<PAGE>
SCHEDULE 14A TEMPLATE
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SYNAGRO TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[SYNAGRO logo]
SYNAGRO TECHNOLOGIES, INC.
1800 Bering Drive, Suite 1000
HOUSTON, TEXAS 77057
December 17, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Synagro Technologies, Inc. to be held at 1800 Bering Drive, Suite 1000, Houston,
Texas 77057, at 2:00 p.m., local time, on Monday, January 17, 2000.
Matters to be considered and acted upon by the stockholders include the
election of four directors and any other matters that may properly come before
the meeting. These matters and the procedures for voting your shares are
discussed in the accompanying Notice of Annual Meeting and Proxy Statement.
We urge each stockholder, whether or not intending to attend the meeting in
person, to execute the enclosed proxy and return it promptly in the enclosed
envelope. Returning a proxy will not prevent a stockholder from voting in
person at the meeting.
Sincerely,
Alvin L. Thomas II
Secretary
<PAGE>
SYNAGRO TECHNOLOGIES, INC.
1800 Bering Drive, Suite 1000
HOUSTON, TEXAS 77057
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held January 17, 2000
______________________
Notice is hereby given that the annual meeting (the "Annual Meeting") of
the stockholders of Synagro Technologies, Inc. (the "Company") will be held at
the Company's offices at 1800 Bering Drive, Suite 1000, Houston, Texas 77057 on
Monday, January 17, 2000, at 2:00 p.m., local time, Houston, Texas, for the
following purposes:
1. To elect a board of four directors to serve until the next annual
meeting of stockholders or until their successors are elected and qualified; and
2. To transact such other business as may properly be presented at the
Annual Meeting.
A record of the stockholders has been taken as of the close of business on
Friday, December 10, 1999, and only those stockholders of record on that date
will be entitled to notice of and to vote at the Annual Meeting.
Your participation in the Company's affairs is important. To ensure your
representation, if you do not expect to be present at the Annual Meeting in
person, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY in the
enclosed postage-prepaid envelope which has been provided for your convenience.
By Order of the Board of Directors,
Alvin L. Thomas II
Secretary
Houston, Texas
December 17, 1999
IMPORTANT
---------
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL THE PROXY CARD IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE ANNUAL
MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED WITHIN THE
UNITED STATES. A STOCKHOLDER MAY, IF SO DESIRED, REVOKE HIS PROXY AND VOTE HIS
SHARES IN PERSON AT THE ANNUAL MEETING.
<PAGE>
SYNAGRO TECHNOLOGIES, INC.
1800 Bering Drive, Suite 1000
HOUSTON, TEXAS 77057
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To be held January 17, 2000
This Proxy Statement is being mailed to stockholders commencing on or about
December 17, 1999, in connection with the solicitation by the board of directors
of Synagro Technologies, Inc., a Delaware corporation (the "Company"), of
proxies to be voted at the annual meeting (the "Annual Meeting") of stockholders
to be held in Houston, Texas on January 17, 2000, and upon any adjournment
thereof, for the purposes set forth in the accompanying Notice. Proxies will be
voted in accordance with the directions specified thereon and otherwise in
accordance with the judgment of the persons designated as the holders of the
proxies. Proxies marked as abstaining on any matter to be acted on by the
stockholders will be treated as present at the Annual Meeting for purposes of
determining a quorum but will not be counted as votes cast on such matters. Any
proxy on which no direction is specified will be voted for the election of each
of the nominees for director named herein. A stockholder may revoke a proxy by:
(i) delivering to the Company written notice of revocation, (ii) delivering to
the Company a proxy signed on a later date or (iii) voting in person at the
Annual Meeting.
As of December 10, 1999, the record date for the determination of
stockholders entitled to vote at the Annual Meeting, there were outstanding and
entitled to vote 17,710,189 shares of the Company's common stock, par value
$.002 per share (the "Common Stock"). Each share of Common Stock entitles the
holder to one vote on each matter presented to the stockholders.
