other representations or warranties, in each case on the date made or furnished; or 7.7 Involuntary Bankruptcy, Appointment of Receiver, etc. (a) A court ---------------------------------------------------- having jurisdiction shall enter a decree or order for relief in respect of the Company or any Subsidiary in an involuntary case under the Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not dismissed, stayed or discharged within 60 days after filing; or any other similar relief is not granted and remains unstayed or undismissed under any applicable federal or state law; or (b) an involuntary case is commenced against the Company or any of its Subsidiaries under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Company or any of its Subsidiaries or over all or a substantial part of any of their respective properties shall have been entered; or an interim receiver, trustee or other custodian of the Company or any of its Subsidiaries for all or a substantial part of their respective properties is involuntarily appointed, such events under this clause (b) continue for 60 days unless dismissed, bonded, stayed, vacated or discharged; or -41- 7.8 Voluntary Bankruptcy, Appointment of Receiver, etc. (a) The Company -------------------------------------------------- or any of its Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or (b) the Company or any of its Subsidiaries makes any assignment for the benefit of creditors; or (c) the board of directors of the Company or any of its Subsidiaries (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the foregoing; or 7.9 Judgments. Final judgments which exceed an aggregate of $2,000,000 --------- shall be rendered against the Company or any Subsidiary and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within 30 days after entry or filing of such judgments; or 7.10 Dissolution. Any order, judgment or decree is entered against the ----------- Company or any of its Subsidiaries decreeing the dissolution or split up of the Company or such Subsidiary and such order remains undischarged or unstayed for a period in excess of thirty (30) days; or 7.11 Solvency. The Company or any of its Subsidiaries ceases to be solvent -------- or admits in writing its present or prospective inability to pay its debts as they become due; or 7.12 Injunction. The Company or any of its Subsidiaries is enjoined, ---------- restrained or in any way prevented by the order of any court or any administrative or regulatory agency from conducting all or any material part of its business for more than thirty (30) days; or 7.13 ERISA; Pension Plans. (i) Institution of any steps by the Company or -------------------- any other Person to terminate a Pension Plan if as a result of such termination the Company could be required to make a contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan, in excess of $2,000,000; (ii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA; or (iii) there shall occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans as a result of such withdrawal (including any outstanding withdrawal liability that the Company and the Controlled Group have incurred on the date of such withdrawal) exceeds $2,000,000; or 7.14 Invalidity of Subordinated Loan Documents. Any of the Subordinated ----------------------------------------- Loan Documents for any reason, other than a partial or full release in accordance with the terms thereof, ceases to be in full force and effect or is declared to be null and void, or the Company or its Subsidiaries denies that it has any further liability under any Subordinated Loan Documents to which it is party, or gives notice to such effect; or -42- 7.15 Change in Control. (a) Any Person or group of Persons (within the ----------------- meaning of Section 13 or 14 of the Exchange Act, but excluding (i) the executive managers of the Company as of the Closing Date and (ii) GTCR Capital, GTCR Fund VII and their respective Affiliates) shall acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more shares of outstanding voting stock of the Company than the amount of such shares held by GTCR Fund VII, GTCR Capital and their respective Affiliates; (b) during any 12- month period, individuals who at the beginning of such period constituted the Board (together with any directors designated by the holders of the Preferred Stock or the Lenders and new directors whose election by the Board or whose nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors who either were directors at the beginning of such period or whose election or nomination was previously so approved) cease for any reason to constitute a majority of the Board; or (c) GTCR Fund VII, GTCR Capital and their respective Affiliates shall fail to own beneficially and of record 35% or more of the outstanding shares of voting stock of the Company (each of clauses (a), (b) and (c) constituting a "Change of Control"). ------------------------ ----------------- 7.16 Consequences of Default. Upon the occurrence and continuation of any ----------------------- Event of Default (but subject to the terms of the Intercreditor Agreement): 7.16.1. With respect to any Event of Default (i) by the Guarantors or (ii) by the Company other than pursuant to Section 7.7 or 7.8 hereof, if the ------------------ Majority Holders have not waived such Event of Default within 75 days of its occurrence, any Lender may, upon written notice to the Company and the other Lenders, declare such Lender's Note to be due and payable, whereupon the principal amount of such Note, together with accrued interest thereon, shall automatically become immediately due and payable, without any other notice of any kind, and without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. 7.16.2. The holders of a majority of the outstanding principal amount of the TCW/Crescent Notes may exercise the rights granted to holders of the Notes in Article Ninth, Part B of the Company's Certificate of Incorporation (as --------------------- in effect following amendment by the Certificate Amendment) to elect an additional director to the Company's Board. 7.16.3. With respect to any Event of Default by the Company pursuant to Section 7.7 or 7.8 hereof, the principal amount of the Notes, together with ------------------ accrued interest thereon, shall automatically become immediately due and payable, without any other notice of any kind, and without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. 7.16.4. If any Event of Default exists, each holder of a Note shall also have any other rights which such holder is entitled to under any contract or agreement at any time and any other rights which such holder may have pursuant to applicable law. -43- SECTION 8. SUBORDINATION The Lenders shall enter into an Amended and Restated Subordination and Intercreditor Agreement ("Intercreditor Agreement") with the Agent substantially ----------------------- in the form of the attached Exhibit D. --------- SECTION 9. THE GUARANTEES 9.1 The Guarantees. In order to induce the Lenders to enter into this -------------- Agreement and to make the Loans hereunder and in recognition of the direct benefits to be received by each Guarantor from the Loans hereunder, each Guarantor hereby agrees with the Lenders as follows (the "Guaranty"): -------- 9.1.1. Each Guarantor hereby unconditionally guarantees, as primary obligor and not merely as a surety, jointly and severally with each other Guarantor, to the Lenders and its successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of, and interest on the Loans and all other Loan Obligations of the Company. Each Guarantor further agrees that if the Company shall fail to pay any of its Loan Obligations in full when due (whether at stated maturity, by acceleration or otherwise), such Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Loan Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. The obligations of the Guarantors hereunder are referred to herein as the "Guaranteed Obligations." ---------------------- 9.2 Guaranteed Obligations Unconditional. The Guaranteed Obligations are ------------------------------------ absolute and unconditional irrespective of the value, genuineness, validity, regularity or enforceability of this Agreement, the Notes, any Document, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Loan Obligations, and to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 9.2 that the obligations of each Guarantor ----------- hereunder shall be absolute and unconditional under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder, which shall remain absolute and unconditional as provided above: (i) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Loan Obligations shall be extended, or such performance or compliance shall be waived; -44- (ii) any of the acts mentioned in any of the provisions of this Agreement, the Notes or any Document or any other agreement or instrument referred to herein or therein shall be done or omitted; or (iii) the maturity of any of the Loan Obligations shall be accelerated, or any such Loan Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement, the Notes, any Document or any other agreement or instrument referred to herein or therein shall be waived or any other guarantee of any such Loan Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with. 9.2.1. Each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Lenders exhaust any right, power or remedy or proceed against the Company under this Agreement, the Notes, any Document or any other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Loan Obligations. 9.3 Reinstatement. The obligations of each Guarantor under this Section 9 ------------- --------- shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Company in respect of the Loan Obligations is rescinded or must be otherwise restored by any holder of any such Loan Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees, on a joint and several basis, that it will indemnify each Lender and any of its successors or assigns on demand for all reasonable costs and expenses (including, without limitation, fees of counsel) incurred by such Lender or such successors or assigns in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 9.4 Subrogation. Each Guarantor hereby waives all rights of subrogation ----------- or contribution, whether arising by contract or operation of law (including, without limitation, any such right arising under the Bankruptcy Code) or otherwise by reason of any payment or performance by it pursuant to the provisions of this Section 9. --------- 9.5 Contribution. ------------ 9.5.1. At any time a payment in respect of the Loan Obligations is made under this Guaranty, the right of contribution, if any, of each Guarantor against any other Guarantor required to make any payment to such Guarantor pursuant to this Section 9 (a "Contributor") shall be determined as provided in --------- ----------- the immediately following sentence, with the right of contribution of each Guarantor to be revised and restated as of each date on which a payment (a "Relevant Payment") is made on the Loan Obligations under this Guaranty. At any ---------------- time that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such Guarantor in respect of the Loan Obligations including the Relevant Payment exceeding such Guarantor's Contribution Percentage (as hereinafter -45- defined) of the aggregate payments made by all Guarantors in respect of the Loan Obligations (such excess, the "Aggregate Excess Amount"), each such Guarantor ----------------------- shall have a right of contribution against each Contributor who has made payments in respect of the Loan Obligations in an aggregate amount less than such Contributor's Contribution Percentage of the aggregate payments made by all Guarantors in respect of the Loan Obligations (the aggregate amount of such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a fraction ------------------------ the numerator of which is the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such Contributor. A Guarantor's right of contribution, if any, pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment at the time of any subsequent computation; provided, however, that no Guarantor may take any action to enforce -------- ------- such right until the Loan Obligations have been irrevocably paid in full in cash and the Notes and the Loan Agreement have been terminated; it being expressly recognized and agreed by all parties hereto that any Guarantor's right of contribution arising pursuant to this Section 9 against any Contributor shall be --------- expressly junior and subordinate to such Contributor's obligations and liabilities in respect of the Loan Obligations and any other obligations owing under this Guaranty. As used in this Guaranty, (i) each Contributor's "Contribution Percentage" shall mean the percentage obtained by dividing (x) the ----------------------- Adjusted Guarantor Net Worth of such Contributor by (y) the aggregate Adjusted Guarantor Net Worth of all Guarantors of the respective Loan Obligations; (ii) the "Adjusted Guarantor Net Worth" of each Guarantor shall mean the greater of ---------------------------- (x) the Guarantor Net Worth of such Guarantor or (y) zero; and (iii) the "Guarantor Net Worth" of each Guarantor shall mean the amount by which the fair ------------------- salable value of such Guarantor's assets (other than its equity interests in another Guarantor and its rights under this Section 9) on the later of the date --------- it first became a Guarantor hereunder and the last date on which the maximum aggregate amount of Loan Obligations which it guarantees pursuant to this Guaranty is increased over that amount which it guaranteed pursuant to this Guaranty on the date it first became a Guarantor hereunder exceeds its existing debts and other liabilities (including contingent liabilities, but without giving effect to any Loan Obligations arising under this Guaranty and any liabilities of such Guarantor in respect of intercompany indebtedness to the Company or any of its Subsidiaries or any Affiliate of any such Person), in each case after giving effect to all transactions occurring on such date. 9.5.2. Each Guarantor recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Guarantor has the right to, and hereby does expressly, waive its contribution right against any other Guarantor to the extent that after giving effect to such waiver such Guarantor would remain solvent, in the determination of the Lenders. 9.5.3. In any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 9 hereof would otherwise, taking into account the provisions of --------- Section 9.5.1 above be held or determined to be void, invalid or unenforceable, - ------------- or subordinated to the claims of any other creditors, on account of the amount of its liability under said Section 9, then, notwithstanding any other provision --------- hereof to the contrary, the amount of such liability shall, without any further action by such Guarantor, the Company, the Lenders or any other -46- Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding. 9.6 Remedies. Each Guarantor agrees that, as between such Guarantor and -------- the Lenders, the Loan Obligations and the Notes may be declared to be forthwith due and payable as provided in Section 7 of this Agreement (and shall be deemed --------- to have become automatically due and payable in the circumstances provided in such Section 7) for purposes of Section 9.1 notwithstanding any stay, injunction --------- ----------- or other prohibition preventing such declaration (or such Loan Obligation being deemed to have become automatically due and payable ), in which case such Loan Obligations (whether or not due and payable by the Company) shall forthwith become due and payable by such Guarantor for purposes of Section 9.1. ----------- 9.7 Continuing Guarantee. The guarantee in this Section 9 is a continuing -------------------- --------- guarantee, and shall apply to all of the Loan Obligations whenever arising. Notwithstanding anything to the contrary in this Agreement, upon (i) the release by the Lenders under this Agreement and the Notes of all guarantees of a Guarantor, or (ii) the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or all or substantially all of its assets) to an entity which is not a Subsidiary of the Company and which sale or disposition is otherwise in compliance with the terms of this Agreement, such Guarantor shall be deemed released from all obligations under this Section 9 --------- without any further action required on the part of the Lenders. 9.8 Subordination of Guaranteed Obligations. Notwithstanding anything to --------------------------------------- the contrary in this Agreement, the Company, each Guarantor and the Lenders, in making the Loans hereunder, agrees and covenants that the Guaranteed Obligations shall be subordinated and junior in right of payment to the prior payment in full of the Senior Indebtedness, in the same manner, and to the same extent, as the Loan Obligations are subordinated and junior in right of payment to the Senior Indebtedness pursuant to the Intercreditor Agreement, if any. SECTION 10. TRANSFERS OF NOTE; LEGENDS 10.1 Assignments of Notes. -------------------- 10.1.1. The Lenders shall have the right at any time, to sell, assign, transfer or negotiate all or any part of the Loans and the Notes to one or more Persons, and may grant participations in all or any part of the Notes or the Loans evidenced thereby to one or more Persons, provided in either case that -------- such Person is an Eligible Assignee, and further provided that any such action ---------------- by the TCW/Crescent Lenders or GTCR Capital shall require the consent of the other party, which shall not be unreasonably withheld. In the case of any sale, assignment, transfer or negotiation of all or part of the Loans and the Notes authorized under this Section 10.1 (but not in the case of a participation), the ------------ assignee, transferee or recipient shall have, to the extent of such sale, assignment, transfer or negotiation, the same rights, benefits and obligations as it would if it were a Lender with respect to such Notes or the Loans evidenced thereby. Notwithstanding anything to the contrary in this Section ------- 10.1.1, each TCW/Crescent Lender shall be permitted to pledge the Notes and - ------ Warrants -47- held by it to a trustee for the benefit of secured noteholders pursuant to documents relating to the financing of such TCW/Crescent Lender. 10.1.2. The Company shall keep at its principal office a register in which the Company shall provide for the registration of the Notes and for the transfer of the same. Upon surrender for registration of transfer of the Notes at the principal office of the Company, the Company shall, at its expense, promptly execute and deliver one or more new Notes of like tenor and of a like aggregate principal amount, registered in the name(s) of such transferee(s) and, in the case of a transfer in part, a new Notes in the appropriate partial amount registered in the name(s) of such transferor(s). 