EXHIBIT 4
EXECUTION
________________________________________________________________________________
PURCHASE AGREEMENT
Dated as of January 27, 2000
Between
SYNAGRO TECHNOLOGIES, INC.
and
GTCR FUND VII, L.P.
________________________________________________________________________________
TABLE OF CONTENTS
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Section 1. Authorization and Closing............................................................... -1-
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1A. Authorization of the Stock........................................................ -1-
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1B. Purchase and Sale of the Stock.................................................... -1-
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1C. The Closing....................................................................... -2-
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Section 2. Conditions of Purchaser's Obligation at the Closing..................................... -2-
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2A. Representations and Warranties; Covenants......................................... -2-
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2B. Certificates of Designation....................................................... -2-
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2C. Professional Services Agreement................................................... -2-
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2D. Registration Agreement............................................................ -3-
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2E. Other Documents................................................................... -3-
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2F. Authorization; Listing............................................................ -3-
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2G. Amendment of Rights Agreement..................................................... -3-
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2H. Shareholder Consent............................................................... -3-
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2I. Waiver of Vesting Upon Change in Control.......................................... -3-
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2J. Increase in Board Size; Appointment of Director................................... -3-
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2K. Closing Documents................................................................. -4-
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2L. Opinion of the Company's Counsel.................................................. -4-
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2M. Opinion of Company General Counsel................................................ -4-
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2N. Restec Acquisition Opinions....................................................... -5-
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2O. Fees and Expenses................................................................. -5-
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2P. Compliance with Applicable Laws................................................... -5-
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2Q. Waiver............................................................................ -5-
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Section 3. Conditions to Purchaser's Obligation to Make Subsequent Purchases After the Closing Date. -5-
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3A. Representations and Warranties.................................................... -5-
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3B. No Default........................................................................ -5-
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3C. Approved Use...................................................................... -6-
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3D. Acquisitions...................................................................... -6-
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3E. Subordinated Debt Financing....................................................... -6-
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3F. Certificates of Designation....................................................... -6-
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3G. Opinion of Counsel to the Company................................................. -6-
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3H. Opinion of Company General Counsel................................................ -6-
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3I. Acquisition Opinions.............................................................. -7-
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3J. Closing Documents................................................................. -7-
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3K. Compliance with Applicable Laws................................................... -7-
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Section 4. Covenants............................................................................... -7-
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4A. Financial Statements and Other Information.................................. -7-
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(i) Audit Report......................................................... -7-
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(ii) Quarterly Reports.................................................... -8-
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(iii) Monthly Reports...................................................... -8-
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(iv) Reports to SEC and to Shareholders................................... -8-
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(v) Notice of Default, Litigation and ERISA Matters...................... -8-
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(vi) Management Reports................................................... -9-
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(vii) Projections.......................................................... -10-
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(viii) Other Information.................................................... -10-
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4B. Inspection of Property...................................................... -10-
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4C. Listing..................................................................... -10-
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4D. Section 203 of the DGCL..................................................... -10-
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4E. Conversion of Series C Preferred............................................ -11-
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4F. Restrictions................................................................ -11-
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4G. Affirmative Covenants....................................................... -15-
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4H. Current Public Information.................................................. -16-
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4I. Public Disclosures.......................................................... -16-
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4J. Unrelated Business Taxable Income........................................... -16-
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4K. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Compliance................................................ -16-
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4L. Rights Agreement............................................................ -17-
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4M. Filing of Information Statement............................................. -17-
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4N. Filing of Charter Amendment................................................. -17-
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4O. Board of Director Nominations............................................... -17-
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4P. Authorization of Sixth Director............................................. -17-
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Section 5. Transfer of Restricted Securities................................................... -18-
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Section 6. Representations and Warranties of the Company....................................... -18-
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6A. Shareholders Consent........................................................ -18-
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6B. Waiver of Vesting Upon Change in Control.................................... -19-
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6C. Organization, Corporate Power and Licenses.................................. -19-
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6D. Capital Stock and Related Matters........................................... -19-
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6E. Subsidiaries; Investments................................................... -21-
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6F. Authorization; No Breach.................................................... -21-
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6G. Financial Statements........................................................ -22-
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6H. Absence of Undisclosed Liabilities.......................................... -23-
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6I. No Material Adverse Change.................................................. -23-
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6J. Absence of Certain Developments............................................. -23-
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6K. Assets...................................................................... -24-