ELECTION OF DIRECTORS
At the Annual Meeting, four nominees are to be elected, each director to
hold office until the next annual meeting of stockholders or until his successor
is elected and qualified. The persons named in the accompanying proxy have been
designated by the board of directors and, unless authority is withheld, they
intend to vote for the election of the nominees named below to the board of
directors. Each of the nominees, except Mr. Meredith, who is hereby nominated
for election by the current board members, have previously been elected by the
stockholders. The board of directors has approved a decrease in the number of
directorships constituting the board, from six directorships to four
directorships, effective January 17, 2000. If any nominee should become
unavailable for election, the proxy may be voted for a substitute nominee
selected by the persons named in the proxy, or the board may be reduced
accordingly; however, the board of directors is not aware of any circumstances
likely to render any nominee unavailable.
<PAGE>
NOMINEES
Certain information concerning the nominees is set forth below:
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED /1/
DECEMBER 1, 1999
--------------------------
DIRECTOR PERCENT
NAME POSITION AGE SINCE SHARES /2/ OF CLASS
<S> <C> <C> <C> <C> <C>
Ross M. Patten Director, Chairman of the Board and 56 1998 373,445 2.2%
Chief Executive Officer
Kenneth Ch'uan-k'ai Director 54 1998 1,292,079 /5/ 7.2%
Leung /4/
Alfred Tyler 2nd /3/ /4/ Director 56 1998 41,968 *
Gene Meredith /3/ /4/ Director 57 1998 41,968 *
</TABLE>
- ------------------------
* Less than 1% of outstanding shares.
/1/ Each person has sole voting and investment power with respect to
the shares listed.
/2/ Includes shares underlying stock options, as follows:
Mr. Patten 373,445; Mr. Leung 42,079; Mr. Tyler 41,968,
and Mr. Meredith 25,301.
/3/ Member, audit committee of the board of directors.
/4/ Member, compensation committee of the board of directors.
/5/ Includes 137,875 shares and 1,112,125 shares owned by Environmental
Opportunities Fund (Cayman), L.P. and Environmental Opportunities
Fund, L.P., respectively. Mr. Leung is the Chief Investment
Officer of these investment funds.
Ross M. Patten was appointed by the board of directors to the position of
President and Chief Executive Officer in February 1998. He was subsequently
appointed to the position of Chairman of the Board on August 3, 1998. Prior to
joining the Company, Mr. Patten enjoyed a seventeen-year career at Browning-
Ferris Industries, where he last served as Divisional Vice President - Corporate
Development. He also served as Executive Vice President for development of
Wheelabrator Technologies, a Waste Management, Inc. subsidiary, and Director and
Vice President - business development at Resource NE, Inc., prior to its
acquisition by Waste Management, Inc. Mr. Patten was a Founder, Principal and
Managing Director of Bedford Capital, an investment firm specializing in
environmental companies, and of Bedford Management, which provides consulting
services to publicly held waste management and environment related companies in
the areas of growth and acquisition strategy, formation and implementation.
Kenneth Ch'uan-k'ai Leung has served on the board of directors since 1998.
Mr. Leung is a managing director of Investment Banking at Sanders Morris Mundy
and is the Chief Investment Officer of both the Environmental Opportunities Fund
(Cayman), L.P., Environmental Opportunities Fund, L.P., and Environmental
Opportunities Fund II, L.P. Additionally, he is the Editor of Environmental
Review. Previously, Mr. Leung was associated with Smith Barney for seventeen
years, and before that with F. Eberstadt & Co. Inc., Chemical Bank and Chase
Manhattan Bank. Mr. Leung serves on the boards of Zahren Alternative Power
Corp., Capital Environmental Resources, Inc., Avista Resources, Inc., Northstar
Passenger Services, Ltd., and US Plastic Lumber Corp.
Alfred Tyler 2nd has served on the board of directors since 1998. Mr.
Tyler has over twenty years experience in the environmental services industry,
most recently as the President and Chief Executive Officer of Enviro-
Gro Technologies, a provider of sludge management services. In late 1992,
Enviro-Gro
2
<PAGE>
was sold to Wheelabrator Technologies and Mr. Tyler resigned his positions to
manage his other investments. From 1989 to the present, Mr. Tyler has been the
President and the sole stockholder of Weston Investments, Inc., a private
investment company. Mr. Tyler is also the President of Days Cove Reclamation
Company, a landfill operation and construction company, a partner and managing
director of Bedford Capital Corporation, a New York consulting firm, and
director of US Liquids, Inc.