10.1.3. In connection with any sales, assignments or transfers of the Notes, the transferor shall give notice to the Company and the Lenders of the identity of such parties and obtain agreements from the transferees that all nonpublic information given to such parties pursuant to this Agreement will be held in strict confidence pursuant to a confidentiality agreement reasonably satisfactory to the Company. 10.2 Investment Representations; Restrictive Legend. ---------------------------------------------- 10.2.1. Investment Representations. Each Lender individually (but not -------------------------- on behalf of any other subsequent holder of the Notes) represents and warrants that as of the Closing Date: (a) Restrictions on Transfer. The Lender has been advised that the ------------------------ Notes has not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Lender is aware that the Company is under no obligation to effect any such registration with respect to the Notes or to file for or comply with any exemption from registration. The Lender is receiving the Notes from the Company hereunder for its own account and not with a view to, or for resale in connection with, the distribution thereof in violation of the Securities Act; provided, however, that except as provided in the Intercreditor -------- ------- Agreement, if any, the disposition of the Lender's property shall at all times be and remain in its control. (b) Accredited Investor, etc. The Lender has such knowledge and ------------------------ experience in financial and business matters so as to be capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and to bear the economic risk of such investment for an indefinite period of time. The Lender is an "accredited investor" as that term is defined in Regulation D under the Securities Act. 10.2.2. Restrictive Legend. The Notes shall bear a legend in ------------------ substantially the following form: "THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE -48- "ACT") AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED." 10.3 Termination of Restrictions. The restrictions imposed by Section 10.2 --------------------------- ------------ hereof upon the transferability of the Notes shall cease and terminate as to the Notes (i) when, in the opinion of counsel reasonably acceptable to the Company, such restrictions are no longer required in order to assure compliance with the Securities Act or (ii) when such Notes shall have been registered under the Securities Act or transferred pursuant to Rule 144 thereunder. Whenever such restrictions shall cease and terminate as to the Notes or such Notes shall be transferable under paragraph (k) of Rule 144, the holder thereof shall be entitled to receive from the Company, without expense, new certificates not bearing the legend set forth in Section 10.2 hereof. ------------ 10.4 Notes Legend relating to Subordination. The Notes shall bear a legend -------------------------------------- in substantially the following form: "THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE PURSUANT TO AN AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT (THE "INTERCREDITOR AGREEMENT") TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANY PURSUANT TO A SENIOR CREDIT AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT; AND A COPY OF THE INTERCREDITOR AGREEMENT SHALL BE AVAILABLE UPON REQUEST TO THE COMPANY BY THE HOLDER HEREOF WITHOUT CHARGE." 10.5 Notes Legend relating to Original Issue Discount. The Notes shall ------------------------------------------------ bear a legend in substantially the following form: "THIS SECURITY BEARS ORIGINAL ISSUE DISCOUNT. UPON WRITTEN REQUEST TO THE CHIEF EXECUTIVE OFFICER OF SYNAGRO TECHNOLOGIES, INC. IN HOUSTON, TEXAS, INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY WILL BE MADE AVAILABLE." SECTION 11. MISCELLANEOUS 11.1 Expenses. If and only if the transactions contemplated hereby shall -------- be consummated, the Company agrees to promptly pay (i) all the actual and reasonable costs and expenses of preparation of this Agreement and related documents and all costs of furnishing all opinions by -49- counsel for the Company (including, without limitation, any opinions requested by the Lenders as to any legal matters arising hereunder), and of the Company's performance of and compliance with all agreements and conditions contained herein on its part to be performed or complied with including, without limitation, reasonable travel and lodging expenses and all reasonable costs incurred in connection with any Lender's review of the Company or any of its Subsidiaries' business and operations and any rating agency fees incurred in connection with the issuance of the Notes, (ii) the reasonable fees, expenses and disbursements of counsel to each Lender in connection with the negotiation, preparation, and execution of the Documents and with the review of other documents related to the Transactions and any Future Acquisitions, and any amendments and waivers hereto or thereto and (iii) after the occurrence of an Event of Default, all costs and expenses (including reasonable attorneys' fees) incurred by each Lender in enforcing any obligations of or in collecting any payments due hereunder or under the Notes by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a workout, or any insolvency or bankruptcy proceedings. 11.2 Indemnity. --------- 11.2.1. General. In addition to the payment of expenses pursuant to ------- Section 11.1, whether or not the transactions contemplated hereby shall be - ------------ consummated, the Company (as "Indemnitor") agrees to indemnify, pay and hold ---------- each Lender, and each of their respective officers, directors, employees, agents, and Affiliates of such Lender (collectively called the "Indemnitees") ----------- harmless from and against any and all other liabilities, costs, expenses liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of one counsel for the TCW/Crescent Indemnitees and one counsel for all other Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not any such Indemnitee shall be designated a party thereto), which may be imposed on, incurred by, or asserted against that Indemnitee, in any manner relating to or arising out of this Agreement, the Loans or the other documents related to the Transactions, any Lender's agreement to make the Loans or the use or intended use of the proceeds of any of the proceeds thereof to the Company (the "Indemnified Liabilities"); provided, that, ----------------------- -------- ---- the Indemnitor shall not have any obligation to an Indemnitee hereunder with respect to an Indemnified Liability to the extent that such Indemnified Liability arises from the gross negligence or willful misconduct of that Indemnitee. THIS INDEMNITY INDEMNIFIES THE INDEMNITEES AGAINST THEIR OWN NEGLIGENCE. Each Indemnitee shall give the Indemnitor prompt written notice of any claim that might give rise to Indemnified Liabilities setting forth a description of those elements of such claim of which such Indemnitee has knowledge; provided, that, any failure to give such notice shall not affect the -------- ---- obligations of the Indemnitor unless (and then solely to the extent) such Indemnitor is prejudiced. The Indemnitor shall have the right at any time during which such claim is pending to select counsel to defend and control the defense thereof and settle any claims for which they are responsible for indemnification hereunder (provided, that, the Indemnitor will not settle any -------- ---- such claim without (i) the appropriate Indemnitee's prior written consent which consent shall not be unreasonably withheld or (ii) obtaining an unconditional release of the appropriate Indemnitee from all claims arising out of or in any way relating to the -50- circumstances involving such claim) so long as in any such event the Indemnitor shall have stated in a writing delivered to the Indemnitee that, as between the Indemnitor and the Indemnitee, the Indemnitor is responsible to the Indemnitee with respect to such claim to the extent and subject to the limitations set forth herein; provided, that, the Indemnitor shall not be entitled to control -------- ---- the defense of any claim in the event that in the reasonable opinion of counsel for the Indemnitee there are one or more material defenses available to the Indemnitee which are not available to the Indemnitor; provided, further, that -------- ------- with respect to any claim as to which the Indemnitee is controlling the defense, the Indemnitor will not be liable to any Indemnitee for any settlement of any claim pursuant to this Section 11.2 that is effected without its prior written ------------ consent. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Company shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnities or any of them. No Indemnitee (in its capacity as a Lender or holder of the Warrants or Warrant Shares) shall be liable for any indirect or consequential damages in connection with its activities relating to this Agreement, the Notes or other documents relating to the Transactions. 11.2.2. Environmental Liabilities. Without limiting the generality of ------------------------- the indemnity set out in Section 11.2.1 above, the Company shall defend, -------------- protect, indemnify and hold harmless each Lender 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, such Lender 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. 11.3 Amendments and Waivers. No amendment, modification, termination, ---------------------- waiver or consent of any provision of this Agreement, shall in any event be effective without the written consent of the Majority Holders and the Company; provided, that, no amendment, modification, termination, waiver or consent of - -------- ---- any provision of this Agreement, shall, unless in writing and signed by all the holders of Notes, do any of the following: (a) increase or subject the Lenders to any additional obligations, (b) reduce the principal of, or interest on the Loans or any fees, premiums or other amounts payable hereunder, (c) postpone any date fixed for any payment of principal of, or premium or interest on, the Loan or any fees or other amounts payable hereunder (other than as a result of -51- waiving a prepayment required under Section 3.2 or a Default or Event of Default ----------- giving rise to a right of acceleration, which shall each be by written consent of the Majority Holders), (d) waive the restrictions of or consent to an acquisition under Section 6.13 or (e) amend this Section 11.3. Any waiver or ------------ ------------ consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Company in any case shall entitle the Company to any further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 11.3 shall be binding upon each ------------ Lender at the time outstanding and each future holder thereof. 11.4 Independence of Covenants. All covenants hereunder shall be given ------------------------- independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitation of, another covenant shall not avoid the occurrence of an Event of Default or Default if such action is taken or condition exists. 11.5 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. 1800 Bering Drive, Suite 1000 Houston, TX 77057 Attention: Chief Financial Officer Telecopier No.: (713) 369-1760 With a copy to: -------------- Locke Liddell & Sapp LLP 3400 Chase Tower 600 Travis Street Houston, TX 77002-3095 Attention: Michael T. Peters Telecopier No.: (713) 223-3717 -52- If to GTCR Capital Partners, L.P.: --------------------------------- GTCR Capital Partners, L.P. 6100 Sears Tower Chicago, IL 60606 Attention: Barry R. Dunn Telecopier No.: (312) 382-2201 With a copy to: -------------- Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attention: Stephen L. Ritchie Telecopier No.: (312) 861-2200 If to the TCW/Crescent Lenders: ------------------------------ 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. c/o TCW/Crescent Mezzanine, L.L.C. 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Attention: Timothy P. Costello Telecopier: (214) 740-7382 With a copy to: -------------- Gardere & Wynne, L.L.P. 1601 Elm Street, Suite 3000 Dallas, Texas 75201 Attention: Gary B. Clark Telecopier No.: (214) 999-4667 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. -53- 11.6 Survival of Warranties and Certain Agreements. --------------------------------------------- 11.6.1. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the execution and delivery of the Notes, and shall continue until the repayment of the Notes and the Loan Obligations in full; provided, that, if all or any part of such payment -------- ---- is set aside, the representations and warranties contained herein shall continue as if no such payment had been made. 11.6.2. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of the Company set forth in Sections 11.1 and ------------- 11.2 shall survive the payment of the Notes and the termination of this - ---- Agreement. 11.7 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or ----------------------------------------------------- delay on the part of the Lenders in the exercise of any power, right or privilege hereunder or under the Notes shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under this Agreement or the Notes are cumulative to and not exclusive of, any rights or remedies otherwise available. 11.8 Severability. If and to the extent that any provision in this ------------ Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions of the Agreement or obligations of the Company under such provisions, or of such provision or obligation in any other jurisdiction, or of such provision to the extent not invalid, illegal or unenforceable shall not in any way be affected or impaired thereby. 11.9 Heading. Section and subsection headings in this Agreement are ------- included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 11.10 Applicable Law. This Agreement shall be governed by, and shall be -------------- construed and enforced in accordance with, the laws of the State of Illinois without regard to the principles of conflicts of laws. 11.11 Successors and Assigns; Subsequent Holders of Notes. This Agreement --------------------------------------------------- shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of the Lenders. The terms and provisions of this Agreement and all certificates delivered pursuant hereto shall inure to the benefit of any assignee or transferee of the Notes, to the extent the assignment is permitted hereunder, and in the event of such transfer or assignment, the rights and privileges herein conferred upon the Lenders shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. The Company's rights or any interest therein or hereunder may not be assigned without the written consent of the Majority Holders. -54- 11.12 Consent to Jurisdiction and Service of Process. ALL JUDICIAL ---------------------------------------------- PROCEEDINGS BROUGHT AGAINST THE COMPANY WITH RESPECT TO THIS AGREEMENT OR THE NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, ILLINOIS AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT SUBJECT, HOWEVER, TO RIGHTS OF APPEAL. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY DELIVERING A COPY OF SUCH PROCESS TO SUCH PARTY, AT ITS ADDRESS SPECIFIED IN SECTION 11.5, OR BY ------------ ANY OTHER METHOD PERMITTED BY APPLICABLE LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION. 11.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO -------------------- THE FULL EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NO CLAIM MAY BE MADE BY THE COMPANY AGAINST ANY LENDER FOR ANY LOST PROFITS OR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (OTHER THAN WILLFUL MISCONDUCT CONSTITUTING ACTUAL FRAUD) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED HEREUNDER OR UNDER THE OTHER DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES. THE COMPANY AGREES THAT THIS SECTION 11.13 IS A SPECIFIC AND MATERIAL ASPECT OF THIS ------------- AGREEMENT AND ACKNOWLEDGES THAT THE LENDERS WOULD NOT EXTEND TO THE COMPANY ANY MONIES HEREUNDER IF THIS SECTION 11.13 WERE NOT PART OF THIS AGREEMENT. ------------- 11.14 No Personal Obligations. Notwithstanding anything to the contrary ----------------------- contained herein or in any other Document, it is expressly understood and each Lender expressly agrees that nothing contained herein, in any other Document or in any other document contemplated hereby or thereby (whether from a covenant, representation, warranty or other provision herein) shall create, or be -55- construed as creating, any personal liability of any shareholder, director, officer, employee, agent, partner or Affiliate of the Company or its Subsidiaries, in its capacity as such or otherwise, with respect to (a) any payment obligation of the Company or its Subsidiaries, (b) any obligation of the Company or its Subsidiaries to perform any covenant, undertaking, indemnification or agreement, either express or implied, contained herein or in any other Document, (c) any other claim or liability to the Lenders under or arising under this Agreement or any other Document, in any other document contemplated hereby or thereby or (d) any credit extended or loan made; provided, that, nothing herein shall be deemed to be a waiver of claims arising - -------- ---- from fraud. 11.15 Counterparts; Effectiveness. This Agreement and any amendments, --------------------------- waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto, and written or telephonic notification of such execution and authorization of delivery thereof has been received by the Company and the Lenders. 11.16 Entirety. This Agreement and the Documents embody the entire -------- agreement among the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof and thereof. 11.17 Amendment and Restatement. Effective as of the date hereof, the ------------------------- Original Loan 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 Loan Agreement, as amended hereby. 