[Wahlco Environmental Systems, Inc. Letterhead]
SUBSCRIPTION AGENT AGREEMENT
Date: January 20, 1998
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xx.
Xxxxxxxxxx Xxxx, XX 00000
Attn: Reorganization Department
Gentlemen:
Wahlco Environmental Systems, Inc., a Delaware corporation (the "Company") is
making an offer to issue (the "Subscription Offer") to the holders of record of
its outstanding shares of Common Stock par value $0.01 per share (the "Common
Stock"), at the close of business on March 3, 1998 (the "Rights Record Date"),
the right to subscribe for and purchase (each a "Right") shares of Common Stock
(the "Additional Common Stock") at a purchase price of $0.10 per share of
Additional Common Stock (the "Subscription Price"), payable by cashier's or
certified check, upon the terms and conditions set forth herein. The term
"Subscribed" shall mean submitted for purchase from the Company by a stockholder
in accordance with the terms of the Subscription Offer, and the term
"Subscription" shall mean any such submission. The Subscription Offer will
expire at the close of business, New York City Time, April 6, 1998 (the
"Expiration Date"), unless the Company shall have extended the period of time
for which the Subscription Offer is open, in which event the term "Expiration
Time" shall mean the latest time and date at which the Subscription Offer, as so
extended by the Company from time to time, shall expire.
The Company filed a Registration Statement relating to the Additional Common
Stock with the Securities and Exchange Commission under the Securities Act of
1933, as amended, on or about December 19, 1997. The terms of the Additional
Common Stock will be more fully described in the combined Prospectus/Proxy
Statement (the "Prospectus") forming part of the Registration Statement when
declared effective, and in the accompanying Letter of Instruction. Copies of the
Prospectus as originally filed, the Letter of Instruction and the Notice of
Guaranteed Delivery are annexed hereto as Exhibit 1, Exhibit 2 and Exhibit 3,
respectively. All terms used and not defined herein shall have the same meaning
as in the Prospectus. Promptly after the Rights Record Date, the Company will
provide you with a list of holders of Common Stock as of the Rights Record Date
(the "Record Stockholders List").
The Rights are evidenced by transferable subscription warrants (the "Warrants"),
a copy of the form of which is annexed hereto as Exhibit 4. The Warrants entitle
the holders to subscribe, upon payment of the Subscription Price, for shares of
Additional Common Stock at the rate of one (1) share for each Right evidenced by
a Warrant (the "Basic Subscription Privilege"). No fractional shares will be
issued.
The Company hereby appoints you as Subscription Agent (the "Subscription Agent")
for the Subscription Offer and agrees with you as follows:
1. As Subscription Agent, you are authorized and directed to:
(a) Issue the Warrants in accordance with this Agreement in the names of the
holders of the Common Stock of record on the Rights Record Date, keep
such records as are necessary for the purpose of recording such
issuance, and furnish a copy of such records to the Company. The
Warrants may be signed on behalf of the Subscription
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Page 2
Agent by the manual or facsimile signature of a Vice President or
Assistant Vice President of the Subscription Agent, or by the manual
signature of any of its other authorized officers.
(b) promptly after you receive the Record Stockholders List:
(i) mail or cause to be mailed, by first class mail, to each holder of
Common Stock of record on the Rights Record Date whose address of
record is within the United States and Canada, (i) a Warrant
evidencing the Rights to which such stockholder is entitled under
the Subscription Offer, (ii) a copy of the final Prospectus, (iii) a
Letter of Instruction, (iv) a Notice of Guaranteed Delivery and (v)
a return envelope addressed to the Subscription Agent; and
(ii) mail or cause to be mailed, by air mail, to each holder of Common
Stock of record on the Record Date whose address of record is
outside the United States and Canada, or is an A.P.O. or F.P.O.
address (i) a copy of the Prospectus, (ii) a Notice of Guaranteed
Delivery and (iii) a Letter of Instruction (different from the
Letter of Instruction sent to stockholders whose address of record
is within the United States and Canada). You shall refrain from
mailing Warrants issuable to any holder of Common Stock of record on
the Rights Record Date whose address of record is outside the United
States and Canada, or is an A.P.O. or F.P.O. address, and will hold
such Warrants for the account of such stockholder subject to such
stockholder making satisfactory arrangements with the Subscription
Agent for the exercise or other disposition of the Rights evidenced
thereby, and follow the instructions of such stockholder for the
exercise, sale or other disposition of such Rights if such
instructions are received at or before 11:00 a.m., New York City
time, on the Expiration Date.