Gene Meredith has served on the board of directors since 1998. Mr.
Meredith served more than 25 years in senior management roles in the solid waste
industry. He was a Regional Vice President at Browning-Ferris Industries, Inc.,
and Chairman, President and CEO of Mid-American Waste Systems. He previously
served as a director of USA Waste Services, Envirofil, Inc., and as a general
manager of Haul-A-Way Systems, Inc., a waste company in St. Paul, Minnesota. Mr.
Meredith also has a law degree, and spent five years as Senior Partner at
Meredith & Addicks in St. Paul, Minnesota.
BOARD ACTIVITY, STRUCTURE AND COMPENSATION
The Company's operations are managed under the broad supervision and
direction of the board of directors, which has the ultimate responsibility for
the establishment and implementation of the Company's general operating
philosophy, objectives, goals and policies. During 1998, the board of directors
met or acted by written consent on six regularly or specially scheduled
occasions. The board has audit, nominating and compensation committees. The
members of the compensation committee are Messrs. Meredith, Tyler and Leung.
The nominating committee consists of Mr. Meredith and Mr. Patten. The audit
committee consists of Messrs. Gelbart, Meredith, and Tyler. For information
regarding the audit committee, see "Auditor". The compensation committee
administers the Company's compensation plans and recommends officers'
compensation for board approval. During 1998, the compensation committee
convened on one occasion and the audit committee on two occasions. Stockholders
who may wish to suggest individuals for possible future consideration for board
positions should direct recommendations to the board of directors at the
Company's principal offices. Each director attended at least 75% of all
meetings of the board and meetings of board committees during 1998.
Each director who is not otherwise compensated by the Company for service
as an officer of the Company is paid for travel expenses, if any. Directors are
compensated $1,000 for attendance at each board committee meeting and $2,000 for
each board meeting. Additionally, upon their initial appointment or election, a
grant of an option to acquire 50,000 shares of common stock, which vests 16,666
upon grant and 16,667 shares on each of the first and second anniversaries of
the date of the grant. Each board member has the right to elect to receive
options in lieu of cash compensation for board and committee meeting attended,
at an exercise price equal to market value of the common stock on the trading
day immediately preceding the date of the meeting. During 1998, the board
granted 50,390 options to Mr. Leung, 50,235 to Mr. Meredith, 50,235 to Mr.
Tyler, 625 to Mr. Gelbart and 390 to Dr. Myers.
EXECUTIVE OFFICERS
Executive officers of the Company generally serve at the pleasure of the
board of directors and are subject to annual appointment by the board at its
first meeting following the annual meeting of stockholders. All of the
Company's executive officers as of December 1, 1999, are listed in the table on
page 5, with the exception of the following:
Paul C. Sellew was appointed President and Chief Operating Officer in
November 1998, Mr. Sellew has extensive experience in organic materials
management. He was the Founder and former President and Chairman of the Board of
Earthgro, Inc., the second largest commercial composting company in the country
prior to its sale in February 1998. In addition, Mr. Sellew's
3
<PAGE>
business ventures have included International Process Systems, Inc. a composting
technology company, and ALLGro Inc., a composting marketing company, both of
which were sold to Wheelabrator Technologies, Inc. in 1991.
Mark A. Rome was appointed Executive Vice President and Chief Development
Officer during 1998. Mr. Rome, an attorney and Certified Public Accountant,
joined the Company from Sanders Morris Mundy, an investment banking firm
specializing in industry consolidations. He previously practiced tax and
corporate law at Fulbright & Jaworski L.L.P., an international law firm
headquartered in Houston, Texas. Mr. Rome received his law degree from the
University of Texas School of Law and a Master's in Professional Accounting from
the University of Texas Graduate School of Business.
Alvin L. Thomas II was appointed Executive Vice President and General
Counsel during 1998. Mr. Thomas practiced law with the national law firm of
Littler Mendelson, P.C. prior to joining the Company. Mr. Thomas has practiced
law with the international law firm of Fulbright & Jaworski L.L.P. Mr. Thomas
received his law degree from the University of Pittsburgh School of Law and an
LL.M. in Taxation from New York University School of Law. His legal background
is broad-based with emphasis in tax law, employment law, corporate law, and
litigation.