11.18 TCW Representative. In order to bind all of the TCW/Crescent Lenders ------------------ as a group hereunder, each TCW/Crescent Lender, by its execution hereof, hereby designates and appoints the TCW Representative as its representative under this Agreement and the other Documents (as used in this Section 11.18, "Documents" ------------- shall mean those documents to which the TCW/Crescent Lenders are a party), and each TCW/Crescent Lender hereby irrevocably authorizes the TCW Representative to take such action or to refrain from taking such action on its behalf under the provisions of this Agreement and the other Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. Each TCW/Crescent Lender agrees not to exercise any rights it may have hereunder or under the other Documents independently but only through the TCW Representative. The TCW Representative is authorized and empowered to amend, modify, or waive any provisions of this Agreement or the other Documents on behalf of the TCW/Crescent Lenders. The TCW Representative may perform any of its duties hereunder, or under this Agreement or the other Documents, by or through its agents or employees. This Section 11.18 is for the ------------- benefit of the Company and may be enforced by the Company. * * * * * -56- IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Senior Subordinated Loan Agreement to be executed by the respective duly authorized officers of the undersigned and by the undersigned as of the date first written above. SYNAGRO TECHNOLOGIES, INC. By: /s/ Ross M. Patten --------------------------------- Name: Ross M. Patten ------------------------------- Title: Chairman/CEO ------------------------------ GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P. Its: General Partner By: GTCR Partners VI, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini --------------------------------- Name: David A. Donnini 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/ Timothy P. Costello ------------------------------------------ Name: Timothy P. Costello ------------------------------------------ Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisors (Bermuda), Limited as general partner By: /s/ Darryl L. Schall ------------------------------------------ Name: Darryl L. Schall ------------------------------------------ Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello ------------------------------------------ Name: Timothy P. Costello ------------------------------------------ Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as general partner By: TCW Advisors (Bermuda), Ltd., as general partner By: /s/ Darryl L. Schall ------------------------------------------ Name: Darryl L. Schall ------------------------------------------ Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello ------------------------------------------ Name: Timothy P. Costello ------------------------------------------ Title: Managing Director ------------------------------------------ Continuation of Signature Page to Amended and Restated Senior Subordinated Loan Agreement TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company, as Investment Advisor By: /s/ Darryl L. Schall ------------------------------------------ Name: Darryl L. Schall ------------------------------------------ Title: Managing Director ------------------------------------------ By: /s/ Timothy P. Costello ------------------------------------------ Name: Timothy P. Costello ------------------------------------------ Title: Managing Director ------------------------------------------ By: TCW (LINC IV), L.L.C., as General Partner By: TCW Asset Management Company, as its Managing Member By: /s/ Darryl L. Schall ------------------------------------------ Name: Darryl L. Schall ------------------------------------------ Title: Managing Director ------------------------------------------ By: /s/ Timothy P. Costello ------------------------------------------ Name: Timothy P. Costello ------------------------------------------ Title: Managing Director ------------------------------------------ Continuation of Signature Page to Amended and Restated Senior Subordinated Loan Agreement Counterpart signature page to Amended and Restated Senior Subordinated Loan Agreement dated as of August 14, 2000 among Synagro Technologies, Inc., GTCR Capital Partners, L.P., the TCW/Crescent Lenders and certain Guarantors: SYNAGRO WEST, INC. SYNAGRO OF CALIFORNIA, INC. SYNAGRO COMPOSTING COMPANY OF CALIFORNIA, INC. SYNAGRO MIDWEST, INC. SYNAGRO OF MICHIGAN, INC. SYNAGRO OF WISCONSIN, INC. SYNAGRO SOUTHWEST, INC. SYNAGRO OF TEXAS - VITAL-CYCLE, INC. SYNAGRO OF TEXAS - CDR, INC. SYNAGRO SOUTHEAST, INC. SYNAGRO OF NORTH CAROLINA - AMSCO, INC. SYNAGRO OF FLORIDA - ANTI-POLLUTION, INC. SYNAGRO OF NORTH CAROLINA - EWR, INC. SYNAGRO OF FLORIDA - A&J, INC. SYNAGRO NORTHEAST, INC. SYNAGRO MID-ATLANTIC, INC. ORGANI-GRO, INC. ST INTERCO, INC. COMPOSTING CORPORATION OF AMERICA ENVIRONMENTAL PROTECTION & IMPROVEMENT COMPANY, INC. SYNAGRO OF FLORIDA - DAVIS WATER, INC. SYNAGRO OF FLORIDA - ECOSYSTEMS, INC. SYNAGRO OF MINNESOTA - REHBEIN, INC. PROVIDENCE SOILS, LLC SYNAGRO-WWT, INC. (F/K/A WHEELABRATOR WATER TECHNOLOGIES, INC.) ENVIROLAND, INCORPORATED NYOFCO HOLDINGS, INC. SYNAGRO-WCWNJ, INC. (F/K/AWHEELABRATOR CLEAN WATER NEW JERSEY INC.) SOARING VISTA PROPERTIES, INC. RESIDUALS PROCESSING, INC. FUTURE-TECH ENVIRONMENTAL SERVICES, INC. By: /s/ Mark A. Rome ---------------------------------- Name:________________________________ Title:_______________________________ NEW HAVEN RESIDUALS SYSTEMS, INC. RESIDUAL TECHNOLOGIES SYSTEMS, INC. FAIRHAVEN RESIDUAL SYSTEMS, INC. NEW ENGLAND TREATMENT COMPANY, INC. NETCO-CONNECTICUT, INC. NETCO-WATERBURY, INC. NETCO-RESIDUALS MANAGEMENT SYSTEMS, INC. By: /s/ Mark A. Rome --------------------------------------------- Name:___________________________________________ Title:__________________________________________ NETCO-RESIDUALS MANAGEMENT, LIMITED PARTNERSHIP By: Netco-Residuals Management Systems, Inc., its General Partner By: /s/ Mark A. Rome ----------------------------------------- Name:_______________________________________ Title:______________________________________ RESIDUAL TECHNOLOGIES, LIMITED PARTNERSHIP By: Residual Technologies Systems, Inc., its General Partner By: /s/ Mark A. Rome ---------------------------------------- Name:_______________________________________ Title:______________________________________ FAIRHAVEN RESIDUALS, LIMITED PARTNERSHIP By: Fairhaven Residual Systems, Inc., its General Partner By: /s/ Mark A. Rome ----------------------------------------- Name:_______________________________________ Title:______________________________________ NETCO-WATERBURY, LIMITED PARTNERSHIP By: Netco-Waterbury, Inc., its General Partner By: /s/ Mark A. Rome ----------------------------------------- Name:_______________________________________ Title:______________________________________ NEW HAVEN RESIDUALS, LIMITED PARTNERSHIP By: New Haven Residuals Systems, Inc., its General Partner By: /s/ Mark A. Rome ----------------------------------------- Name:_______________________________________ Title:______________________________________ NEW YORK ORGANIC FERTILIZER COMPANY By: Synagro - WWT, Inc., its Partner By: /s/ Mark A. Rome ----------------------------------------- Name:_______________________________________ Title:______________________________________ List of Exhibits ---------------- Exhibit A Definitions Exhibit B Form of Notes Exhibit C Compliance Certificate Exhibit D Form of Intercreditor Agreement List of Schedules ----------------- Schedule 2.2.3 (loan allocation %) Schedule 3.1 (face amount of note) Capitalization Schedule Subsidiary 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 Schedule of Key Employees Employee Benefit Schedule Environmental Schedule Affiliated Transactions Schedule Customer Schedule Shareholders Consent Schedule Unsecured Seller Debt Schedule Capital Lease Debt Schedule Liens Schedule EXHIBIT A --------- DEFINITIONS ----------- "Accounting Changes" shall mean changes in GAAP or interpretations of GAAP ------------------ occurring after the Closing Date. "Acquisition Loans" has the meaning set forth in the Credit Agreement. ----------------- "Act" has the meaning set forth in Section 10.2.2 to the Agreement. --- -------------- "Adjusted Capital Expenditures" means Capital Expenditures other than ----------------------------- Capital Expenditures made from the proceeds of asset sales. "Adjusted EBITDA" means, for any period, EBITDA for such period; provided ---------------- -------- that in calculating Adjusted EBITDA: (a) the consolidated net income of any Person acquired (and, solely for the purpose of determining pro forma compliance with financial covenants pursuant to Section 6.13(c)(4) any Person to be acquired) by the ------------------ Company or any Subsidiary during such period (plus, to the extent deducted in determining such consolidated net income, interest expense, income tax expense, depreciation and amortization of such Person) shall be included on a pro forma basis for such period (assuming the consummation of each such --- ----- acquisition and the incurrence or assumption of any Debt in connection therewith occurred on the first day of such period, but adjusted to add back non-recurring expenses (such as owner compensation) to the extent disclosed to and reasonably approved by the Lenders) based upon (i) to the extent available, (x) the audited consolidated balance sheet of such acquired Person and its consolidated Subsidiaries as at the end of the fiscal year of such Person preceding the acquisition of such Person and the related audited consolidated statements of income, stockholders' equity and cash flows for such fiscal year and (y) any subsequent unaudited financial statements for such Person for the period prior to the acquisition of such Person so long as such statements were prepared on a basis consistent with the audited financial statements referred to above or (ii) to the extent the items listed in clause (i) are not available, such historical financial ---------- statements and other information as is disclosed to, and reasonably approved by, the Lenders; (b) the consolidated net income of any Person (or division or similar business unit) disposed of by the Company or any Subsidiary during such period (plus, to the extent deducted in determining such consolidated net income, interest expense, income tax expense, depreciation and amortization of such Person (or division or business unit)) shall be excluded on a pro --- forma basis for such period (assuming the consummation of such disposition ----- occurred on the first day of such period); -i- (c) the Special Charges (net of any Recoveries received or taken), if applicable, shall be added to EBITDA; and (d) EBITDA shall be increased by (i) $3,000,000 for the periods ending September 30, 2000, December 31, 2000 and March 31, 2001 (ii) $2,000,000 for the period ending June 30, 2001 and (iii) $1,000,000 for the period ending September 30, 2001. "Adjusted Guarantor Net Worth" has the meaning set forth in Section 9.5.1 ---------------------------- ------------- of this 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. Neither of GTCR Capital, GTCR Capital VII nor any parent of any such entity nor any Subsidiary of any such entity shall be treated as an Affiliate of the Company nor shall be deemed to be a holder of 5% or more of any class of equity securities of the Company. "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. "Agent" has the meaning set forth in the recitals to the Agreement. ----- "Agreement" means this Senior Subordinated Loan Agreement, as from time to --------- time in effect, of which this Exhibit is a part. "Applicable Asset Sale Proceeds" means the Net Cash Proceeds from any Asset ------------------------------ Sale, excluding (i) Net Cash Proceeds from any Asset Sale of transportation, --------- processing and spreading equipment so long as such Net Cash Proceeds are used to purchase similar transportation, processing or spreading equipment within six months after such Asset Sale and (ii) the first $500,000 of Net Cash Proceeds received from all other Asset Sales in any Fiscal Year. "Approved Use" has the meaning set forth in Section 2.2.3 to the Agreement. ------------ ------------- "Asset Sale" means the sale, lease, assignment or other transfer for value ---------- by the Company or any Subsidiary to any Person (other than the Company or any Subsidiary) of any asset or right of the Company or such Subsidiary (including any sale or other transfer of stock of any Subsidiary, whether by merger, consolidation or otherwise). -ii- "Baltimore Bonds" means the $58,550 Limited Obligation Solid Waste Disposal --------------- Revenue Bond (Wheelabrator Water Technologies Baltimore L.L.C. Projects), 1996 Series. "Bankruptcy Code" means Title 11 of the United States Code, as now and --------------- hereafter in effect, or any successor statute. "Benefit Plan" has the meaning set forth in Section 4.19.1 of the ------------ -------------- Agreement. "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" means the acquisition of Bio Gro pursuant to the Bio ------------------- Gro Acquisition Agreement. "Bio Gro Acquisition Agreement" has the meaning set forth in the recitals ----------------------------- to the Agreement. "Bio Gro Loan" has the meaning set forth in Section 2.2.2 of the Agreement. ------------ ------------- "Board" means the Board of Directors of the Company. ----- "Borrowers' Certificate" means, as applied to any company, a certificate ---------------------- executed on behalf of such company by its chairman of the board (if an officer), its chief executive officer, its president or its Chief Financial Officer; provided, that, every Borrowers' Certificate with respect to the compliance with - -------- ---- a condition precedent to the making of loans hereunder shall include (i) a statement that the officer or officers making or giving such Borrowers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement of the signers that they have made or have caused to be made such examination or investigation as they deem necessary to enable them to certify that such condition has been complied with, and (iii) a statement that such condition has been complied with. "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 Expenditures" means all expenditures which, in accordance with -------------------- GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Company, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced. -iii- "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 Moody's 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 ("CERCLA"), as amended, or any other Environmental and Safety Requirements. "Certificate Amendment" has the meaning set forth in Section 5.1.14 to the --------------------- ------ Agreement. "Certificates of Designation" means the Company's Certificates of --------------------------- Designation filed pursuant to the Purchase Agreement relating to the Preferred Stock. "Change of Control" has the meaning set forth in Section 7.15 of the ----------------- ------------ Agreement. "Chief Financial Officer" means the highest ranking officer of any company ----------------------- then in charge of the financial matters of such company. "Closing" has the meaning set forth in Section 2.4 to the Agreement. ------- ----------- "Closing Date" has the meaning set forth in Section 2.4 to the Agreement. ------------ ----------- "Code" means the Internal Revenue Code of 1986, as amended, or any ---- successor statute. "Common Stock" means the Company's common stock, par value $.002 per share. ------------ -iv- "Company" has the meaning set forth in the preamble to this Agreement. ------- "Computation Period" means each period of four consecutive Fiscal Quarters ------------------ ending on the last day of a Fiscal Quarter. "Consolidated Net Income" means, with respect to the Company and its ----------------------- Subsidiaries for any period, the net income (or loss) of the Company and its Subsidiaries for such period, excluding any extraordinary gains during such --------- period. "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. "Contributor" has the meaning set forth in Section 9.5.1 to the Agreement. ----------- -------------- "Contribution Percentage" has the meaning set forth in Section 9.5.1 to the ----------------------- ------------- Agreement. "Credit Agreement" has the meaning set forth in the recitals to the ---------------- Agreement, 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 -v- (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 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 Majority Holders, 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 this Agreement have been paid in full or (c) which is issued pursuant to or in connection with the Documents. "DGCL" has the meaning set forth in Section 4.27 of the Agreement. ---- ------------ "Documents" means the Credit Documents, the Subordinated Loan Documents, --------- the Bio Gro Acquisition Agreement, the Warrant Agreements, the Warrants, the Purchase Agreement, 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. "EBITDA" means, for any period, Consolidated Net Income for such period ------ plus to the extent deducted in determining such Consolidated Net Income, - ---- Interest Expense, income tax expense, depreciation and amortization for such period, less all payments of principal and interest made on the Baltimore Bonds ---- and on the Rhode Island Non-Recourse Debt during such period. "Eligible Assignee" means (i) any Lender or any affiliate (as defined in ----------------- the Exchange Act) of any Lender, (ii) any commercial bank, insurance company, mutual fund, (iii) any investment fund or finance company or other entity that is an institutional "accredited investor" (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses (such commercial bank, insurance company, mutual fund, investment fund, finance company or other entity collectively referred to herein as a "Finance Company"), which, in the case of any Finance Company, together with such Finance Company's affiliates (as defined in the Exchange Act), has assets or assets under management equal to or greater than $500,000,000. -vi- "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, 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 7.1 of the ---------------- ----------- Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended from ------------ time to time, and any successor statute. "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 2000") refer to the Fiscal Year ending on December 31 of such calendar year. "Fixed Charge Coverage Ratio" means, for any Computation Period ending, the --------------------------- ratio of (i) Adjusted EBITDA less Adjusted Capital Expenditures for such Computation Period to (ii) the sum -vii- of Interest Expense to the extent payable in cash for such Computation Period plus the actual aggregate amount of all principal payments on Debt (other than Debt under the Baltimore Bonds and the Rhode Island Non-Recourse Debt) required to be made by the Company and its Subsidiaries during such Computation Period; provided that (x) in calculating Capital Expenditures, capital expenditures of - -------- any Person (or division or similar business unit) acquired by the Company or any Subsidiary during such period shall be included on a pro forma basis for such --- ----- period and the capital expenditures of any Person (or division or similar business unit) disposed of by the Company or any Subsidiary during such period shall be excluded on a pro forma basis for such period and (y) in calculating --- ----- Interest Expense, any Debt incurred or assumed in connection with the acquisition of any Person (or division or similar business unit) shall be assumed to have been incurred or assumed on the first day of such period and any Debt assumed by any Person (other than the Company or any Subsidiary) in connection with the disposition of any Person (or division or similar business unit) disposed of by the Company or any Subsidiary during such period shall be assumed to have been repaid on the first day of such period. "Foreign Subsidiary" means each Subsidiary of the Company