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6L. Real Property............................................................... -25-
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(a) Owned Properties....................................................... -25-
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(b) Leased Properties...................................................... -25-
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(c) Real Property Disclosure............................................... -25-
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6M. Tax Matters.................................................. -26-
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6N. Contracts and Commitments.................................... -27-
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6O. Intellectual Property Rights................................. -29-
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6P. Litigation, etc.............................................. -30-
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6Q. Brokerage.................................................... -30-
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6R. Governmental Consent, etc.................................... -30-
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6S. Insurance.................................................... -31-
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6T. Employees.................................................... -31-
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6U. Employee Benefit Plans....................................... -31-
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6V. Compliance with Laws......................................... -33-
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6W. Environmental and Safety Matters............................. -33-
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6X. Affiliated Transactions...................................... -34-
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6Y. Real Property Holding Corporation Status..................... -34-
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6Z. Customers and Suppliers...................................... -35-
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6AA. Reports with the Securities and Exchange Commission.......... -35-
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6BB. Investment Company........................................... -35-
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6CC. Section 203 of the DGCL; Takeover Statute.................... -35-
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6DD. Rights Agreement............................................. -36-
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6EE. Disclosure................................................... -36-
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Section 7. Definitions................................................................. -37-
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Section 8. Miscellaneous............................................................... -48-
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8A. Expenses..................................................... -48-
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8B. Remedies..................................................... -48-
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8C. Purchaser's Investment Representations....................... -49-
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8D. Consent to Amendments........................................ -49-
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8E. Survival of Representations and Warranties................... -49-
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8F. Successors and Assigns....................................... -50-
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8G. Generally Accepted Accounting Principles..................... -50-
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8H. Severability................................................. -50-
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8I. Counterparts................................................. -50-
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8J. Entire Agreement............................................. -50-
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8K. Descriptive Headings; Interpretation......................... -50-
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8L. Governing Law................................................ -51-
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8M. Notices...................................................... -51-
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8N. Indemnification.............................................. -52-
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(a) General.................................................. -52-
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(b) Enviromental Liabilities................................. -53-
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8O. Standstill................................................... -53-
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PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT (this "Agreement") is made as of January 27,
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2000, between Synagro Technologies, Inc., a Delaware corporation (the "Company")
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and GTCR Fund VII, L.P., a Delaware limited partnership ("GTCR Fund VII" or the
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"Purchaser"). Except as otherwise indicated herein, capitalized terms used
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herein are defined in Section 7 hereof.
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The parties hereto agree as follows:
Section 1. Authorization and Closing.
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1A. Authorization of the Stock. The Company shall authorize the
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issuance and sale to the Purchaser of 17,358.824 shares of its Series C
Convertible Preferred Stock, par value $.002 per share (the "Series C
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Preferred"), having the rights and preferences set forth in Exhibit A attached
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hereto, and up to 2,641.176 shares of its Series D Convertible Preferred Stock,
par value $.002 per share (the "Series D Preferred"), having the rights and
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preferences set forth in Exhibit B attached hereto. The Series C Preferred and
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the Series D Preferred are collectively referred to herein as the "Closing
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Preferred Stock." The Series D Preferred is convertible into shares of the
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Company's Common Stock, par value $0.002 per share (the "Common Stock").
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1B. Purchase and Sale of the Stock.
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(a) At the Closing (as defined in ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇), subject to the
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terms and conditions set forth herein, the Company shall sell to the Purchaser
and the Purchaser shall purchase from the Company, 17,358.824 shares of Series C
Preferred and 2,641.176 shares of Series D Preferred, at a price of $1,000.00
per share.
(b) 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 Purchaser intends to provide up to
$125 million in equity financing to the Company as the equity portion of the
debt and equity financing necessary to fund such acquisitions (the "Future
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Acquisitions") and for certain other uses, in each case as approved by the Board
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of Directors of the Company (the "Board") and the Purchaser (an "Approved Use").
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In order to implement the foregoing, the Purchaser may purchase from time to
time after the Closing, upon the written request of the Board in connection with
an Approved Use, up to an additional 105,000 shares of one or more series of
Future Convertible Preferred Stock 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). In connection with each such purchase, the
Board shall designate a series of Future Convertible Preferred Stock with a
conversion price mutually agreed upon by the Board and the
Majority Holders (a "New Series"), taking into account, among other things, an
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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.
1C. The Closing. The closing of the purchase and sale of the
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Closing Preferred Stock to be purchased pursuant to Section 1B(a) (the
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"Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on January 27, 2000, or at
such other place or on such other date as may be mutually agreeable to the
Company and the Purchaser. At the Closing, the Company shall deliver to the
Purchaser stock certificates evidencing the Closing Preferred Stock to be
purchased by the Purchaser, registered in the Purchaser's name, 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 Purchaser's Obligation at the Closing. The
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obligation of the Purchaser to purchase and pay for the Closing Preferred Stock
to be purchased by it at the Closing is subject to the satisfaction as of the
Closing of the following conditions:
2A. Representations and Warranties; Covenants. The representations
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and warranties contained in Section 6 hereof shall be true and correct in all
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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) at and as of the
Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company shall have performed
in all material respects all of the covenants required to be performed by it
hereunder prior to the Closing.