(c) Mail or deliver a copy of the final Prospectus (i) to each assignee or
transferee of Warrants upon your receiving appropriate documents to
register the assignment or transfer thereof and (ii) with certificates
for shares of Additional Common Stock when such are issued to persons
other than the registered holder of the Warrant.
(d) Accept Subscriptions upon the due exercise (including payment of the
Subscription Price) on or prior to the Expiration Time of Rights in
accordance with the terms of the Warrants and the final Prospectus.
(e) Subject to the next sentence, accept Subscriptions from stockholders
whose Warrants are alleged to have been lost, stolen or destroyed upon
receipt by you of an affidavit of theft, loss or destruction and a bond
of indemnity in form and substance satisfactory to you, accompanied by
payment of the Subscription Price for the total number of shares of
Additional Common Stock Subscribed for. Upon receipt of such affidavit
and bond of indemnity and compliance with any other applicable
requirements, stop orders shall be placed on said Warrants and you shall
withhold delivery of the shares of Additional Common Stock Subscribed
for until after the Warrants have expired and it has been determined
that the Rights evidenced by the Warrants have not otherwise been
purported to have been exercised or otherwise surrendered.
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(f) Accept Subscriptions, without further authorization or direction from
the Company, without procuring supporting legal papers or other proof of
authority to sign (including without limitation proof of appointment of
a fiduciary or other person acting in a representative capacity), and
without signatures of co-fiduciaries, co-representatives or any other
person:
(i) if the Warrant is registered in the name of a fiduciary and is
executed by, and the Additional Common Stock is to be issued in
the name of, such fiduciary;
(ii) if the Warrant is registered in the name of joint tenants and is
executed by one of the joint tenants, provided the certificate
representing the Additional Common Stock is issued in the names
of, and is to be delivered to, such joint tenants;
(iii) if the Warrant is registered in the name of a corporation and is
executed by a person in a manner which appears or purports to be
done in the capacity of an officer, or agent thereof, provided
the Additional Common Stock is to be issued in the name of such
corporation; or
(iv) if the Warrant is registered in the name of an individual and is
executed by a person purporting to act as such individual's
executor, administrator or personal representative, provided, the
Additional Common Stock is to be registered in the name of the
subscriber as executor or administrator of the estate of the
deceased registered holder and there is no evidence indicating
the subscriber is not the duly authorized representative that he
purports to be.
(g) Accept Subscriptions not accompanied by Warrants if submitted by a firm
having membership in the New York Stock Exchange or another national
securities exchange or by a commercial bank or trust company having an
office in the United States together with the Notice of Guaranteed
Delivery and accompanied by proper payment for the total number of
shares of Additional Common Stock Subscribed for.
(h) Accept Subscriptions even though unaccompanied by Warrants, under the
circumstances and in compliance with the terms and conditions set forth
in the final Prospectus under the heading "THE RIGHTS OFFERING --
Exercise of Rights".
(i) Refer to the Company for specific instructions as to acceptance or
rejection, Subscriptions received after the Expiration Time,
Subscriptions not authorized to be accepted pursuant to this Paragraph
1, and Subscriptions otherwise failing to comply with the requirements
of the final Prospectus and the terms and conditions of the Warrants.
(j) Upon acceptance of a Subscription:
(i) hold all monies received in a special escrow account for the
benefit of the Company. Promptly following the Expiration Time
you shall distribute to the Company the funds in such account and
issue certificates for shares of Additional Common Stock issuable
with respect to Subscriptions which have been accepted.