J. Paul Withrow was appointed Executive Vice President and Chief Financial
Officer during 1999. Mr. Withrow was previously Vice President and Chief
Accounting Officer of Integrated Electrical Services, Inc., which is a leading
national provider of electrical contracting and maintenance services. Prior to
that, Mr. Withrow was a Senior Audit Manager at Arthur Andersen L.L.P. Mr.
Withrow is a Certified Public Accountant and received his Bachelor of Business
Administration in Accounting from the University of Houston.
4
<PAGE>
MANAGEMENT STOCKHOLDINGS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock at December 1, 1999, by (i) all current
directors, (ii) the Named Executives and (iii) all directors and all executive
officers as a group.
NUMBER OF PERCENT
NAME OF PERSON OR IDENTITY OF GROUP SHARES /1/ OF CLASS
- --------------------------------------------------------------------------------
Ross M. Patten.............................................373,445 2.0%
Irwin I. Gelbart............................................62,230 *
Dr. J. Mark Myers...........................................18,385 *
Kenneth Ch'uan-k'ai Leung/2/.............................1,292,079 /2/ 7.3%
Gene Meredith...............................................41,968 *
Alfred Tyler II.............................................41,968 *
All directors and executive officers as a group
(11 persons)......................................../3/ 2,423,680 12.8%
- ----------------
* Less than 1% of outstanding shares.
/1/ Includes shares underlying vested stock options, as follows:
Mr. Patten--373,445; Mr. Leung--42,079; Mr. Gelbart-- 62,230;
Mr. Myers--13,593; Mr. Meredith-- 25,301; Mr. Tyler-- 41,968,
and 493,580 for all other executive officers.
/2/ Includes 137,875 shares and 1,112,125 shares owned by Environmental
Opportunities Fund (Cayman), L.P. and Environmental Opportunities Fund,
L.P., respectively. Mr. Leung is the Chief Investment Officer of these
investment funds.
/3/ Includes (without duplication) all shares referred to above.
VOTE REQUIRED FOR ELECTION
The four nominees for election as directors at the Annual Meeting who
receive the greatest number of votes cast for election by the holders of Common
Stock of record shall be the duly elected directors upon completion of the vote
tabulation at the Annual Meeting, provided a majority of the outstanding shares
as of the record date are present in person or by proxy at the meeting. Votes
will be tabulated by Georgeson Shareholder Communications, Inc., and the results
will be certified by election inspectors who are required to resolve impartially
any interpretive questions as to the conduct of the vote. Under applicable
provisions of the Company's bylaws, any proxy containing an abstention from
voting for any nominee will be sufficient to represent the shares at the meeting
for purposes of determining whether a quorum is present but will count neither
as a vote for nor against any nominee with respect to whom the holder has
abstained from voting. In tabulating votes, a record will be made of the number
of shares voted for each nominee, the number of shares with respect to which
authority to vote for that nominee has been withheld, and the number of shares
held of record by broker-dealers and present at the Annual Meeting but not
voting.
The board of directors recommends that the stockholders vote FOR the
election of each of the nominees listed on page 2.
5
<PAGE>
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock at December 10, 1999, by each
stockholder who is known by the Company to own beneficially more than 5% of the
outstanding Common Stock.
<TABLE>
<CAPTION>
NAME OF PERSON OR IDENTITY OF GROUP SHARES NUMBER OF SHARES PERCENT OF CLASS
-----------------------------------------------------------------------------------------------
<S> <C> <C>
James A. Jalovec 1,911,527/1/ 10.7%
2841 South 5th Court
Milwaukee, Wisconsin 53207
Randall S. Tuttle 1,657,377 9.4%
1900 Virginia Road
Winston-Salem, NC 27107
GroWest, Inc. 1,475,323 8.3%
114 Business Center Drive
Corona, CA 91720
James Rosendall 1,400,001 7.9%
323 Martindale Street
Sparta, MI 49345
Kenneth Ch'uan-k'ai Leung 1,292,079/1//2/ 7.3%
126 E. 56th Street
New York, New York 1002
Bill E. Tuttle 1,194,668 6.7%
711 East Twain Avenue
Las Vegas, NV 89109
</TABLE>
____________
/1/ Includes currently exercisable options.