2B. Certificates of Designation. The Company shall have duly
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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 Series C Preferred and the Series D
Preferred in the form set forth in Exhibits A and B hereto, respectively, (the
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"Closing Certificates of Designation"), and the Company shall not have adopted
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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 Preferred and Series B Preferred. The Closing Certificates
of Designation shall be in full force and effect as of the Closing under the
laws of Delaware and shall not have been amended or modified.
2C. Professional Services Agreement. The Company shall have
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entered into the Professional Services Agreement in form and substance
substantially similar to Exhibit C attached hereto and the Professional Services
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Agreement shall be in full force and effect as of the Closing.
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2D. Registration Agreement. The Company and the Purchaser shall
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have entered into a registration agreement in form and substance substantially
similar to Exhibit D attached hereto (the "Registration Agreement"), and the
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Registration Agreement shall be in full force and effect as of the Closing.
2E. Other Documents. Each of the other Documents shall have been
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duly executed and delivered by the respective parties thereto and shall be in
full force and effect.
2F. Authorization; Listing. The Common Stock issuable upon
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conversion of the Series D Preferred 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
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issuance.
2G. Amendment of Rights Agreement. The Company shall have amended
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its Rights Agreement to the extent set forth in the representation in Section
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6DD.
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2H. Shareholder Consent. A majority of the Company's shareholders
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shall have executed an action on written consent (the "Shareholders Consent")
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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 (including the Series D Preferred issuable upon conversion of
the Series C Preferred) and all of the Warrant Shares, in each case whether
issued on the date hereof or in the future and (c) the amendment to Company's
Restated Certificate of Incorporation as set forth in Exhibit E (the "Charter
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Amendment"), and the Company shall have delivered such executed consent to the
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▇▇▇▇▇▇▇▇▇.
▇▇. Waiver of Vesting Upon Change in Control. Each employee and
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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" shall have executed a waiver
providing that the Purchaser's and Lender's investment in the Company pursuant
to the Purchase Agreement, the Subordinated Loan Agreement and the Warrant
Agreement, whether on 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" shall have
executed a waiver providing that the Purchaser's and Lender's investment in the
Company pursuant to the Purchase Agreement, the Subordinated Loan Agreement and
the Warrant Agreement, whether on the date hereof or in the future, shall not be
considered a "change in control" for purposes of such agreement.
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2J. Increase in Board Size; Appointment of Director. The Board
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shall have authorized an increase in the number of persons constituting the
entire Board from four to five directors, and the Board shall have elected ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ to fill such newly created vacancy and to serve as a director of the
Company.
2K. Closing Documents. The Company shall have delivered to the
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Purchaser all of the following documents:
(a) an Officer's Certificate, dated the date of the
Closing, stating that the conditions specified in Section 1 and Sections 2A
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through 2J, inclusive, have been fully satisfied;
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(b) certified copies of the resolutions duly adopted by the
Board authorizing the execution, delivery and performance of this Agreement
and the other Documents, the issuance and sale of the Closing Preferred
Stock and the consummation of all other transactions contemplated by this
Agreement; authorizing the execution and filing of the Closing Certificates
of Designation; exempting GTCR Fund VII, GTCR Capital Partners, L.P. and
their affiliates and associates from Section 203 of the Delaware General
Corporate Law; authorizing the amendment to the Rights Agreement; and
authorizing the Charter Amendment.
(c) certified copies of the Closing Certificates of
Designation and the Company's bylaws, each as in effect at the Closing; and
(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).
2L. Opinion of the Company's Counsel. The Purchaser shall have
--------------------------------
received an opinion from ▇▇▇▇▇, Liddell & ▇▇▇▇ LLP special counsel for the
Company, which shall be addressed to the Purchaser, dated the Closing Date and
in form and substance reasonably satisfactory to the Purchaser.
2M. Opinion of Company General Counsel. The Purchaser shall have
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received an opinion from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, general counsel for the Company,
which shall be addressed to the Purchaser, dated the Closing Date and in form
and substance reasonably satisfactory to the Purchaser.
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2N. Restec Acquisition Opinions. The Purchaser shall have received
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an opinion (or permission to rely on an opinion) from each of the special
counsels to the sellers in the Acquisition, relating to the transactions
consummating the Acquisition, dated the Closing Date and in form and substance
reasonably satisfactory to the Purchaser.
2O. Fees and Expenses. The Company shall have reimbursed each
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Purchaser for its fees and expenses as provided in Section 8A hereof.
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2P. Compliance with Applicable Laws. The purchase of Closing
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Preferred Stock by the Purchaser hereunder shall not be prohibited by any
applicable law or governmental regulation, shall not subject the 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 the Purchaser is subject.