(k) Advise the Company daily by telecopy and confirm by letter to the
attention of Xxxx Xxxxxxxx (the "Company Representative") as to the
total number of shares of
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Page 4
Additional Common Stock Subscribed for, the total number of Rights sold,
the total number of Rights partially Subscribed for and the amount of
funds received, with cumulative totals for each; and in addition advise
the Company Representative, by telephone at (000) 000-0000, confirmed by
telecopy, of the amount of funds received and identified, deposited,
available or transferred in accordance herewith, with cumulative totals;
and
(l) as promptly as possible but in any event on or before 3:30 p.m., New
York City time, on the first full business day following the Expiration
Time, advise the Company Representative of the number of shares
Subscribed for, the number of Subscription guarantees received and the
number of shares of Additional Common Stock not subscribed for.
(m) Upon completion of the Subscription Offer, you shall requisition
certificates from the Transfer Agent for the Common Stock for shares of
Additional Common Stock Subscribed for.
2. The Warrants shall be issued in registered form only. The Company shall
appoint and have in office at all times a Transfer Agent and Registrar for
the Warrants, satisfactory to you, which shall keep books and records of the
registration and transfers and exchanges of Warrants (such books and records
are hereinafter called the "Warrant Register"). The Company shall promptly
notify the Transfer Agent and Registrar of the exercise of any Warrants. The
Company shall promptly notify you of any change in the Transfer Agent and
Registrar of the Warrants.
(a) All Warrants issued upon any registration of transfer or exchange of
Warrants shall be the valid obligations of the Company, evidencing the
same obligations, and entitled to the same benefits under this
Agreement, as the Warrants surrendered for such registration of transfer
or exchange.
(b) Any Warrant when duly endorsed in blank shall be deemed negotiable, and
when a Warrant shall have been so endorsed the holder thereof may be
treated by the Company, you and all other persons dealing therewith as
the absolute owner thereof for any purpose and as the person entitled to
exercise the rights represented thereby, any notice to the contrary
notwithstanding, but until such transfer is registered in the Warrant
Register, the Company and you may treat the registered holder thereof as
the owner for all purposes.
3. You will follow your regular procedures to attempt to reconcile any
discrepancies between the number of shares of Additional Common Stock that
any Warrant may indicate are to be issued to a stockholder and the number
that the Record Stockholders List indicates may be issued to such
stockholder. In any instance where you cannot reconcile such discrepancies
by following such procedures, you will consult with the Company for
instructions as to the number of shares of Additional Common Stock, if any,
you are authorized to issue. In the absence of such instructions, you are
authorized not to issue any shares of Additional Common Stock to such
stockholder.
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Page 5
4. You will examine the Warrants received by you as Subscription Agent to
ascertain whether they appear to you to have been completed and executed in
accordance with the applicable Letter of Instruction. In the event you
determine that any Warrant does not appear to you to have been properly
completed or executed, or where the Warrants do not appear to you to be in
proper form for Subscription, or any other irregularity in connection with
the Subscription appears to you to exist, you will follow, where possible,
your regular procedures to attempt to cause such irregularity to be
corrected. You are not authorized to waive any irregularity in connection
with the Subscription, unless you shall have received from the Company the
Warrant which was delivered, duly dated and signed by an authorized officer
of the Company, indicating that any irregularity in such Warrant has been
cured or waived and that such Warrant has been accepted by the Company. If
any such irregularity is neither corrected nor waived, you will return to
the subscribing stockholder (at your option by either first class mail under
a blanket surety bond or insurance protecting you and the Company from
losses or liabilities arising out of the non-receipt or non-delivery of
Warrants or by registered mail insured separately for the value of such
Warrants) to such stockholder's address as set forth in the Subscription any
Warrants surrendered in connection therewith and any other documents
received with such Warrants, and a letter of notice to be furnished by the
Company explaining the reasons for the return of the Warrants and other
documents.
5. Each document received by you relating to your duties hereunder shall be
dated and time stamped when received.
6. For so long as this Agreement is in effect, the Company will reserve for
issuance and keep available free from preemptive rights a sufficient number
of shares of Additional Common Stock to permit the exercise in full of all
Rights issued pursuant to the Subscription Offer. Subject to the terms and
conditions of this Agreement, you will request the Transfer Agent for the
Common Stock to issue certificates evidencing the appropriate number of
shares of Additional Common Stock as required from time to time in order to
effectuate the Subscriptions.