/2/ Includes 137,875 shares and 1,112,125 shares owned by Environmental
Opportunities Fund (Cayman) L.P., and Environmental Opportunities Fund,
L.P., respectively. Mr. Leung is the Chief Investment Officer of these
investment funds.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to the
Company for the periods indicated of each individual who was the chief executive
officer at any time during 1998 ("Named Executives"). No other executive
officer of the Company serving as such at the end of the year had total salary
and bonus exceeding $100,000 in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- --------------------------------
RESTRICTED STOCK OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER STOCK AWARDS (SHARES) COMPENSATION
- --------------------------- ---- ------ ----- ----- ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
Ross M. Patten 1998 $134,038 - - - 485,000 -
Chairman of the Board,
Chief Executive Officer
Donald L. Thone/1/ 1998 $100,312 - - - - -
President and Chief 1997 $150,000 $33,125 - - 444,326 -
Executive Officer 1996 $150,000 $55,500 - - 246,296 -
</TABLE>
___________
/1/ Served as Chief Executive Officer and President until February 1998.
OPTION GRANTS
The following table sets forth certain information with respect to stock
options granted to the Named Executives during 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS/2/ TERM/1/
___________________________________________ _____________________________
PERCENT OF TOTAL
OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED YEAR PRICE DATE 5% 10%
- ----------------- ------- --------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ross M. Patten 485,000 22.3% $3.25 2/18/08 $991,295 $2,512,137
</TABLE>
- ------------------
/1/ Potential values stated are the result of using the Securities and Exchange
Commission (the "Commission") method of calculations of 5% and 10% appreciation
in value from the date of grant to the end of the option term. Such assumed
rates of appreciation and potential realizable values are not necessarily
indicative of the appreciation, if any, which may be realized in future periods.
/2/ Options vest 34% upon grant, 33% on each of the first and second
anniversaries of the date of grant. Unvested options will immediately vest upon
a change of control of the Company.
7
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the exercised
and unexercised options to purchase shares of Common Stock held by each of the
Named Executives at December 31, 1998. Of the Named Executives, none exercised
stock options during 1998.
<TABLE>
<CAPTION>
SHARES ACQUIRED VALUE NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
ON EXERCISE REALIZED AT DECEMBER 31, 1998 OPTIONS AT DECEMBER 31, 1998/1/
--------------- -------- ------------------------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ross M. Patten -- -- 161,667 323,333 $ 80,834 $161,666
Donald L. Thone -- -- 690,622 -- $761,018 --
</TABLE>
- ---------------------
/1/ Value of in-the-money options calculated based on the closing price per
share of the common stock on December 31, 1998 ($3.75 per share) as reported on
the NASDAQ Small-Cap Market on December 31, 1998.
Employment Agreements With Executive Officers
Mr. Patten is employed by the Company under an employment agreement
effective April 16, 1998, with a term of twenty-four consecutive months. The
annual salary under the employment agreement is $150,000. Additionally, Mr.
Patten may be entitled to such bonus awards as may be approved by the
compensation committee and board of directors, and is entitled to participate in
any applicable profit-sharing, stock option or similar benefit plan. The
employment agreement automatically renews for successive twenty-four month
periods annually, unless terminated by prior written notice. If employment is
terminated without cause, Mr. Patten is entitled to a severance payment equal to
200% of the sum of his annual salary and bonus for the preceeding year. The
agreement contains confidentiality and non-compete provisions. The employment
agreement contains a provision vesting any unvested stock options upon a change
of control.
COMPENSATION COMMITTEE REPORT
The compensation committee of the board of directors (the "Committee") has
furnished the following report on executive compensation for fiscal 1998:
Under the supervision of the Committee, the Company seeks to relate a
significant portion of potential total executive compensation to the
Company's financial performance. In general, executive financial rewards
may be segregated into the following significant components: base
compensation, bonus and stock-based benefits.