2Q. Waiver. Any condition specified in this Section 2 may be
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waived only if such waiver is set forth in a writing executed by the Purchaser.
Section 3. Conditions to Purchaser's Obligation to Make Subsequent
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Purchases After the Closing Date. The Purchaser's obligation to purchase any
--------------------------------
Future Convertible Preferred Stock of the Company pursuant to Section 1B(b)
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after the Closing Date is subject to the satisfaction of the following
conditions, each as of the date of each such subsequent purchase:
3A. Representations and Warranties. All representations and
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warranties of the Company contained in this Agreement shall be true and correct
in all material respects (other than representations and warranties qualified by
a materiality standard including, without limitation, a Material Adverse Effect
qualifier, which shall be true and correct in all respects) as of the making of
such subsequent 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 Purchaser pursuant to
Section 4A hereof and the latest consolidated balance sheet of the Company
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required to be provided to the Purchaser pursuant to Section 4A hereof,
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respectively, and (b) references to the date of this Agreement, the Closing Date
and the like shall be deemed to refer to the date of the making of such
subsequent purchase.
3B. No Default. No Default or Event of Default (as such terms are
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defined in the Subordinated Loan Agreement) shall exist as of the date of such
subsequent purchase or would result from the consummation of the borrowings by
the Company under the Subordinated Loan Agreement made concurrently with such
purchase of Future Convertible Preferred Stock.
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3C. Approved Use. The Purchaser shall have received evidence
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satisfactory to it that the proceeds of such subsequent purchase will be used
for the Approved Use. The Purchaser shall have approved the respective Future
Acquisition or other Approved Use being financed therewith and the Purchaser
shall have received such documents and deliveries in connection therewith as
reasonably requested by the Purchaser.
3D. Acquisitions. No default or material breach of performance
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shall have occurred under the agreements related to the Future Acquisition, if
any, for which the Future Convertible 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 Purchaser's consent).
3E. Subordinated Debt Financing. The Lender shall have loaned (or
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will loan concurrently with the funding of the subsequent purchase) to the
Company pursuant to the Subordinated Loan Agreement an amount equal to the
purchase price for the Future Convertible Preferred Stock being purchased by the
Purchaser.
3F. Certificates of Designation. The Company shall have duly
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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 the Series D Preferred Certificate of Designation set forth in
Exhibit B hereto except with respect to the conversion price as agreed to by the
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Board and the Majority Holders pursuant to Section 1B(b) hereof (the "Future
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Certificate of Designation"), and the Company shall not have adopted or filed
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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 and Series D Preferred Stock and any
other previously issued New Series. The Future Certificate of Designation shall
be in full force and effect as of such Subsequent Closing under the laws of
Delaware and shall not have been amended or modified.
3G. Opinion of Counsel to the Company. The Purchaser shall have
---------------------------------
received an opinion from the special counsel for the Company, which shall be
addressed to the Purchaser, dated the date of the Subsequent Closing and in form
and substance reasonably satisfactory to the Purchaser.
3H. Opinion of Company General Counsel. The Purchaser shall have
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received an opinion from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, general counsel for the Company, or
his successor, if any, which shall be addressed to the Purchaser, dated the
Subsequent Closing Date and in form and substance reasonably satisfactory to the
Purchaser.
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3I. Acquisition Opinions. To the extent the Company or any of its
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Subsidiaries receives (or is otherwise entitled to rely on) an opinion of
counsel in connection with any Future Acquisition, such opinion shall also be
addressed to the Purchaser or the Purchaser shall otherwise be entitled to rely
thereon.
3J. Closing Documents. The Company shall have delivered to the
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Purchaser all of the following documents:
(a) an Officer's Certificate, dated the date of the
purchase of the Future Convertible Preferred Stock (each a "Subsequent
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Closing"), stating that the conditions specified in Sections 3A through 3F,
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inclusive, have been fully satisfied;
(b) certified copies of the resolutions duly adopted by the
Board authorizing the issuance and sale of the Future Convertible Preferred
Stock and the filing of a Future Certificate of Designation to create the
New Series.
(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 Subsequent Closing; and
(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 Future
-------------------------------
Convertible Preferred Stock by the Purchaser hereunder shall not be prohibited
by any applicable law or governmental regulation, shall not subject the
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 the Purchaser is subject.
Section 4. Covenants.
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4A. Financial Statements and Other Information. The Company shall
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deliver to the Purchaser (so long as the Purchaser holds any Preferred Stock)
and to each holder of at least 15% of the Investor Preferred:
(i) Audit Report. Promptly when available and in any event
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within 90 days after the close of each Fiscal Year: (a) a copy of the annual
audit report of the Company and
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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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or other independent auditors of recognized standing selected by
the Company and reasonably acceptable to the Purchaser, together with a written
statement from such accountants to the effect that in making the examination
necessary for the signing of such annual audit report by such accountants, they
have not become aware of any Event of Default or Default that has occurred and
is continuing or, if they have become aware of any such event, describing it in
reasonable detail and (b) consolidating balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Year and consolidating statements of
earnings for the Company and its Subsidiaries for such Fiscal Year, certified by
the chief financial officer of the Company.