which is ------------------ organized under the laws of any jurisdiction other than, and which is conducting the majority of its business outside of, the United States or any state thereof. "FRB" means the Board of Governors of the Federal Reserve System or any --- successor thereto. "Funded Debt" means all Debt of the Company and its Subsidiaries, excluding ----------- (i) contingent obligations in respect of undrawn letters of credit and Suretyship Liabilities (except, in each case, to the extent constituting Suretyship Liabilities in respect of Debt of a Person other than the Company or any Subsidiary), (ii) Hedging Obligations, (iii) Debt under the Baltimore Bonds, (iv) the Rhode Island Non-Recourse Debt and (v) Debt of the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries. "Future Acquisitions" has the meaning set forth in Section 2.2.4 to the ------------------- ------------- 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 Fund VII" means GTCR Fund VII, L.P., a Delaware limited partnership. ------------- "GTCR Representative" shall mean, initially, Barry R. Dunn. From to time ------------------- after the Closing Date, upon written notice to the Company in accordance with Section 11.5 hereof, GTCR Capital may identify a new individual to thereafter - ------------ act as the "GTCR Representative" of GTCR Capital. ------------------- -viii- "GTCR Fund VII Warrant Agreement" means the Warrant Agreement, dated June ------------------------------- 15, 2000, by and between GTCR Fund VII and the Company. "GTCR Warrant" means each Warrant granted by the Company, as of the date of ------------ this Agreement, to GTCR Fund VII or GTCR Co-Invest, L.P. "GTCR Warrant Agreement" means the Amended and Restated GTCR Warrant ---------------------- Agreement, dated as of the date of this Agreement, by and between GTCR Capital and the Company. "Guaranteed Obligations" has the meaning set forth in Section 9.1.1 of the ---------------------- ------------- Agreement. "Guarantor" means, on any day, each Subsidiary that has executed a --------- counterpart of this Agreement (or is required to execute a counterpart of this Agreement on that date). "Guarantor Net Worth" has the meaning set forth in Section 9.5.1 of the ------------------- ------------- Agreement. "Guaranty" has the meaning set forth in Section 9.1 of the Agreement -------- ----------- "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 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. "Immaterial Law" means any provision of any Environmental Law the violation -------------- of which will not (a) violate any judgment, decree or order which is binding upon the Company or any Subsidiary, (b) result in or threaten any injury to public health or the environment or any material damage to the property of any Person or (c) result in any liability or expense (other than any de minimis -- ------- liability or expense) for the Company or any Subsidiary; provided that no -------- provision of any Environmental Law shall be an Immaterial Law if the Majority Holders have notified the Company that the Majority Holders have determined in good faith that such provision is material. "Indemnified Liabilities" has the meaning set forth in Section 11.2 of the ----------------------- ------------ Agreement. "Indemnitees" has the meaning set forth in Section 11.2 of the Agreement. ----------- ------------ "Indemnitors" has the meaning set forth in Section 11.2 of the Agreement. ----------- ------------ -ix- "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). "Intercreditor Agreement" has the meaning set forth in Section 8 of the ----------------------- --------- Agreement. "Interest Coverage Ratio" means, for any Computation Period, the ratio of ----------------------- (a) Adjusted EBITDA for such Computation Period plus, if applicable, any Special Charges (net of any Recoveries received or taken) to (b) Interest Expense to the extent payable in cash for such Computation Period. "Interest Expense" means, as to any Person for any Computation Period, the ---------------- consolidated interest expense of the Company and its Subsidiaries for such Computation Period (including all imputed interest on Capital Leases), excluding any portion thereof attributable to the Baltimore Bonds and the Rhode Island Non-Recourse Debt. "Interest Payment Date" has the meaning set forth in Section 3.2.2 of the --------------------- ------------- Agreement. "Interest Period" has the meaning set forth in Section 3.2.2 of the --------------- ------------- Agreement. "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. "Leases" has the meaning set forth in Section 4.10.2 of the Agreement. ------ "Lender" or "Lenders" shall have the meaning set forth in the preamble to ------ ------- the Agreement, and shall also mean any assignees of the Notes pursuant to Section 10 of the Agreement. - ---------- "Lender Representatives" means the TCW Representative and the GTCR ---------------------- Representative. -x- "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. "Loan" and "Loans" have the meaning set forth in Section 2.1 of the ---- ----- ----------- Agreement. "Loan Obligations" mean any and all obligations of the Company or the ---------------- Guarantors under the Subordinated Loan Documents, including, without limitation, the obligation to pay principal, interest, expenses, attorneys' fees and disbursements, indemnities and other amounts payable thereunder or in connection therewith or related thereto. "Majority Holders" means the holders in interest of an amount equal to 50% ---------------- plus $5 million of the aggregate principal amount of the outstanding Loans. "Margin Stock" means any "margin stock" as defined in Regulation U of the ------------ FRB. "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 the Agreements, the Notes, the Warrants, the Warrant Agreements, or the Registration Agreement or the rights or remedies, taken as a whole, of the Lenders thereunder. "Maturity Date" means January 27, 2008. ------------- "Maximum Senior Indebtedness" has the meaning set forth in Section 6.9 --------------------------- hereof. "Monitoring Agreement" means that certain Amended and Restated Monitoring -------------------- Agreement, dated as of the date hereof, between the Company, GTCR Golder Rauner, L.L.C and the TCW/Crescent Lenders. "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. "Nasdaq" has the meaning set forth in Section 6.26 of the Agreement. ------ ------------ "Net Cash Proceeds" means: ----------------- (a) with respect to any Asset Sale, the aggregate cash proceeds (including cash proceeds received by way of deferred payment of principal pursuant to a note, installment receivable or -xi- otherwise, but only as and when received) received by the Company or any Subsidiary pursuant to such Asset Sale, net of (i) the direct costs relating to such Asset Sale (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Company to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (iii) amounts required to be applied to the repayment of any Debt secured by a Lien on the asset subject to such Asset Sale (other than Debt hereunder); and (b) with respect to any issuance of equity securities or Debt, the aggregate cash proceeds received by the Company or any Subsidiary pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriter's discounts and commissions and legal, accounting and investment banking fees). "Net Worth" means the Company's consolidated stockholders' equity --------- (including the Preferred Stock but excluding any equity attributable to any preferred stock which is mandatorily redeemable, or redeemable at the option of the holder thereof, prior to one year following the final stated maturity of the Loans). "1999 Special Charges" means up to $1,500,000 of special charges taken by -------------------- the Company in the 1999 Fiscal Year (of which not more than $500,000 may be cash payable after January 27, 2000). "Notes" has the meaning set forth in Section 3.1 of this Agreement. ----- ----------- "Other Documents" means the Documents other than the Subordinated Loan --------------- Documents. "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 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 -xii- 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 later 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) pursuant to which the Debt -------------- being refinanced was incurred. "Person" means and includes natural persons, corporations, limited ------ partnerships, limited liability companies, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivision thereof. "Preferred Stock" means the Company's Series D Preferred (including that --------------- acquired upon conversion of the Series C Preferred), and the Series E Preferred, and each other series of the Company's convertible preferred stock issued, or from time to time issuable, pursuant to the Purchase Agreement and the exercise of Warrants issued pursuant to the Warrant Agreements. "Professional Services Agreement" means that certain Professional Services ------------------------------- Agreement, dated as of January 27, 2000, between the Company and GTCR Golder Rauner, L.L.C. -xiii- "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. "Purchase Agreement" has the same meaning in the recitals to the Agreement. ------------------ "Purchased Preferred" means the Preferred Stock purchased from time to time ------------------- pursuant to the Purchase Agreement. "Real Property" means the Owned Real Property and Leased Real Property. ------------- "Recoveries" means, without duplication, (i) any amounts (including ---------- insurance proceeds and proceeds from any judgment or settlement) received by the Company or any Subsidiary arising out of any other matter which gave rise to any Special Charge and (ii) any reversal of any reserve established in connection with any Special Charge. "Registration Agreement" has the meaning set forth in the recitals to the ---------------------- Agreement. "Regulations U and X" means Regulations U and X of the FRB as in effect ------------------- from time to time. "Related Person" has the meaning set forth in Section 4.19.6 of the -------------- -------------- Agreement. "Relevant Payment" has the meaning set forth in Section 9.5.1 of the ---------------- ------------- Agreement. "Release" shall have the meaning set forth in CERCLA. ------- "Required Banks" has the meaning set forth in the Credit Agreement. -------------- "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 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. "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 -xiv- 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. "SEC" means the Securities and Exchange Commission. --- "Securities Act" means the Securities Act of 1933, as amended from time to -------------- time. "Senior Funded Debt" means the remainder of (a) Funded Debt minus (b) ------------------ ----- Subordinated Debt. "Senior Leverage Ratio" means , for any Computation Period, the ratio of --------------------- (i) Senior Funded Debt as of the last day of such Computation Period to (ii) Adjusted EBITDA for such Computation Period. "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" has the meaning set forth in the recitals to the -------------- Agreement. "Series C Preferred" means the Company's Series C Convertible Preferred ------------------ Stock, par value $.002 per share. "Series D Preferred" means the Company's Series D Convertible Preferred ------------------ Stock, par value $.002 per share. "Series E Preferred" means the Company's Series E Convertible Preferred ------------------ Stock, par value $.002 per share. "Special Charges" means 1999 Special Charges and any charge taken by the --------------- Company with respect to below market stock option prices provided for stock options granted to its employees in connection with investments by GTCR VII, the Lenders and/or their Affiliates (provided that any such stock option shall be granted no later than one year following the relevant investment). "Stockholders Agreement" means that certain Stockholders Agreement, dated ---------------------- as of the date hereof, by and among the Company, GTCR Fund VII, GTCR Co-Invest Fund, L.P., and the Lenders. "Stockholders Consent" means the action on written consent approved by a -------------------- majority of the Company's shareholders on January 27, 2000 approving (a) the conversion of Series C Preferred to -xv- 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) an amendment to Company's Restated Certificate of Incorporation. "Subordinated Debt" means (a) the Loan Obligations, (b) and any other Debt ----------------- of the Company which is subordinated to the Senior Lenders. "Subordinated Loan Documents" means, collectively, this Agreement, the --------------------------- Notes, and the Guaranties, including all exhibits, schedules and other attachments thereto. "Subsidiary" means, with respect to any Person, a corporation, partnership, ---------- limited liability company or other entity of which such Person and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares or other ownership interests as have more than 50% of the ordinary voting power for the election of directors or other managers of such entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company. "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 (v) TCW Leveraged Income Trust IV, L.P., a Delaware limited partnership. -xvi- "TCW Representative" shall mean, initially, Timothy P. Costello. From to ------------------ time after the Closing Date, upon written notice to the Company in accordance with Section 11.5 hereof, the TCW/Crescent Lenders may identify a new individual ------------ to thereafter act as the "TCW Representative" of the TCW/Crescent Lenders. ------------------ "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. "Total Leverage Ratio" means, for any Computation Period, the ratio of (i) -------------------- Funded Debt as of the last day of such Computation Period to (ii) Adjusted EBITDA for such Computation Period. "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 Lenders in connection with the -------------- making of loans under this Agreement and the GTCR 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. -xvii- Schedule 2.2.3 --------------
TCW/Crescent Lender TCW/Crescent Lender Allocation - ------------------- ------------------------------ TCW/CRESCENT MEZZANINE PARTNERS II, L.P. 64.391497% TCW/CRESCENT MEZZANINE TRUST II 15.608503% TCW LEVERAGED INCOME TRUST, L.P. 6.666667% TCW LEVERAGED INCOME TRUST II, L.P. 6.666667% TCW LEVERAGED INCOME TRUST IV, L.P. 6.666667%
Schedule 3.1 ------------
Face Amount Lender Allocations for ----------- ---------------------- Name of Lender of Note ($) Subsequent Closings - -------------- ----------- ------------------- GTCR CAPITAL PARTNERS, L.P. $98,620,007.25 50.000000% TCW/CRESCENT MEZZANINE PARTNERS II, L.P. $40,244,685.50 32.195748% TCW/CRESCENT MEZZANINE TRUST II $ 9,755,314.50 7.804252% TCW LEVERAGED INCOME TRUST, L.P. $ 4,166,666.67 3.333333% TCW LEVERAGED INCOME TRUST II, L.P. $ 4,166,666.67 3.333333% TCW LEVERAGED INCOME TRUST IV, L.P. $ 4,166,666.67 3.333333% Total 100.00000%
EX-99.11 5 0005.txt AMENDED & RESTATED GTCR WARRANT AGREEMENT Exhibit 11 FINAL AMENDED AND RESTATED GTCR WARRANT AGREEMENT ---------------------- This AMENDED AND RESTATED GTCR WARRANT AGREEMENT (this "Agreement") is --------- made as of August 14, 2000, by and among GTCR Capital Partners, L.P., a Delaware limited partnership (the "GTCR Lender"), and Synagro Technologies, Inc., a ----------- Delaware corporation (the "Company"). Capitalized terms used herein and not ------- otherwise defined shall have the meanings given to such terms in Section 5A ---------- hereof. WHEREAS, the Company and the GTCR Lender are parties to a Warrant Agreement dated as of January 27, 2000, as amended by the First Amendment to Warrant Agreement, dated June 15, 2000 (the "Original Warrant Agreement") and a -------------------------- letter agreement, dated June 15, 2000, pursuant to which the GTCR Lender has been granted Warrants for the purchase of 272.058 shares of Series C Preferred, 2,857.143 shares of Series D Preferred, and 723.8 shares of Series E Preferred prior to the date of this Agreement (the "Prior Warrants"); -------------- WHEREAS, the Company, the GTCR Lender and the TCW/Crescent Lenders (as defined therein) have entered into an Amended and Restated Senior Subordinated Loan Agreement, dated as of the date hereof (as the same shall be modified, amended and supplemented from time to time, the "Loan Agreement"); -------------- WHEREAS, the Company and the GTCR Lender have agreed to enter into this Agreement in order, among other things, to: (a) amend and restate the Original Warrant Agreement in its entirety and (b) amend the terms thereof as the Company and the TCW/Crescent Lenders have agreed to enter into a separate TCW/Crescent Warrant Agreement as of the date hereof (the "TCW Warrant ----------- Agreement"); - --------- 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 Warrant Agreement, but merely a restatement of and, where applicable, an amendment to the terms governing such obligations; WHEREAS, pursuant to the Loan Agreement, the GTCR Lender has made loans to the Company prior to the date hereof in the principal amount (not including accrued or overdue interest) of $26,380,400 (the "Prior Loans") and, ----------- subject to the terms and conditions of the Loan Agreement, the GTCR Lender will make an additional loan to the Company on the date hereof of zero dollars (the "August 2000 Loan") and may make or arrange for loans to the Company from time ---------------- to time after the date hereof (each a "Subsequent Loan", and together with the --------------- Prior Loans and the August 2000 Loan, the "Loans") up to an aggregate principal ----- amount (excluding the Prior Loans and the August 2000 Loan) of $36,119,600 (the "Aggregate Subsequent Loan Amount"); -------------------------------- WHEREAS, as an inducement and partial consideration to the GTCR Lender to enter into the Loan Agreement and to make the Loans, the Company has agreed to (i) issue to the GTCR Lender on the date hereof a warrant (the "August 2000 ----------- Warrant") representing the right to purchase - ------- the August 2000 Warrant Shares from the Company and (ii) issue to the GTCR Lender on the date of each Subsequent Loan a warrant (each a "Subsequent ---------- Warrant", and together with the Prior Warrants and the August 2000 Warrant, the - ------- "Warrants") representing the right to purchase Subsequent Warrant Shares from -------- the Company, in each case pursuant to the terms and conditions of this Agreement and in the form of Exhibit A attached hereto; and --------- WHEREAS, the Company has authorized the issuance of the Warrants to the GTCR Lender pursuant to the terms and conditions of this Agreement and each such Warrant. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Original Warrant Agreement is amended and restated in its entirety, and the parties hereto agree as follows: SECTION 1. Issuance of Warrants; Closings. ------------------------------ 1A. August 2000 Closing. The issuance of the August 2000 Warrant to ------------------- the GTCR Lender (the "August 2000 Closing") shall take place simultaneously with ------------------- the closing of the August 2000 Loan pursuant to the Loan Agreement. The date of the August 2000 Closing is hereinafter referred to as the "August 2000 Closing ------------------- Date." - ---- 1B. Issuance of August 2000 Warrant. At the August 2000 Closing, the ------------------------------- Company shall issue to the GTCR Lender the August 2000 Warrant representing the right to purchase the August 2000 Warrant Shares. The August 2000 Warrant shall be exercisable immediately upon issuance thereof, and the GTCR Lender may exercise all or any portion of the August 2000 Warrant at any time and from time to time thereafter. 1C. Subsequent Closings. The issuance of each Subsequent Warrant to ------------------- the GTCR Lender (each a "Subsequent Closing") shall take place simultaneously ------------------ with the closing of each Subsequent Loan. The date of each Subsequent Closing is hereinafter referred to as a "Subsequent Closing Date"). ----------------------- 1D. Issuances of Subsequent Warrants. At each Subsequent Closing in -------------------------------- which a purchase of Convertible Preferred Stock will be made concurrently with such Subsequent Closing pursuant to the Preferred Stock Purchase Agreement, the Company shall issue to the GTCR Lender a Subsequent Warrant representing the right to purchase a number of Subsequent Warrant Shares equal to the product of: (I) (X) the result of (1) the aggregate number of shares of Convertible Preferred Stock being purchased pursuant to the Preferred Stock Purchase Agreement by all Purchasers (as defined in the Preferred Stock Purchase Agreement) at such Subsequent Closing, -2- divided by ---------- (2) 1.00 minus the product of (a) 12.5% and (b) the ratio of (i) ------ the aggregate Loans being made by all of the Lenders at such Subsequent Closing pursuant to the Loan Agreement over (ii) the aggregate dollar amount of all Convertible Preferred Stock being purchased by all of the Purchasers pursuant to the Preferred Stock Purchase Agreement at such Subsequent Closing, minus ----- (Y) the aggregate number of shares of Convertible Preferred Stock being purchased by all of the Purchasers pursuant to the Preferred Stock Purchase Agreement at such Subsequent Closing, multiplied by ------------- (II) the aggregate dollar amount of all Loans being made at such Subsequent Closing by the GTCR Lender divided by the aggregate dollar amount of all Loans being made at such Subsequent Closing by all of the Lenders at such Subsequent Closing. At each Subsequent Closing in which a purchase of Convertible Preferred Stock will not be made concurrently with such Subsequent Closing pursuant to the Preferred Stock Purchase Agreement, the Company shall issue to the GTCR Lender a Subsequent Warrant representing the right to purchase a number of Subsequent Warrant Shares to be mutually agreed between the Company and the GTCR Lender at the time of such Subsequent Closing. If the Purchasers (as defined in the Preferred Stock Purchase Agreement) are required to purchase additional Convertible Preferred Stock from the Company to meet a Funding Obligation (as defined in the Preferred Stock Purchase Agreement) then the Company shall issue to the GTCR Lender a Subsequent Warrant concurrently with such purchase representing the right to purchase a number of Subsequent Warrant Shares equal to the GTCR Allocation (as such term is defined in the TCW Warrant Agreement (as defined in the Loan Agreement)). SECTION 2. Representations and Warranties of the Company. As of the --------------------------------------------- August 2000 Closing, and as of each Subsequent Closing, the Company represents and warrants to the GTCR Lender as follows: 2A. Good Standing. The Company is a corporation duly organized, ------------- validly existing and in good standing under the laws of the State of Delaware. 2B. Authority Relative to this Agreement. The Company has all ------------------------------------ requisite corporate power and authority to enter into and perform this Agreement and to issue and deliver the Warrants to the GTCR Lender. The execution, delivery and performance by the Company of this Agreement, including the issuance and delivery of the Warrants to the GTCR Lender, have been duly -3- authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and is a legal, valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms (except as may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights). 2C. No Conflict or Violation. The execution and delivery of this ------------------------ Agreement by the Company, the performance by the Company of its obligations hereunder and the issuance and delivery of the Warrants to the GTCR Lender does not and will not conflict with or result in a violation of (i) the charter or bylaws of the Company or (ii) any agreement, instrument, law, rule, regulation, order, writ, judgment or decree to which the Company is a party or is subject, except for such conflicts and violations which will not, individually or in the aggregate, have a material adverse effect on the business, operations, assets or condition (financial or otherwise) or business of the Company and will not deprive the GTCR Lender of any material benefit under this Agreement. 2D. Validity of Issuance. The Warrants to be issued to the GTCR -------------------- Lender pursuant to this Agreement and the Warrant Shares issued upon exercise of the Warrants will, when issued, be duly and validly issued, fully paid and non- assessable, and free and clear of all liens, claims and encumbrances. 2E. Capital Structure (August 2000 Closing). The authorized and --------------------------------------- issued capital stock of the Company as of the August 2000 Closing and immediately thereafter is as set forth on the Capitalization Schedule dated as ----------------------- of the August 2000 Closing Date and attached hereto. 2F. Capital Structure (Subsequent Closings). The authorized and --------------------------------------- issued capital stock of the Company as of any Subsequent Closing and immediately thereafter will be as set forth on the Capitalization Schedule dated as of such ----------------------- Subsequent Closing Date and provided to the GTCR Lender prior to such Subsequent Closing. SECTION 3. Investment Representations; Legends. ----------------------------------- 3A. Investment Representations. The GTCR Lender hereby represents -------------------------- and warrants to the Company that the GTCR Lender is acquiring the Warrants, and to the extent any such Warrant has been exercised, the Warrant Shares, for its own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof. The GTCR Lender agrees and acknowledges that it will not, directly or indirectly, offer, transfer or sell any Warrant or any Warrant Shares, or solicit any offers to purchase or acquire any Warrant or any Warrant Shares, unless the transfer or sale is (i) pursuant to an effective registration statement under the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "Securities Act") and has -------------- been registered under any applicable state securities or "blue sky" laws or (ii) pursuant to an exemption from registration under the Securities Act and all applicable state securities or "blue sky" laws. 3B. Additional Investment Representations. The GTCR Lender hereby ------------------------------------- represents and warrants to the Company that (i) it has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment hereunder, (ii) it is able to incur a complete loss of such investment, (iii) it is able to bear the economic risk of such -4- investment for an indefinite period of time and (iv) it is an "accredited investor" as that term is defined in Regulation D under the Securities Act. 3C. Legend. The GTCR Lender hereby acknowledges that the Company ------ will stamp or otherwise imprint each Warrant with a legend in substantially the following form: THIS WARRANT AND ANY SHARES OF STOCK OBTAINABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE'S SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION THEREFROM. In connection with the transfer of any Warrant or any Warrant Shares (other than a transfer pursuant to a public offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or any similar rules then in effect) or to an affiliate of the GTCR Lender), the GTCR Lender shall deliver, upon the reasonable request of the Company, an opinion of counsel, which counsel shall be knowledgeable in securities laws and which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer may be effected without registration under the Securities Act. Upon receipt of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend no longer applies to any particular Warrant and/or Warrant Shares, the Company shall promptly issue a replacement Warrant and/or replacement certificate evidencing such Warrant Shares (as applicable), which does not contain such legend. SECTION 4. Inspection Rights. The Company shall permit any ----------------- representatives designated by the GTCR Lender (so long as the GTCR Lender or any affiliate of the GTCR Lender holds any Warrant Shares), any holder of at least 50% of the Warrant Shares that are Common Stock or any holder of at least 50% of the Warrant Shares that are Convertible Preferred Stock, upon reasonable notice and during normal business hours and at 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 the Company and/or any of its subsidiaries with their respective directors, officers, key employees and independent accountants (it being understood that such representatives will keep all non-public information confidential to the full extent permitted by applicable law). SECTION 5. Miscellaneous ------------- 5A. Definitions. For the purposes of this Agreement, the following ----------- terms shall have the following meanings: "Convertible Preferred Stock" means the Company's Series D Convertible --------------------------- Preferred Stock, par value $.002 per share, the Company's Series E Convertible Preferred Stock, par value -5- $.002 per share, and each series of the Company's Convertible Preferred Stock issued, or from time to time issuable, pursuant to the Preferred Stock Purchase Agreement with substantially the same rights and preferences as the Company's Series E Convertible Preferred Stock, par value $.002 per share (except that the number of shares of the Company's Common Stock into which such securities are convertible shall be determined as set forth in the Preferred Stock Purchase Agreement). "August 2000 Warrant Shares" means 296.504 shares of the Company's -------------------------- Series E Convertible Preferred Stock, par value $.002 per share, obtained or obtainable upon exercise of the August 2000 Warrant, as such number of shares shall be adjusted from time to time in accordance with Section 2 of the August --------- 2000 Warrant. "Preferred Stock Purchase Agreement" means that certain Amended and ---------------------------------- Restated Purchase Agreement by and among the Company, GTCR Fund VII, L.P., a Delaware limited partnership, GTCR Co-Invest Fund, L.P., a Delaware limited partnership, and the TCW/Crescent Lenders (as defined therein), dated as of the date hereof, as amended from time to time. "Subsequent Warrant Shares" means, with respect to a Subsequent ------------------------- Warrant, the shares issuable upon exercise of such Subsequent Warrant which shares shall be Convertible Preferred Stock of the same series as the Convertible Preferred Stock being issued pursuant to the Preferred Stock Purchase Agreement at such Subsequent Closing. "Warrant Shares" means, collectively, the August 2000 Warrant Shares -------------- and any Subsequent Warrant Shares then outstanding, issued pursuant to this Agreement. 5B. Notices. All notices and other communications provided for ------- herein shall be dated and in writing and shall be deemed to have been duly given (i) when delivered, if delivered personally, sent by registered or certified mail, return receipt requested and postage prepaid, or sent via nationally recognized overnight courier or via facsimile with confirmation of receipt and (ii) when received if delivered otherwise, to the party to whom it is directed: If to the Company: ----------------- Synagro Technologies, Inc. 1800 Bering Drive, Suite 1000 Houston, TX 77057 Attention: Chief Financial Officer Telecopier No.: (713) 369-1760 -6- With a copy to: -------------- Locke Liddell & Sapp LLP 3400 Chase Tower 600 Travis Street Houston, TX 77002-3095 Attention: Michael T. Peters Telecopier No.: (713) 223-3717 If to the GTCR Lender: ---------------------- GTCR Capital Partners, L.P. 6100 Sears Tower Chicago, IL 60606 Attention: David A. Donnini Telecopier No.: (312) 382-2201 With a copy to: -------------- Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attention: Stephen L. Ritchie Telecopier No.: (312) 861-2200 or to such other address as any party hereto shall have provided in a written notice to the others. 5C. Assignment. This Agreement and all the provisions hereof shall ---------- be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any rights or obligations hereunder shall be assigned by the Company without the prior written consent of the GTCR Lender. 5D. Amendment. This Agreement may be amended only by a written --------- instrument signed by the Company, the holders of a majority of the Warrant Shares and the holders of a majority of the Company's warrants issued to the TCW/Crescent Lenders. 5E. Waiver. Any party hereto may (a) extend the time for the ------ performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions herein. Any agreement on the part of a party hereto to any such extension or waiver shall only be valid as to such party if set forth in an instrument in writing signed by such party. 5F. Severability. In the event that any one or more of the ------------ provisions hereof, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect -7- for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired; it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 5G. Governing Law. All questions concerning the construction, ------------- validity and interpretation of this Agreement 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 other 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. 5H. Counterparts. This Agreement may be executed in two or more ------------ counterparts (including by means of facsimile), each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. 5I. Descriptive Headings. The headings in this Agreement are for -------------------- convenience of reference only and shall not limit or otherwise affect the meaning of the terms contained herein. 5J. Survival of Representations and Warranties. All representations ------------------------------------------ and warranties made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including each Subsequent Closing), regardless of any investigation made by the GTCR Lender or on its behalf. 5K. Purchase Prices for August 2000 Warrant. The Company and the --------------------------------------- GTCR Lender hereby agree that for purposes of Sections 1271 through 1275 of the Internal Revenue Code of 1986, as amended (or any successor statute), the aggregate original purchase price of the August 2000 Warrant is $296,504, which purchase prices will be used by the Company and the GTCR Lender, as appropriate, for financial reporting and income tax purposes. 5L. Entire Agreement. Except as otherwise expressly set forth ---------------- herein, this Agreement, the Loan Agreement and the Warrants embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof 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. 5M. Amendment and Restatement. Effective as of the date hereof, the ------------------------- Original Warrant 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 Warrant Agreement, as amended hereby. * * * * -8- IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated GTCR Warrant Agreement to be signed by its duly authorized officers as of the date first written above. SYNAGRO TECHNOLOGIES, INC. By: /s/ Ross M. Patten ------------------------------ Name: Ross M. Patten ------------------------------ Its: Chairman/CEO ------------------------------ GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P. Its: General Partner By: GTCR Partners VI, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------ Name: David A. Donnini Its: Principal -9- Capitalization Schedule EX-99.12 6 0006.txt AMENDED & RESTATED REGISTRATION AGREEMENT Exhibit 12 FINAL AMENDED AND RESTATED REGISTRATION AGREEMENT ---------------------- THIS AMENDED AND RESTATED REGISTRATION AGREEMENT (this "Agreement") is made --------- as of August 14, 2000, by and among (i) Synagro Technologies, Inc., a Delaware corporation (together with its successors and permitted assigns, the "Company"), ------- (ii) GTCR Fund VII, L.P., a Delaware limited partnership ("GTCR Fund VII"), GTCR ------------- Co-Invest, L.P., a Delaware limited partnership ("GTCR Co-Invest"), and GTCR -------------- Capital Partners, L.P., a Delaware limited partnership ("GTCR Capital") and ------------ (iii) the TCW/Crescent Lenders (as defined herein). Each of GTCR Fund VII, GTCR Co-Invest, GTCR Capital and the TCW/Crescent Lenders are sometimes individually referred to as an "Investor" and collectively as the "Investors". -------- --------- WHEREAS, the Company, GTCR Fund VII and GTCR Capital are parties to a Registration Agreement dated as of January 27, 2000 (the "Original Registration --------------------- Agreement"); - --------- WHEREAS, the Company and the Investors have agreed to enter into this Agreement in order, among other things, to: (a) amend and restate the Original Registration Agreement in its entirety and (b) join GTCR Co-Invest and the TCW/Crescent Lenders as parties hereto; and WHEREAS, the Company, GTCR Fund VII, GTCR Co-Invest and the TCW/Crescent Lenders are parties to an Amended and Restated Purchase Agreement of even date herewith (the "Purchase Agreement"). The Company, GTCR Capital and the ------------------ TCW/Crescent Lenders are parties to an Amended and Restated Senior Subordinated Loan Agreement of even date herewith, as amended, supplemented or modified from time to time (the "Loan Agreement"). In connection with the transaction -------------- contemplated by the Purchase Agreement and the Loan Agreement, the Company will issue to the Investors Warrants (as defined herein) to purchase shares of the Company's Preferred Stock. In order to induce GTCR Fund VII, GTCR Co-Invest and the TCW/Crescent Lenders to enter into the Purchase Agreement and GTCR Capital and the TCW/Crescent Lenders to enter into the Loan Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closings under the Purchase Agreement and the Loan Agreement. Unless otherwise provided in this Agreement, capitalized terms used herein shall have the meanings set forth in Section 8 hereof. --------- NOW, THEREFORE, the parties hereto agree as follows: 1. Demand Registrations. -------------------- (a) Requests for Registration. Subject to the restrictions set forth ------------------------- below, the holders of a majority of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration ("Long-Form --------- Registrations"), or on Form S-2 or S-3 (including pursuant to Rule 415 under the - ------------- Securities Act) or any similar short-form registration ("Short-Form ---------- Registrations"), if available. All - ------------- registrations requested pursuant to this Section 1(a) are referred to herein as ----------- "Demand Registrations." Each request for a Demand Registration shall specify the -------------------- approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company's notice. (b) Long-Form Registrations. The holders of Registrable Securities ----------------------- shall be entitled to request two (2) Long-Form Registrations plus one (1) ---- additional Long-Form Registration for each additional $25 million invested in the Company (either on one or multiple occasions) through the purchase of Preferred Stock pursuant to the Purchase Agreement, in which the Company shall pay all Registration Expenses (as defined in Section 5). All Long-Form --------- Registrations shall be underwritten registrations. A registration shall not count as one of the permitted Long-Form Registrations until it has become effective, and the last Long-Form Registration shall not count as one of the permitted Long-Form Registrations unless the holders of Registrable Securities are able to register and sell at least 90% of the Registrable Securities requested to be included in such registration; provided that in any event the -------- ---- Company shall pay all Registration Expenses in connection with any Long-Form Registration whether or not it has become effective and whether or not such registration has counted as one of the permitted Long-Form Registrations. (c) Short-Form Registrations. In addition to the Long-Form ------------------------ Registrations provided pursuant to Section 1(b), the holders of Registrable ----------- Securities shall be entitled to request an unlimited number of Short-Form Registrations in which the Company shall pay all Registration Expenses; provided, however, that all Short-Form Registrations shall be for a minimum of - -------- ------- $10 million of Registrable Securities, based on the anticipated per share price range for such offering. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form. The Company shall use its best efforts to make Short-Form Registrations on Form S-3 available for the sale of Registrable Securities. If the Company, pursuant to the request of the holder(s) of a majority of Registrable Securities, is qualified to and has filed with the Securities Exchange Commission a registration statement under the Securities Act on Form S-3 pursuant to Rule 415 under the Securities Act (the "Required Registration"), then the Company --------------------- shall use its best efforts to cause the Required Registration to be declared effective under the Securities Act as soon as practicable after filing, and, once effective, the Company shall cause such Required Registration to remain effective for a period ending on the earlier of (i) the date on which all Registrable Securities have been sold pursuant to the Required Registration, or (ii) the date as of which the holder(s) of Registrable Securities (assuming such holder(s) are affiliates of the Company) are able to sell all of the Registrable Securities then held be them within a ninety-day period in compliance with Rule 144 under the Securities Act. (d) Priority on Demand Registrations. The Company shall not include -------------------------------- in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company -2- in writing that, in their opinion, the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Registrable Securities to be included in such registration, then the Company shall include in such registration, prior to the inclusion of any securities which are not Registrable Securities, the number of Registrable Securities requested to be included which, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering, pro rata among the respective holders thereof on the basis of the amount of Registrable Securities owned by each such holder. (e) Restrictions on Long-Form Registrations. --------------------------------------- (i) The Company shall not be obligated to effect any Long-Form Registration within 90 days after the effective date of a previous Long- Form Registration or a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 2 --------- and in which there was no reduction in the number of Registrable Securities requested to be included. (ii) The Company may postpone for up to 120 days the filing or the effectiveness of a registration statement for a Demand Registration if the Company's Board of Directors determines that such Demand Registration would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its Subsidiaries to acquire financing, engage in any acquisition of assets (other than in the ordinary course of business), or engage in any merger, consolidation, tender offer, reorganization, or similar transaction; provided that, in such event, the -------- ---- holders of Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request and the Company shall pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration under this Section 1(e)(ii) --------------- only once in any twelve-month period and two times in the aggregate. (f) Selection of Underwriters. In the case of an underwritten ------------------------- offering, the Company shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the approval of the holders of a majority of the Registrable Securities included in such Demand Registration, which approval shall not be unreasonably withheld. (g) Other Registration Rights. Except as provided in this Agreement, ------------------------- the Company shall not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities, options, or rights convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of a majority of the Registrable Securities. -3- 2. Piggyback Registrations. ----------------------- (a) Right to Piggyback. Whenever the Company proposes to register ------------------ any of its securities under the Securities Act (other than (i) pursuant to a Demand Registration, to which Section 1 is applicable or (ii) in connection with --------- registrations on Form S-4, S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company shall give prompt written ---------------------- notice (and in any event within three business days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to all holders of Registrable Securities of its intention to effect such a registration and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company's notice. (b) Piggyback Expenses. The Registration Expenses of the holders of ------------------ Registrable Securities shall be paid by the Company in all Piggyback Registrations. (c) Priority on Primary Registrations. If a Piggyback Registration --------------------------------- is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, then the Company shall include in such registration (i) first, the securities the Company proposes to sell and (ii) second, all other securities (including the Registrable Securities) requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares owned by each such holder. (d) Priority on Secondary Registrations. If a Piggyback Registration ----------------------------------- is an underwritten secondary registration on behalf of holders of the Company's securities other than holders of Registrable Securities (it being understood that secondary registrations on behalf of holders of Registrable Securities are addressed in Section 1 above rather than this Section 2(d)), and the managing --------- ------------ underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Registrable Securities to be included in such registration, then the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration and (ii) second, all other securities (including Registrable Securities) requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares owned by each such holder. (e) Other Registrations. If the Company has previously filed a ------------------- registration statement with respect to Registrable Securities pursuant to Section 1 or pursuant to this Section 2, and if such previous registration has - --------- --------- not been withdrawn or abandoned, then, unless such previous registration is a Required Registration, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether -4- on its own behalf or at the request of any holder or holders of such securities, until a period of at least 180 days has elapsed from the effective date of such previous registration. 3. Other Sales. ----------- The Company (i) shall not effect any public sale or distribution of its equity securities, or any securities, options, or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to the extent not inconsistent with applicable law, shall cause each holder of its equity securities, or any securities convertible into or exchangeable or exercisable for equity securities, in an amount of more than 5% of the then-outstanding shares of Common Stock (as adjusted for stock splits, stock dividends, recapitalizations, and similar transactions), purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree. 4. Registration Procedures. Whenever the holders of Registrable ----------------------- Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use commercially reasonable efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible: (a) prepare and, within 60 days after the end of the period within which requests for registration may be given to the Company, file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and use commercially reasonable efforts to cause such registration statement to become effective (provided that, before filing a -------- ---- registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel); (b) notify in writing each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 180 days (or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities -5- covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement; (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus and any supplemental prospectus), and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (d) use commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller of Registrable Securities to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller of Registrable Securities (provided that the Company shall not be required to (i) qualify generally to do -------- ---- business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(d), (ii) subject itself to taxation in any such ----------- jurisdiction, or (iii) consent to general service of process in any such jurisdiction); (e) promptly notify in writing each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made, and, at the request of the holders of a majority of the Registrable Securities covered by such registration statement, the Company shall promptly prepare and furnish to each such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use its best efforts to secure designation of all such Registrable Securities covered by such registration statement as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing that, to secure NASDAQ authorization for such Registrable Securities; (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate -6- the disposition of Registrable Securities (including effecting a stock split or a combination of shares); (i) make available for inspection by any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees, and independent accountants to supply all information reasonably requested by any such underwriter, attorney, accountant, or agent in connection with such registration statement and assist and, at the request of any participating underwriter, use commercially reasonable efforts to cause such officers or directors to participate in presentations to prospective purchasers; (j) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (k) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; (l) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any equity securities included in such registration statement for sale in any jurisdiction, the Company shall use its best efforts promptly to obtain the withdrawal of such order; (m) use commercially reasonable efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; (n) obtain one or more cold comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the holders of a majority of the Registrable Securities being sold in such registered offering reasonably request (provided that such -------- ---- Registrable Securities constitute at least 10% of the securities covered by such registration statement), which letter or letters shall be addressed to the underwriters; and -7- (o) provide a legal opinion of the Company's outside counsel, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature, which opinion and other documents shall be addressed to the underwriters and the holders of such Registrable Securities. 5. Registration Expenses. --------------------- (a) Subject to Section 5(b) below, all expenses incident to the ----------- Company's performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, travel expenses, filing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company, and fees and disbursements of all independent certified public accountants, underwriters including, if necessary, a "qualified independent underwriter" within the meaning of the rules of the National Association of Securities Dealers, Inc. (in each case, excluding discounts and commissions), and other Persons retained by the Company or by holders of Registrable Securities or their affiliates on behalf of the Company (all such expenses being herein called "Registration Expenses"), shall be borne ------------ -------- as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance, and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system (or any successor or similar system). (b) In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration. (c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder's securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered. 6. Indemnification. --------------- (a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, its officers, directors, agents, and employees, and each Person who controls such holder (within the meaning of the Securities Act) against all -8- losses, claims, damages, liabilities, and expenses (or actions or proceedings, whether commenced or threatened, in respect thereof), whether joint and several or several, together with reasonable costs and expenses (including reasonable attorney's fees) to which any such indemnified party may become subject under the Securities Act or otherwise (collectively, "Losses") caused by, resulting ------ from, arising out of, based upon, or relating to (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto covering the sale of Registrable Securities or (B) any application or other document or communication (in this Section 6, collectively called an --------- "application") executed by or on behalf of the Company or based upon written ----------- information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the "blue sky" or securities laws thereof or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each such director, officer, and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such Losses; provided that the Company shall not be liable in any such case to the extent - -------- ---- that any such Losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the fullest extent permitted by law, shall indemnify and hold harmless the other holders of Registrable Securities and the Company, and their respective officers, directors, agents, and employees, and each other Person who controls the Company (within the meaning of the Securities Act) against any Losses caused by, resulting from, arising out of, based upon, or relating to (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto or in any application, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such other indemnified party for any legal or any other expenses incurred by them in connection with investigating or defending any such Losses; provided that the obligation to -------- ---- indemnify will be -9- individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice -------- ---- shall not impair any Person's right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, then the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its written consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. (d) The indemnification provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract, and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and shall survive the transfer of securities. (e) If the indemnification provided for in this Section 6 is --------- unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect to any Losses referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such Losses (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, then in such proportion as is appropriate to reflect not only the relative fault referred to in clause (i) above but also the relative benefit of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other in connection with the registration statement on the other in connection with the statement or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other shall be determined by reference to, among other things, whether -10- the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (f) The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6 --------- were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in Section 6(e) above. The amount paid or payable by an indemnified ----------- party as a result of the Losses referred to in Section 6(e) above shall be ----------- deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no seller of Registrable Securities shall be --------- required to contribute pursuant to this Section 6 any amount in excess of the --------- result of (i) the net proceeds received by such seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto minus (ii) any amounts paid pursuant to Section 6(b) above. No Person ----------- guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 7. Participation in Underwritten Registrations. ------------------------------------------- (a) No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s), provided that no holder of Registrable Securities will be -------- ---- required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities -------- ---- included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder's intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6 hereof. --------- (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e) above, such Person will immediately ----------- discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person's receipt of the copies of a supplemented or amended prospectus as contemplated by Section 4(e). In the event ----------- the Company shall give any such notice, the applicable time period mentioned in Section 4(b) during which a Registration Statement is to remain effective shall - ----------- be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 7(b) to and including the ----------- date when each seller of a Registrable Security covered by such registration statement -11- shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(e). ----------- 8. Definitions. ----------- "Common Stock" means any class of the Company's common stock. ------------ "Person" means and includes natural persons, corporations, limited ------ partnerships, limited liability companies, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivision thereof. "Preferred Stock" means the Series C Preferred, the Series D Preferred --------------- (including that acquired upon conversion of the Series C Preferred), the Series E Preferred and all subsequent series of convertible preferred stock issued or to be issued in connection with the Purchase Agreement. "Registrable Securities" means (i) any Common Stock issued or issuable ---------------------- upon conversion of the Preferred Stock (x) issued pursuant to the Purchase Agreement or (y) issued or issuable upon exercise of the Warrants (whether issued before, on, or after the Closing Date) and (ii) any other shares of Common Stock issued or issuable directly or indirectly with respect to the securities referred to in clause (i) above by way of a stock dividend or stock split or in connection with an exchange or combination of shares, recapitalization, merger, consolidation, or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they (i) have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), (ii) unless the respective Investor otherwise elects, have been distributed to the limited partners of any of the Investors, (iii) have been effectively registered under a registration statement including, without limitation, a registration statement on Form S-8 (or any successor form), or (iv) have been repurchased by the Company. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected; provided that this sentence shall not apply to shares of the common -------- ---- equity securities of the Company issuable upon the exercise of unvested options originally issued to employees or former employees of the Company. "Securities Act" means the Securities Act of 1933, as amended, or any -------------- successor federal law then in force, together with all rules and regulations promulgated thereunder. "Securities Exchange Act" means the Securities Exchange Act of 1934, ----------------------- as amended, or any successor federal law then in force, together with all rules and regulations promulgated thereunder. -12- "Series C Preferred" means the Corporation's Series C Convertible ------------------ Preferred Stock, par value $.002 per share. "Series D Preferred" means the Corporation's Series D Convertible ------------------ Preferred Stock, par value $.002 per share. "Series E Preferred" means the Corporation's Series E Convertible ------------------ Preferred Stock, par value $.002 per share. "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 (v) TCW Leveraged Income Trust IV, L.P., a Delaware limited partnership. "Warrants" means the warrants to purchase shares of Preferred Stock -------- issued by the Company to GTCR Fund VII, GTCR Co-Invest and the TCW/Crescent Lenders prior to the date hereof, on the date hereof or at any time in the future. Unless otherwise stated, other capitalized terms contained herein have the meanings set forth in the Purchase Agreement. 9. Miscellaneous. ------------- (a) No Inconsistent Agreements. The Company shall not hereafter -------------------------- enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. (b) Adjustments Affecting Registrable Securities. The Company shall -------------------------------------------- not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including effecting a stock split or a combination of shares). (c) Remedies. Any Person having rights under any provision of this -------- Agreement shall be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. Nothing contained in this Agreement shall be construed to confer upon any Person who is not a signatory hereto any rights or benefits, whether as a third-party beneficiary or otherwise. -13- (d) Amendments and Waivers. Except as otherwise provided herein, no ---------------------- modification, amendment, or waiver of any provision of this Agreement shall be effective against the Company or the holders of Registrable Securities unless such modification, amendment, or waiver is approved in writing by the Company and the holders of at least a majority of the Registrable Securities then in existence; provided that no such amendment or modification that would materially -------- ---- and adversely affect holders of one class or group of Registrable Securities in a manner different than holders of any other class or group of Registrable Securities, shall be effective against the holders of such class or group of Registrable Securities without the prior written consent of holders of at least a majority of Registrable Securities of such class or group materially and adversely affected thereby. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition. (e) Successors and Assigns. All covenants and agreements 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, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. Notwithstanding the foregoing, in order to obtain the benefit of this Agreement, any subsequent holder of Registrable Securities must execute a counterpart to this Agreement, thereby agreeing to be bound the terms hereof. (f) 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. (g) 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. (h) Descriptive Headings. The descriptive headings of this Agreement -------------------- are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word "including" in this Agreement shall be, in each case, by way of example and without limitation. The use of the words "or," "either," and "any" shall not be exclusive. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. (i) Governing Law. The corporate law of the State of Delaware shall ------------- govern all issues and questions concerning the relative rights of the Company and its stockholders. All other -14- issues and questions concerning the construction, validity, interpretation, and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (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. (j) 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 shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by reputable overnight courier service (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands, and other communications shall be sent to each Investor at the addresses indicated on the Schedule of Holders and to the Company at the address of its corporate headquarters or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. (k) Entire Agreement. This Agreement, those documents expressly ---------------- referred to herein and other documents of even date herewith embody the complete agreement and understanding 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. (l) No Strict Construction. The parties hereto have participated ---------------------- jointly in the negotiation and drafting to this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. (m) Amendment and Restatement. Effective as of the date hereof, the ------------------------- Original Registration 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 Registration Agreement, as amended hereby. * * * * * -15- IN WITNESS WHEREOF, the parties have executed this Amended and Restated Registration Agreement as of the date first written above. SYNAGRO TECHNOLOGIES, INC. By: /s/ Ross M. Patten -------------------------------------- Name: Ross M. Patten -------------------------------------- Its: Chairman / CEO -------------------------------------- GTCR FUND VII, L.P. By: GTCR Partners VII, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini -------------------------------------- Name: David A. Donnini Its: Principal GTCR CO-INVEST, L.P. By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini -------------------------------------- Name: David A. Donnini Its: Principal GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P. Its: General Partner By: GTCR Partners VI, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini -------------------------------------- Name: David A. Donnini Its: Principal SIGNATURE PAGE TO THE AMENDED AND RESTATED REGISTRATION AGREEMENT 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/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisors (Bermuda), Limited as general partner By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as general partner By: TCW Advisors (Bermuda), Ltd., as general partner By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ SIGNATURE PAGE TO THE AMENDED AND RESTATED REGISTRATION AGREEMENT TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company, as Investment Advisor By: /s/ Darryl L. Schall ----------------------------------------------- Name: Darryl L. Schall --------------------------------------------- Title: Managing Director -------------------------------------------- By: /s/ Timothy P. Costello ----------------------------------------------- Name: Timothy P. Costello --------------------------------------------- Title: Managing Director -------------------------------------------- By: TCW (LINC IV), L.L.C., as General Partner By: TCW Asset Management Company, as its Managing Member By: /s/ Darryl L. Schall ----------------------------------------------- Name: Darryl L. Schall --------------------------------------------- Title: Managing Director -------------------------------------------- By: /s/ Timothy P. Costello ---------------------------------------------- Name: Timothy P. Costello --------------------------------------------- Title: Managing Director -------------------------------------------- SIGNATURE PAGE TO THE AMENDED AND RESTATED REGISTRATION AGREEMENT SCHEDULE OF HOLDERS ------------------- GTCR FUND VII, L.P. GTCR CO-INVEST, L.P. GTCR CAPITAL PARTNERS, L.P. 6100 Sears Tower Chicago, IL 60606-6402 Attention: David A. Donnini 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. c/o TCW/Crescent Mezzanine, L.L.C. 200 Crescent Court, Suit 1600 Dallas, Texas 75201 Attention: Timothy P. Costello Phone: (214) 740-7348 Fax: (214) 740-7382 EX-99.13 7 0007.txt SHAREHOLDERS AGREEMENT Exhibit 13 FINAL SYNAGRO TECHNOLOGIES, INC. STOCKHOLDERS AGREEMENT THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of August 14, --------- 2000 by and among (i) Synagro Technologies, Inc., a Delaware corporation (together with its successors and permitted assigns, the "Company") and (ii) the ------- investors set forth on the attached "Schedule of Investors" and any other holder --------------------- of securities of the Company who, at any time, is added as a party to this Agreement in accordance with Section 10 hereof as an Investor hereunder (each, ---------- an "Investor" and collectively, the "Investors"). The Investors are sometimes -------- --------- referred to herein as the "Stockholders" and individually as a "Stockholder." ------------ ----------- Capitalized terms used but not otherwise defined herein are defined in Section 8 --------- hereof. The execution and delivery of this Agreement is a condition to the obligations of the Investors under the Purchase Agreement and the Senior Subordinated Loan Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Participation Rights. -------------------- (a) At least 30 days before any Transfer of Stockholder Shares of any class by any Investor (the "Selling Investor"), the Selling Investor shall ---------------- deliver a written notice (the "Sale Notice") to the Company and to the other ----------- Stockholders (the "Participation Right Stockholders") holding Stockholder Shares -------------------------------- of such class specifying in reasonable detail the identity of the prospective transferee(s) and the terms and conditions of the Transfer. The Participation Right Stockholders holding Stockholder Shares of such class may elect to participate in the contemplated Transfer by delivering written notice to the Selling Investor within 30 days after delivery of the Sale Notice. If any Participation Right Stockholders have elected to participate in such Transfer, then the Selling Investor and such Participation Right Stockholders will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, a number of Stockholder Shares of such class equal to the product of (A) the quotient determined by dividing the number of Stockholder Shares of such class owned by such person by the aggregate number of outstanding Stockholder Shares of such class owned by the Selling Investor and the Participation Right Stockholders participating in such sale and (B) the number of Stockholder Shares of such class to be sold in the contemplated Transfer. (b) The Selling Investor will use reasonable best efforts to obtain the agreement of the prospective transferee(s) to the participation of the Participation Right Stockholders in any contemplated Transfer, and the Selling Investor will not transfer any of its Stockholder Shares of such class to the prospective transferee(s) unless (A) the prospective transferee(s) agrees to allow the participation of the Participation Right Stockholders holding Stockholder Shares of such class or (B) the Selling Investor agrees to purchase the number of such class of Stockholder Shares from the Participation Right Stockholders which the Participation Right Stockholders would have been entitled to sell pursuant to this Section 1(b) for the consideration per share to be paid to the Selling ------------ Investor by the prospective transferee(s). (c) Notwithstanding anything to the contrary in any other provision of this Agreement, the restrictions set forth in this Section 1 shall not apply to --------- (i) any Transfer of Common Stock or Preferred Stock by any Investor to another Investor or among their respective Affiliates (other than in connection with a Sale of the Company), (ii) a Public Sale or (iii) any pledge of Stockholder Shares by a TCW/Crescent Lender to a trustee for the benefit of secured noteholders pursuant to documents relating to the financing of such TCW/Crescent Lender; provided that the restrictions contained in this Agreement will continue -------- to be applicable to such shares after any Transfer pursuant to clause (i) and the transferee of such shares shall agree in writing to be bound by the provisions of this Agreement. Upon the Transfer of shares pursuant to clause (i) of the previous sentence, the transferees will deliver a written notice to the Company, which notice will disclose in reasonable detail the identity of such transferee. Each Stockholder transferring Stockholder Shares pursuant to Section ------- 1 shall pay his or its pro rata share (based on the number of Stockholder Shares - - to be sold) of the expenses incurred by the Stockholders in connection with such transfer and shall be obligated to join on a pro rata basis (based on the number of Stockholder Shares to be sold) in any indemnification or other obligations that the Selling Stockholder agrees to provide in connection with such transfer (other than any such obligations that related specifically to a particular Stockholder, such as indemnification with respect to representations and warranties given by a Stockholder regarding such Stockholder's title to, ownership of Stockholder Shares and, for such Stockholders that are not individuals, authority to enter into such agreement); provided, however, that no -------- Investor shall be required to make a representation or warranty that any other Investor is not required to make. (d) The provisions of this Section 1 will terminate upon the consummation --------- of a Sale of the Company. 2. Preemptive Rights. ----------------- (a) If the Company (or any successor entity thereto) authorizes the issuance or sale to the GTCR Investors or an Affiliate of the GTCR Investors of any equity securities (other than pursuant to the Purchase Agreement or the Senior Subordinated Loan Agreement), or any debt securities containing options or rights to acquire any equity securities (other than as a distribution on outstanding equity securities or pursuant to the Senior Subordinated Loan Agreement), or any securities exchangeable or exercisable for or convertible into any equity securities, the Company shall first offer to sell to each holder of Stockholder Shares (other than the GTCR Investors) a portion of such securities equal to the quotient determined by dividing (1) the number of shares of Common Stock held by such holder on an as-converted basis (regardless of whether such conversion has occurred) by (2) the total number of shares of Common Stock held by all holders of Stockholder Shares on an as-converted basis (regardless of whether such conversion has occurred). Each holder -2- of Stockholder Shares shall be entitled to purchase such securities at the most favorable price and on the most favorable terms as such securities are to be offered or sold to any other Persons; provided that if such holder elects to -------- purchase any securities being offered for sale by the Company, such holder shall also be required to purchase a pro rata portion of each other class or series of securities (including any debt securities) being offered for sale by the Company contemporaneously therewith. (b) In order to exercise its purchase rights hereunder, a holder of Stockholder Shares must within 20 days after receipt of written notice from the Company describing in reasonable detail the securities being offered, the purchase price thereof, the payment terms and such holder's percentage allotment deliver a written notice to the Company describing its election hereunder. If all of the securities offered to the holders of Stockholder Shares is not fully subscribed by such holders, the remaining securities shall be reoffered by the Company to the holders purchasing their full allotment upon the terms set forth in this Section 2(b), except that such reoffer shall not extend the 20-day offer ------------ period referred to in this Section 2(b). Any holder of Stockholder Shares may ----------- assign its purchase rights hereunder to any of its Affiliates, but not to any other Person. (c) Upon the expiration of the offering periods described above, the Company shall be entitled to sell such securities which the holders of Stockholder Shares have not elected to purchase during the 90-day period following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to such holders. Any securities offered or sold by the Company after such 90-day period must be reoffered to the holders of Stockholder Shares pursuant to the terms of this Section 2. --------- (d) The provisions of this Section 2 shall continue with respect to each --------- Stockholder Share until the earliest to occur of (i) the date of which such Stockholder Share has been transferred in a Public Sale, (ii) the consummation of a Public Offering after the date hereof having an aggregate offering value of at least $25 million and (iii) the consummation of a Sale of the Company. 