Base compensation and bonuses for the executive officers are intended to be
competitive with that paid in comparably situated companies, with a
reasonable degree of financial security and flexibility to those
individuals who were regarded by the Committee as acceptably discharging
the levels and types of responsibility implicit in the various executive
positions. In the course of considering annual executive salary increases
and bonuses, appropriate consideration is given to the credentials, age and
experience of the individual senior executives, as viewed in the
Committee's collective best judgment, which necessarily involves subjective
as well as objective elements. Using the criteria set forth above, no
8
<PAGE>
general pay increase for executive officers was authorized during fiscal
1998, in as much as their base compensation was covered by employment
agreements.
The Committee is of the view that the periodic grant of stock options to
employees, including executive officers, is calculated to align the
employees' economic interests with those of stockholders and to provide a
direct and continuing focus upon the goal of increasing stockholder value.
The Company granted options to acquire 485,000 shares of the Company's
Common Stock to Mr. Patten during fiscal 1998 at 100% of the market price
for the Common Stock on the date of grant. The options vest 161,666 shares
upon grant and 161,667 shares on each of the first and second anniversaries
of the date of grant. The Compensation Committee presently anticipates
that such grants to executive officers will be considered annually.
The Compensation Committee
Kenneth Ch'uan-k'ai Leung
Gene Meredith
Alfred Tyler 2nd
Certain Transactions
The Company has entered into the following transactions with James A.
Jalovec and GroWest, Inc., the prior owners of certain purchased companies or
their affiliates. The prior owners hold 10.7% and 8.3% of the outstanding shares
including exercisable options as of December 10, 1999, respectively.
The Company issued notes in the amount of $6,454,750 to the prior owners of
the purchased companies as partial consideration of the acquisition price. These
notes had a balance of $6,361,822 at December 31, 1998. The terms of the
outstanding notes include interest rates of 7% to be paid quarterly.
Concurrent with certain acquisitions, the Company entered into various
agreements with the prior owners to lease land and buildings used in the
Company's operations. The terms of the leases range from three years to thirty
years and provide for certain escalations in rental expense. One such lease,
which expires in 2028, has an option to terminate upon 30-days notice in the
event a conditional use permit (as defined in the agreement) relating to the
leased land expires. Additionally, the Company has a five-year option to
purchase such leased property for $2,250,000, which expires in 2003. Currently,
the Company pays rent in the amount of $36,000 per annum for the first three
years and $192,000 per annum thereafter on the lease. The charges for the lease
costs are being expensed on a straight-line basis. Included in 1998 rent expense
was approximately $210,500 of rent paid to related parties.
In March 1998, the Company completed a private placement of 1,458,335
shares of its Series B Preferred Stock for which Sanders Morris Mundy, an
investment banking firm in which Mr. Leung is a managing director, acted as
placement agent. Of the shares of Series B Preferred Stock issued, 1,250,000
were sold to investment funds managed by Sanders Morris Mundy of which Mr. Leung
is the Chief Investment Officer. In June 1998, the holders of the shares of the
Series B Preferred Stock over which Mr. Leung has investment control converted
those shares into an aggregate of 1,250,00 shares of Common Stock.
9
<PAGE>
Notwithstanding any apparent (or actual) conflict of interest that may have
existed with respect to the above financial arrangements, the board of directors
is of the opinion that these arrangements are as favorable to the Company as any
that could have been negotiated at arm's length with similar situated third
parties under the same circumstances.
COMMON STOCK PERFORMANCE GRAPH
The following graph illustrates the yearly change in the trading price of
the Company's Common Stock against the NASDAQ (U.S. Companies) Stock Index (the
"NASDAQ U.S. Index") and a peer group comprised of eighteen companies in the
industry (the "Peer Group").
Synagro Technology NASDAQ US Index Peer Group
Dec 93 100 100 100
Dec 94 25.53 97.8 64.55
Dec 95 2.27 138.23 65.82
Dec 96 2.83 170.07 72.4
Dec 97 2.9 208.39 92.09
Dec 98 4.25 293.66 103.11
10
<PAGE>
AUDITOR
Arthur Andersen L.L.P. (the "Auditor") is the independent auditor of the
Company. While management anticipates that this relationship will continue to
be maintained with respect to the audit of the Company's financial statements,
for 1999 no formal action is proposed to be taken at the Annual Meeting with
respect to the continued employment of the Auditor inasmuch as no such action is
legally required. Representatives of the Auditor plan to attend the Annual
Meeting and will be available to answer appropriate questions. Representatives
of the Auditor will have an opportunity to make a statement at the Annual
Meeting if they so desire, although it is not expected that any statement will
be made.