(ii) Quarterly Reports. Promptly when available and in any
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event within 45 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter) of each Fiscal Year, consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such Fiscal Quarter,
together with consolidated and consolidating statements of earnings and
consolidated statements of cash flow for such Fiscal Quarter and for the period
beginning with the first day of such Fiscal Year and ending on the last day of
such Fiscal Quarter, certified by the chief financial officer of the Company.
(iii) Monthly Reports. Promptly when available and in any
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event within 30 days after the end of each of the first two months of each
Fiscal Quarter, consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such month, together with consolidated and
consolidating statements of earnings for such month and for the period beginning
with the first day of the applicable Fiscal Year and ending on the last day of
such month, certified by the chief financial officer of the Company.
(iv) Reports to SEC and to Shareholders. Promptly upon the
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filing or sending thereof, copies of all regular, periodic or special reports of
the Company or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Company shall promptly deliver any such exhibit to the
Purchaser 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.
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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:
-8-
(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 Purchaser 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; 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 the
------------------
Purchaser, copies of all detailed financial and management reports submitted to
the Company by independent
-9-
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 the Purchaser
prior to the Closing Date.
(viii) Other Information. From time to time such other
-----------------
information concerning the Company and its Subsidiaries as the Purchaser may
reasonably request.
4B. Inspection of Property. The Company shall permit any
----------------------
representatives designated by the Purchaser (so long as the 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
Closing, the Company shall prepare and submit to Nasdaq a listing application
covering the shares of Common Stock issuable upon conversion of the Closing
Preferred Stock (including the Series D Preferred issuable upon conversion of
the Series C Preferred) 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 series of
Future Convertible Preferred Stock 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 Purchaser or its Affiliates which would adversely
affect or otherwise impair the rights of the Purchaser or its Affiliates
thereunder.
-10-
4E. Conversion of Series C Preferred. The Company shall not take
--------------------------------
any action that would adversely affect or limit the rights of the Purchaser or
its Affiliates to convert the Series C Preferred into Series D Preferred, in
accordance with the terms thereof.
4F. Restrictions. For so long as the 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 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 (assuming exercise of the Warrants and conversion
of all Preferred Stock) or (y) issuing equity securities in connection with
an acquisition approved by the Purchaser;
(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 Closing Date in
wholly-owned Subsidiaries identified on the Subsidiaries
------------
Schedule;
--------
-11-
(ii) equity Investments in Subsidiaries acquired after the
Closing Date in transactions approved by the Purchaser
including approved Future 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)
$115,000 in the aggregate to any single individual or (ii)
$287,500 in the aggregate for all such individuals;
(vii) good faith deposits and escrow accounts in connection
with prospective acquisitions of stock or assets for Future
Acquisitions approved by the Lender;
(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 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;
-12-
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 $3,000,000 for any
single transaction or series of related transactions and less than
$10,000,000 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. Notwithstanding the foregoing, the Company shall not,
and shall not permit any Subsidiary to, consummate any such merger,
consolidation or purchase described above within the 120 days immediately
following the Closing Date without the prior written consent of the
Purchaser other than Future Acquisitions approved by the Purchaser.
(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
-13-
than the Company and its Subsidiaries) 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) $10,000,000 of revolving Senior
-------------------
Indebtedness, (B) $100,000,000 of term Senior Indebtedness, (C)
$15,000,000 of additional Senior Indebtedness (whether
revolving or term) and (D) up to $10,000,000 of additional
Senior Indebtedness (whether revolving or term) incurred to
fund the Rhode Island Project in each case with respect to this
Section 4F(i) less the aggregate principal amount of any
-------------
permanent reductions of commitments for revolving Senior
Indebtedness 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) and (C);
-14-
(ii) unsecured seller Debt which represents all or part of
the purchase price payable in connection with a Future
Acquisition approved by the Lender 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;
(iii) Debt arising under Capital Leases, Debt secured by Liens
permitted by subsection 6.10(c) or (d) of the Subordinated Loan
------------------ ---
Agreement 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
$15,000,000;
(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 RESTEC Bonds; provided that the RESTEC Bonds must be
--------
repaid or defeased not later than 360 days after the Closing
Date; and
(viii) the Loans made pursuant to the Subordinated Loan
Agreement.