3. Sale of the Company. ------------------- (a) If the Majority Investors approve a Sale of the Company (an "Approved -------- Sale"), then each holder of Stockholder Shares shall vote for, consent to, and - ---- raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, then each holder of Stockholder Shares shall, to the extent permitted by applicable law, waive any dissenters' rights, appraisal rights, or similar rights in connection with such merger or consolidation or (ii) sale of stock, then each holder of Stockholder Shares shall agree to sell all of his Stockholder Shares and rights to acquire Stockholder Shares on the terms and conditions approved by the Company's board of directors (the "Board") and the holders of a majority of the Stockholder ----- Shares (voting as a single class) then outstanding. Each holder of Stockholder Shares shall take all necessary or desirable actions in connection with the consummation of the Approved Sale as requested by the Company; provided that, -------- each holder of Stockholder Shares shall only be obligated -3- to join on a pro rata basis in any indemnification or other obligations provided in connection with the Approved Sale (other than any such obligations that related specifically to a particular Stockholder, such as indemnification with respect to representations and warranties given by a Stockholder regarding such Stockholder's title to, ownership of Stockholder Shares and, for such Stockholders that are not individuals, authority to enter into such agreement); provided, however, that no Investor shall be required to make a representation - -------- representation or warranty that any other Investor is not required to make. (b) The obligations of the holders of Stockholder Shares with respect to the Approved Sale of the Company are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, each holder of a class of Stockholder Shares shall receive the same form of consideration and the same amount of consideration per share; (ii) if any holders of a class of Stockholder Shares are given an option as to the form and amount of consideration to be received, then each holder of such class of Stockholder Shares shall be given the same option; and (iii) each holder of then currently exercisable rights to acquire shares of a class of Stockholder Shares shall be given an opportunity to either (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Stockholder Shares or (B) upon the consummation of the Approved Sale, receive in exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Stockholder Shares received by holders of such class of Stockholder Shares in connection with the Approved Sale less the exercise price per share of such class of Stockholder Shares of such rights to acquire such class of Stockholder Shares by (2) the number of shares of such class of Stockholder Shares represented by such rights. (c) Holders of Stockholder Shares will bear their pro rata share (based upon the number of shares sold) of the costs of any sale of such Stockholder Shares pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all holders of Stockholder Shares and are not otherwise paid by the Company or the acquiring party. For purposes of this Section 3(c), costs ----------- incurred in exercising reasonable efforts to take all actions in connection with the consummation of an Approved Sale in accordance with Section 3(a) shall be ----------- deemed to be for the benefit of all holders of the Stockholder Shares. Costs incurred by holders of Stockholder Shares on their own behalf will not be considered costs of the transaction hereunder. 4. Public Offering. In the event that the Board and the Majority --------------- Investors approve a Public Offering, the holders of Stockholder Shares shall take all necessary or desirable actions requested by the Board and the Majority Investors in connection with the consummation of such Public Offering, including without limitation compliance with the requirements of all laws and regulatory bodies which are applicable or which have jurisdiction over such Public Offering. In the event that such Public Offering is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the Company's capital structure would adversely affect the marketability of the offering, each holder of Stockholder Shares shall convert the Preferred Stock held by such holder into Common Stock in accordance with the terms of the Preferred Stock. -4- 5. Holdback Agreement. To the extent not inconsistent with applicable ------------------ law, each Stockholder shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities, options, or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of any Demand Registration (as defined in the Registration Agreement) or Piggyback Registration (as defined in the Registration Agreement) pursuant to the Registration Agreement (except as part of such underwritten registration or pursuant to registrations on Form S-4 or Form S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree. 6. Legend. Each certificate evidencing Stockholder Shares and each ------ certificate issued in exchange for or upon the transfer of any Stockholder Shares (if such shares remain Stockholder Shares as defined herein after such transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form: "The securities represented by this certificate are subject to a Stockholders Agreement dated as of August 14, 2000 among the issuer of such securities (the "Company") and ------- certain of the Company's stockholders. A copy of such Stockholders Agreement will be furnished without charge by the Company to the holder hereof upon written request." The Company shall imprint such legend on certificates evidencing Stockholder Shares outstanding prior to the date hereof. The legend set forth above shall be removed from the certificates evidencing any shares which cease to be Stockholder Shares. 7. Representations and Warranties. Each Stockholder represents and ------------------------------ warrants that (i) this Agreement has been duly authorized, executed, and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder, enforceable in accordance with its terms and (ii) such Stockholder has not granted and is not a party to any proxy, voting trust, or other agreement which is inconsistent with, conflicts with, or violates any provision of this Agreement. No holder of Stockholder Shares shall grant any proxy or become a party to any voting trust or other agreement which is inconsistent with, conflicts with, or violates any provision of this Agreement. 8. Definitions. ----------- "Affiliate" of a Stockholder means any direct or indirect general or --------- limited partner of such Stockholder or any other person, entity, or investment fund controlling, controlled by, or under common control with such Stockholder. "class" means the Common Stock or any separate series or class of Preferred ----- Stock; provided that, for purposes of Section 1, different series of Preferred -------- --------- Stock with the same conversion price shall be considered to be of the same class. -5- "Common Stock" means the Company's common stock, par value $.002 per share. ------------ "GTCR Investors" means, collectively, GTCR Fund VII, L.P., a Delaware -------------- limited partnership ("GTCR Fund VII"), GTCR Co-Invest Fund, L.P., a Delaware ------------- limited partnership ("GTCR Co-Invest"), and GTCR Capital Partners, L.P., a -------------- Delaware limited partnership ("GTCR Capital"). ------------ "Majority Investors" means, with respect to any date of determination, the ------------------ holders of a majority of the Stockholders Shares held by the Investors as of such date. "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 the Company's Series D Preferred (including that --------------- acquired upon conversion of the Series C Preferred), and the Series E Preferred, and each other series of the Company's convertible preferred stock issued, or from time to time issuable, pursuant to the Purchase Agreement and the exercise of Warrants. "Purchase Agreement" means the Amended and Restated Purchase Agreement, ------------------ dated as of the date hereof, by and among GTCR Fund VII, L.P., GTCR Co-Invest Fund, L.P. and the TCW/Crescent Lenders. "Public Offering" means the sale in an underwritten public offering --------------- registered under the Securities Act of shares of the Company's Common Stock as approved by the Board or GTCR. "Public Sale" means any sale of Stockholder Shares to the public pursuant ----------- to an offering registered under the Securities Act or to the public through a broker, dealer, or market maker pursuant to the provisions of Rule 144 (other than Rule 144(k) prior to a Public Offering) adopted under the Securities Act. "Registration Agreement" means the amended and restated registration ---------------------- agreement, dated as of the date of this Agreement, by and among the Company, the GTCR Investors and the TCW/Crescent Lenders, as amended from time to time. "Series C Preferred" means the Company's Series C Convertible Preferred ------------------ Stock, par value $.002 per share. "Series D Preferred" means the Company's Series D Convertible Preferred ------------------ Stock, par value $.002 per share. "Series E Preferred" means the Company's Series E Convertible Preferred ------------------ Stock, par value $.002 per share. -6- "Sale of the Company" means any transaction or series of transactions ------------------- pursuant to which any Person or group of related Persons (including any Affiliate of the GTCR Investors ), other than the GTCR Investors, in the aggregate acquire(s) (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 from time to -------------- time. "Senior 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 of the Company's subsidiaries, GTCR Capital Partners, L.P. and the TCW/Crescent Lenders, as amended from time to time. "Stockholder Shares" means (i) any Common Stock and Preferred Stock ------------------ purchased or otherwise acquired by any Stockholder, (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) including by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization or reclassification affecting Stockholder Shares and (iii) any other shares of any class or series of capital stock of the Company held by a Stockholder. As to any particular shares constituting Stockholder Shares, such shares will cease to be Stockholder Shares when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them or (y) sold to the public through a broker, dealer, or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act. "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 (v) TCW Leveraged Income Trust IV, L.P., a Delaware limited partnership. "Transfer" means to sell, transfer, assign, pledge, or otherwise dispose of -------- (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). "Warrants" means the warrants to purchase shares of Preferred Stock issued -------- by the Company to GTCR and the TCW/Crescent Lenders (i) in connection with the making of loans under this Senior Subordinated Loan Agreement and (ii) in connection with the purchase of Preferred Stock pursuant to the Purchase Agreement. 9. Transfers; Transfers in Violation of Agreement. Except in connection ---------------------------------------------- with a Public Sale or a Sale of the Company, prior to transferring any Common Stock or Preferred Stock -7- to any person or entity, the transferring Stockholder shall cause the prospective transferee to execute and deliver to the Company and the other Stockholders a counterpart of this Agreement. Any transfer or attempted transfer of any such shares in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such shares as the owner of such shares for any purpose. 10. Additional Stockholders. The Company may permit any owner of ----------------------- Stockholder Shares not already party to this Agreement to become a party to this Agreement as an Investor and succeed to all of the rights and obligations of an Investor under this Agreement by obtaining an executed counterpart signature page to this Agreement from such owner of Stockholder Shares, and, upon such execution, such person shall for all purposes be an Investor party under this Agreement; provided, however, that the addition of such Person as a party to -------- ------- this Agreement shall only be valid and binding with the prior written consent of the Majority Investors. 11. Amendment and Waiver. Except as otherwise provided herein, no -------------------- modification, amendment, or waiver of any provision of this Agreement shall be effective against the Company or the Stockholders unless such modification, amendment, or waiver is approved in writing by the Company and the holders of a majority of the Stockholder Shares; provided that in the event that such -------- modification, amendment, or waiver would materially and adversely affect the GTCR Investors or the TCW/Crescent Lenders, then such amendment or waiver will require the consent of a majority of the Stockholder Shares held by such group of holders adversely affected. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. 12. 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 invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, then such invalidity, illegality, or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein. 13. Entire Agreement. Except as otherwise expressly set forth herein, ---------------- this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts 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. 14. Successors and Assigns. Except as otherwise provided herein, this ---------------------- Agreement shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Stockholders and any subsequent holders of Stockholder Shares and the respective successors and assigns of each of them, so long as they hold Stockholder Shares. -8- 15. Counterparts. This Agreement may be executed in separate counterparts ------------ each of which shall be an original and all of which taken together shall constitute one and the same agreement. 16. Remedies. The Company and each Stockholder shall be entitled to -------- enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and each Stockholder may in his or its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. 17. Notices. Any notice provided for in this Agreement shall be in ------- writing and shall be either personally delivered, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to the Company at the address set forth below and to any other recipient at the address indicated on the schedules hereto and to any subsequent holder of Common Stock subject to this Agreement at such address as indicated by the Company's records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service. The Company's address is: If to the Company: ----------------- Synagro Technologies, Inc. 1800 Bering Drive, Suite 1000 Houston, TX 77057 Attention: Chief Financial Officer Telecopier No.: (713) 369-1760 With a copy to: -------------- GTCR Fund VII, L.P. c/o GTCR Golder Rauner, L.L.C. 6100 Sears Tower Chicago, IL 60606 Attention: David A. Donnini Vincent J. Hemmer Telecopier No.: (312) 382-2201 and --- -9- Locke Liddell & Sapp LLP 3400 Chase Tower 600 Travis Street Houston, TX 77002-3095 Attention: Michael T. Peters Telecopier No.: (713) 223-3717 and --- Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Stephen L. Ritchie 18. 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 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 other 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. 19. Descriptive Headings. The descriptive headings of this Agreement are -------------------- inserted for convenience only and do not constitute a part of this Agreement. * * * * * -10- IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement on the day and year first above written. SYNAGRO TECHNOLOGIES, INC. By: /s/ Ross M. Patten ------------------------------------------- Name: Ross M. Patten ----------------------------------------- Its: Chairman / CEO ------------------------------------------ GTCR FUND VII, L.P. By: GTCR Partners VII, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------------------- Name: David A. Donnini ----------------------------------------- Its: Principal ------------------------------------------ GTCR CO-INVEST, L.P. By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------------------- Name: David A. Donnini ----------------------------------------- Its: Principal ------------------------------------------ GTCR CAPITAL PARTNERS, L.P. By: GTCR Mezzanine Partners, L.P. Its: General Partner By: GTCR Partners VI, L.P. Its: General Partner By: GTCR Golder Rauner, L.L.C. Its: General Partner By: /s/ David A. Donnini ------------------------------------------- Name: David A. Donnini ----------------------------------------- Its: Principal ------------------------------------------ [CONTINUATION OF SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT] 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/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisors (Bermuda), Limited as general partner By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as general partner By: TCW Advisors (Bermuda), Ltd., as general partner By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: TCW Investment Management Company, as Investment Advisor By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ [CONTINUATION OF SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT] TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company, as Investment Advisor By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ By: TCW (LINC IV), L.L.C., as General Partner By: TCW Asset Management Company, as its Managing Member By: /s/ Darryl L. Schall --------------------------------------------- Name: Darryl L. Schall ------------------------------------------- Title: Managing Director ------------------------------------------ By: /s/ Timothy P. Costello --------------------------------------------- Name: Timothy P. Costello ------------------------------------------- Title: Managing Director ------------------------------------------ SCHEDULE OF INVESTORS --------------------- Name and Address ---------------- GTCR Stockholders - ----------------- GTCR FUND VII, L.P. GTCR CO-INVEST, L.P. GTCR CAPITAL PARTNERS, L.P. Address for GTCR Stockholders: ------------------------------ 6100 Sears Tower Chicago, IL 60606-6402 Attention: David A. Donnini TCW/Crescent Stockholders - ------------------------- 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. Address for TCW/Crescent Stockholders: -------------------------------------- c/o TCW/Crescent Mezzanine, L.L.C. 200 Crescent Court, Suit 1600 Dallas, Texas 75201 Attention: Timothy P. Costello Facsimile: (214) 740-7382 - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----