The audit committee, whose members are Messrs. Gelbart, Meredith, and
Tyler, assists the Board in assuring that the accounting and reporting practices
of the Company are in accordance with all applicable requirements. The
committee reviews with the auditors the scope of proposed audit work and meets
with the auditors to discuss matters pertaining to the audit and any other
matters, which the committee of the auditors may wish to discuss. In addition,
the audit committee would recommend the appointment of new auditors to the board
of directors in the event future circumstances were to indicate that such action
is desirable.
LIMITATION ON INCORPORATION BY REFERENCE
Notwithstanding any reference in prior or future filings of the Company
with the Commission that purports to incorporate this proxy statement by
reference into another filing, such incorporation does not include any material
included herein under the captions "Other Information--Common Stock Performance
Graph."
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Commission. With respect to the
year-ended December 31, 1998, the Company believes that all filing requirements
applicable to the Company's executive officers, directors and 10% shareholders
have been met.
STOCKHOLDER PROPOSALS
The Company currently expects to hold its next Annual Meeting on or about
June 28, 2000. Any stockholder who wishes to submit a proposal for action to be
included in the proxy statement and form of proxy relating to such annual
meeting of stockholders is required to submit such proposal to the Company on or
before February 29, 2000.
OTHER MATTERS
The Annual Report to stockholders covering the year ended December 31, 1998
either has been mailed to each stockholder entitled to vote at the Annual
Meeting or accompanies this proxy statement.
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, several regular employees of
the Company may, if necessary to assure the presence of a quorum, solicit
proxies in person or by telephone.
11
<PAGE>
The persons designated as proxies to vote shares at the meeting intend to
exercise their judgment in voting such shares on other matters that may properly
come before the meeting. Management does not expect that any matters other than
those referred to in this proxy statement will be presented for action at the
meeting.
By Order of the Board of Directors
Alvin L. Thomas II
Secretary
December 17, 1999
12
<PAGE>
PROXY
SYNAGRO TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 17, 2000
The undersigned hereby appoints Ross M. Patten and Alvin L. Thomas II, and
each of them, either one of whom may act without joinder of the other, each
with full power of substitution and ratification, attorneys and proxies of the
undersigned to vote all shares of Synagro Technologies, Inc. which the
undersigned is entitled to vote at the annual meeting of stockholders to be
held at Synagro's offices at 1800 Bering Drive, Suite 1000, Houston, Texas on
Monday, January 17, 2000 at 2:00 p.m., local time, and at any adjournment
thereof.
This Proxy will be voted in accordance with the specifications made hereon.
If no contrary specification is made, then this Proxy will be voted FOR the
election of the four director nominees named in Item 1. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
Proxy Statement furnished herewith. PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY in the enclosed, pre-addressed stamped envelope.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL
MEETING OF STOCKHOLDERS SYNAGRO TECHNOLOGIES, INC. JANUARY 17, 2000
(To be Signed on Reverse Side)
-----------
|SEE REVERSE|
| SIDE |
-------------
<TABLE>
<CAPTION>
[X] Please mark your
votes as in this
example.
<S> <C> <C> <C> <C> <C> <C>
NOMINEES: Ross M. Patten
FOR WITHHOLD Kenneth Ch'uan-k'ai Leung FOR WITHHOLD
-------- -------- Alfred Tyler 2nd ------ -------
1. Election of | | | | Gene Meredith 2. In their discretion, upon such | | | |
Directors | | | | other matters (including | | | |
-------- -------- procedural and other matters ------ ------
relating to the conduct of the
meeting) which may properly
come before the meeting and
any adjournment thereof.
</TABLE>
To withhold authority to vote for any individual nominee,
print that nominee's name on the line below.
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
------------------------------------------ ---------------
NOTE: Please sign exactly as your name appears on your stock certificate. When
signing as executor, administrator, trustee or other representative,
please give your full title. All joint owners should sign.