4G. Affirmative Covenants. For so long as the 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
-15-
discharge when payable all taxes, assessments and governmental charges
(except to the 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 Purchaser's 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 Purchaser, 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 Purchaser describing in reasonable detail the proposed content of such
disclosure and shall permit the Purchaser 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 GTCR Fund VII or
any of its 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. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Compliance. In connection with any
----------------------------
transaction in which the Company is involved (an "HSR Transaction") which is
---------------
required to be reported under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended from time to time (the "HSR Act"),
-------
-16-
the Company and GTCR Fund VII 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 GTCR Fund
VII shall take all reasonable actions and shall file and use reasonable best
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 GTCR Fund VII or
--------
any of its Affiliates be required to divest any of its assets or Subsidiaries.
If GTCR Fund VII is required to make a filing under the HSR Act in connection
with an HSR Transaction, the Company will provide to GTCR Fund VII 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 Purchaser 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. Filing of Information Statement. Within twenty (20) days after
-------------------------------
the Closing, the Company shall file with the Securities and Exchange Commission
an information statement pursuant to Section 14(c) and Regulation 14C of the
Securities Exchange Act (an "Information Statement") regarding the Shareholders
---------------------
Consent. The Company shall comply with all of its obligations pursuant to
Section 14(c) and Regulation 14C of the Securities Exchange Act in connection
with the Shareholders Consent.
4N. Filing of Charter Amendment. Twenty-one calender days after
---------------------------
the date that the Company sends or gives its shareholders the Information
Statement relating to the Shareholders Consent, the Company shall file the
Charter Amendment.
4O. Board of Director Nominations. For so long as the 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
Purchaser 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 Closing Certificates
of Designation and the Future Certificates of Designation.
4P. Authorization of Sixth Director. At such time as the holders
-------------------------------
of the Series C Preferred convert such shares into Series D Preferred, the Board
shall authorize an increase in the number of persons constituting the entire
Board from five to six directors.
-17-
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.
----------
(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
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ 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 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 ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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 the Purchaser, the Company shall
promptly supply to the 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 Purchaser to enter into this Agreement and purchase
the Preferred Stock, the Company hereby represents and warrants to the Purchaser
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"). 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
-18-
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 the Purchaser's and Lender's investment in the Company pursuant to the
Purchase Agreement, the Subordinated Loan Agreement and the Warrant Agreement,
whether on 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 the Purchaser's and Lender's investment in the Company pursuant
to the Purchase Agreement, the Subordinated Loan Agreement and the Warrant
Agreement, whether on the date hereof or in the future, shall not be considered
a "change in control" for purposes of such agreement.
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
Purchaser's 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 capital stock of the Company shall consist of:
(1) 10,000,000 shares of preferred stock, (i) of which 500,000
shares shall be designated as Series A Preferred, none of which shall be issued
and outstanding, (ii) of which 1,458,335 shares shall be designated as Series B
Preferred, none of which shall be issued and outstanding, (iii) of which 30,000
shares shall be designated as Series C Preferred, of which
-19-
17,358.824 shares shall be issued and outstanding, (iv) of which 32,000 shares
shall be designated as Series D Preferred, of which (a) 5,498.319 shares shall
be issued and outstanding and (b) 17,358.824 shares shall be reserved for future
issuance upon conversion of the Series C Preferred, (v) of which 15,000 shares
shall be reserved for future issuance under the Warrant Agreement and (vi) of
which 105,000 shares shall be reserved for future issuance pursuant to this
Agreement; and
(2) 100,000,000 shares of Common Stock, of which 17,710,189
shares shall be issued and outstanding, 9,142,858 shares shall be reserved for
issuance upon conversion of the Series D Preferred, and 4,689,599 shares shall
be reserved for issuance upon exercise of outstanding options and warrants to
purchase Common Stock 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 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,
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 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.
-20-
6E. Subsidiaries; Investments. The attached "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 Series C Preferred, the issuance of Warrants
pursuant to the Warrant Agreement, 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
-21-
loans or advances or paying dividends to, transferring property to, or repaying
any Debt owed to, the Company or another Subsidiary.
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 and 1998, and the related
statements of income and cash flows (or the equivalent) for the respective
twelve-month periods ended December 31, 1997 and 1998; and
(b) the unaudited consolidated balance sheet of the Company
and its Subsidiaries as of November 30, 1999 (the "Latest Balance Sheet"), and
--------------------
the related statements of income and cash flows (or the equivalent) for the
eleven-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 December 31, 1999, which gives effect to the Transactions and the
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.
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
-22-
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.
6I. No Material Adverse Change. Except as set forth on the
--------------------------
attached "Adverse Change Schedule," since November 30, 1999, 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;
-23-
(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 Purchaser; 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
-24-
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 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"). The Company has delivered to the Purchaser true, correct, complete
--------
and accurate copies of each of the Leases described in the Leased Property
Schedule. 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
Purchaser; 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.
-25-
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 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
-26-
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;
(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;
-27-
(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 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.
(iii) The Purchaser's special counsel has been supplied with
a true and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral arrangements,
contracts and agreements which are referred to on the Contracts Schedule,
together with all amendments, waivers or other changes thereto.
-28-
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, misappropriate or conflict with any
Intellectual Property Rights of other Persons, nor would any
-29-
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. Other than fees payable by the Company to ▇▇▇▇▇▇▇
---------
▇▇▇▇▇▇ and ▇▇▇▇▇ as described in the Financial Advisory Agreement dated November
16, 1999, as amended by the Amendment dated January 24, 2000, 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 Purchaser 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
-30-
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 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 Closing Date, transferred out of the Company's Controlled Group.
-31-
(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).
(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 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.
(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
-32-
occurred since the date of such determination that could adversely affect such
qualification or tax-exempt status.
(i) With respect to each Benefit Plan, the Company previously has
furnished to the Lender a true and correct copy of, where applicable, (a) the
most recent annual report (Form 5500) filed with the IRS, (b) the plan document
if written, or a description of such plan if not written, (c) each trust
agreement, group annuity contract or other funding arrangement, if any, relating
to such Benefit Plan, (d) the most recent actuarial report or valuation relating
to such Benefit Plan (in the event such Benefit Plan is subject to Title IV of
ERISA, is a non-U.S. pension plan, or provides any post-employment health,
medical or life insurance benefits), (e) the most recent summary plan
description and (f) the most recent determination letter issued by the IRS.
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":
----------------------
(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 contemplated 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
-33-
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.
6X. 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.
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
-34-
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
---------------------------------------------------
has furnished the Purchaser with complete and accurate copies of its 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. Such reports
and filings 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.
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 Warrants and all issuances of Future Convertible 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
-35-
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 Purchaser, GTCR Capital Partners, L.P. and their 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 Warrants and all issuances of Future
Convertible 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. Disclosure. All information heretofore or contemporaneously
----------
herewith furnished in writing by the Company or any Subsidiary to the 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 the 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 Purchaser 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 Purchaser 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 purchase of Preferred Stock
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 purchase of Preferred
Stock hereunder, each borrowing under the Subordinated Loan Agreement and
-36-
under the Credit Agreement and the application of the proceeds therefrom
including the acquisition of RESTEC or any Future Acquisitions 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 the
Acquisition or a Future Acquisition, the Company's "Subsidiaries" in such
representations and warranties shall include the entities and businesses being
acquired pursuant to such Acquisition or Future 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
--------
Purchaser and shall be in a form satisfactory to the Purchaser; 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" is defined in the definition of Acquisition Agreement.
-----------
"Acquisition Agreement" means the Purchase and Sale Agreement, dated
---------------------
as of October 20, 1999 together with all amendments, with ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
individually, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as trustee of the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1998 Grat,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as executrix of the
estate of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, as
co-trustees of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Revocable Trust under agreement dated
November 2, 1998, which collectively own, directly or indirectly, all of the
outstanding capital stock, limited partnership interests and limited liability
companies interests listed on Schedule 1 thereto (the "Acquisition").
---------- -----------
"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.
-37-
"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.
"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 ▇▇▇▇▇'▇ 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 Closing
---------------------------
Certificates of Designation and, once they have been filed with the Delaware
Secretary of State, the Future Certificates of Designation.
-38-
"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 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 and (h) all Debt of
any partnership in which such Person is a general partner. 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
-39-
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 Purchaser, 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.
"Documents" means this Agreement, the Credit Documents, the
---------
Subordinated Loan Documents, the Acquisition Agreement, the Warrant Agreement,
the Warrants, the Registration 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, 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).
-40-
"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" is defined in the Certificates of Designation
----------------------
of the Series C Preferred and Series D Preferred.
"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.
"Future Convertible Preferred Stock" means future series (i.e., series
----------------------------------
E, F, G, etc.) of the Company's preferred stock (other than the Series C
Preferred and Series D Preferred) that are identical in terms to the Series D
Preferred in all respects other than their conversion price and that are issued
in connection with this 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.
"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
-41-
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.
"Investor Preferred" means (i) the Preferred Stock issued hereunder
------------------
(including, without limitation, pursuant to Section 1B(b)) 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).
"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
-42-
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.
"Lender" means GTCR Capital Partners, L.P.
------
"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 Purchaser thereunder.
"Monitoring Agreement" means that certain Monitoring Agreement, dated
--------------------
as of the date hereof, between the Company and GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
"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 certif icate
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 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
------------
-43-
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.
-44-
"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 Closing Preferred Stock and
---------------
the Future Convertible Preferred Stock.
"Professional Services Agreement" means that certain Professional
-------------------------------
Services Agreement, dated as of the date hereof, between the Company and GTCR
▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
"Real Property" means the Owned Real Property and Leased Real
-------------
Property.
"Release" shall have the meaning set forth in CERCLA.
-------
"RESTEC" means the Persons and interests acquired pursuant to the
------
Acquisition.
"RESTEC Bonds" means the Sewage Sludge Disposal Facility Revenue Bonds
------------
(Netco-Waterbury, Limited Partnership Project - 1995 Series) and the Sewage
Sludge Disposal Facility Revenue Bonds (New Haven Residuals, Limited Partnership
Project - 1996 Series).
"Restricted Securities" means (i) the Preferred Stock issued hereunder
---------------------
and pursuant to Section 1B(b) hereof and (ii) any securities issued with respect
-------------
to the securities referred to in clause (i) 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 Project" means the proposed project in which RESTEC
--------------------
would develop a soil manufacturing facility to process biosolids in Rhode Island
for which a proposal was submitted in response to a request for proposals issued
by the Rhode Island Resource Recovery Corporation. RESTEC originally
contemplated a joint venture for this project, but both of its proposed partners
have now agreed to sell their rights to the project to RESTEC for contingent
payments.
-45-
"Rights Agreement" means the Rights Agreement, dated as of December
----------------
20, 1996, between the Corporation and Intercontinental Registrar & Transfer
Agency, Inc., as Rights Agent.
"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.
"Subordinated Loan Agreement" means the Senior Subordinated Loan
---------------------------
Agreement dated as of the date hereof by and among the Company, certain
Subsidiary guarantors and GTCR Capital Partners, L.P.
"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.
"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
-46-
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.
"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 Agreement" is defined in the definition of Warrants.
-----------------
"Warrants" means the warrants to purchase shares of the Company's
--------
Convertible Preferred Stock (the "Warrant Shares") issued by the Company to GTCR
--------------
Capital Partners, L.P. in connection with the borrowing of subsequent loans
under the Subordinated Loan Agreement, pursuant to a Warrant Agreement, dated as
of the date hereof, by and between the Company and GTCR Capital Partners, L.P.
(the "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
-47-
(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. If the transactions contemplated hereby are
--------
consummated, the Company agrees to pay, and hold the Purchaser and all holders
of Investor Preferred harmless against liability for the payment of, (i) the
reasonable fees and expenses of their counsel 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 1B(b) hereof), (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 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
-------
1B(b) 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 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,
legal fees and other out-of-pocket fees and expenses as have been or may be
incurred by the 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 the Purchaser or its
Affiliates (including, but not limited to, fees and expenses incurred in
attending board of directors or other Company-related meetings).
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.
-48-
8C. Purchaser's Investment Representations. The Purchaser hereby
--------------------------------------
represents (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 the Purchaser,
enforceable in accordance with its terms, and (iv) that the execution, delivery
and performance of this Agreement and such other agreements by the 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 Purchaser 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 January 27, 2000 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 Purchase Agreement, dated as of
January 27, 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. 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. 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.
8E. 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
-49-
applicable, regardless of any investigation made by the Purchaser or on its
behalf (the "Survivability Period").
--------------------
8F. 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 Purchaser's benefit as a
purchaser or holder of Preferred Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Preferred Stock. The rights and
obligations of the Purchaser under this Agreement and the agreements
contemplated hereby may be assigned by such Purchaser at any time, in whole or
in part, to any investment fund managed by GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C., or any
successor thereto.
8G. 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.
8H. 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.
8I. 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.
8J. 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.
8K. 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.
-50-
8L. 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.
8M. 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.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
3400 Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser:
-------------------
GTCR Fund VII, L.P.
c/o GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
-51-
With a copy to:
--------------
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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.
8N. Indemnification.
---------------
(a) General. In consideration of the 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 the 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, (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.
-52-
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 8N(a) above, the Company shall defend, protect,
-------------
indemnify and hold harmless the 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.
▇▇. ▇▇▇▇▇▇▇▇▇▇. During the term of this Agreement, the 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 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.
* * * * *
-53-
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement on the date first written above.
SYNAGRO TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name:▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Its: Chairman/CEO
----------------------------------
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Principal
SIGNATURE PAGE TO THE PURCHASE AGREEMENT
LIST OF EXHIBITS
----------------
Exhibit A - Certificate of Designation of Series C Preferred
Exhibit B - Certificate of Designation of Series D Preferred
Exhibit C - Form of Professional Services Agreement
Exhibit D - Form of Registration Agreement
Exhibit E - Amendment to Restated Certificate of Incorporation
LIST OF DISCLOSURE SCHEDULES
----------------------------
Shareholders Consent Schedule
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
Intellectual Property Schedule
Litigation Schedule
Consents Schedule
Insurance Schedule
Key Employees Schedule
Employee Benefits Schedule
Environmental Schedule
Affiliated Transactions Schedule
Customer Schedule
Unsecured Seller Debt Schedule