(a) The Company shall take any and all action, including without limitation
obtaining the authorization, consent, lack of objection, registration or
approval of any governmental authority, or the taking of any other
action under the laws of the United States of America or any political
subdivision thereof, to insure that all shares of Additional Common
Stock issuable upon the exercise of the Warrants at the time of delivery
of the certificates therefor (subject to payment of the Subscription
Price) will be duly and validly issued and fully paid and non-assessable
shares of Common Stock, free from all preemptive rights and taxes,
liens, charges and security interests created by or imposed upon the
Company with respect thereto.
(b) The Company shall from time to time take all action necessary or
appropriate to obtain and keep effective all registrations, permits,
consents and approvals of the Securities and Exchange Commission and any
other governmental agency or authority and make such filings under
federal and state laws which may be necessary or appropriate in
connection with the issuance, sale, transfer and delivery of Warrants or
Additional Common Stock issued upon exercise of Warrants.
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7. If certificates representing shares of Additional Common Stock are to be
delivered by you to a person other than the person in whose name a
surrendered Warrant is registered, you will issue no certificate for
Additional Common Stock until the Warrant so surrendered has been properly
endorsed (or otherwise put in proper form for transfer) and the person
requesting such exchange has paid any transfer or other taxes or
governmental charges required by reason of the issuance of a certificate for
Additional Common Stock in a name other than that of the registered holder
of the Warrant surrendered, or has established to your satisfaction that any
such tax or charge either has been paid or is not payable.
8. Should any issue arise regarding federal income tax reporting or
withholding, you will take such action as the Company instructs you in
writing.
9. The Company may terminate this Agreement at any time by so notifying you in
writing. You may terminate this Agreement upon thirty (30) days' prior
notice to the Company. Upon any such termination, you shall be relieved and
discharged of any further responsibilities with respect to your duties
hereunder. Upon payment of all your outstanding fees and expenses, you will
forward to the Company or its designee promptly any Warrant or other
document relating to your duties hereunder that you may receive after your
appointment has so terminated. Paragraphs 10, 12, and 13 of this Agreement
shall survive any termination of this Agreement.
10. As agent for the Company hereunder you:
(a) shall have no duties or obligations other than those specifically set
forth herein or as may subsequently be agreed to in writing by you and
the Company;
(b) shall have no obligation to issue any shares of Additional Common Stock
unless the Company shall have provided a sufficient number of
certificates for such Additional Common Stock;
(c) shall be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value, or genuineness
of any Warrants surrendered to you hereunder or shares of Additional
Common Stock issued in exchange therefor, and will not be required to or
be responsible for and will make no representations as to, the validity,
sufficiency, value or genuineness of the Subscription Offer;
(d) shall not be obligated to take any legal action hereunder. If, however,
you determine to take any legal action hereunder, and where the taking
of such action might, in your judgment, subject or expose you to any
expense or liability you shall not be required to act unless you shall
have been furnished with an indemnity satisfactory to you;
(e) may rely on and shall be fully authorized and protected in acting or
failing to act upon any certificate, instrument, opinion, notice,
letter, telegram, telex, facsimile transmission or other document or
security delivered to you and believed by you to be genuine and to have
been signed by the proper party or parties;
(f) shall not be liable or responsible for any recital or statement
contained in the Prospectus or any other documents relating thereto;
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Page 7
(g) shall not be liable or responsible for any failure on the part of the
Company to comply with any of its covenants and obligations relating to
the Subscription Offer, including without limitation obligations under
applicable securities laws;
(h) may rely on and shall be fully authorized and protected in acting or
failing to act upon the written, telephonic or oral instructions with
respect to any matter relating to you acting as Subscription Agent
covered by this Agreement (or supplementing or qualifying any such
actions) of officers of the Company;
(i) may consult with counsel satisfactory to you, including Xxxxx X. Xxxxxx,
Esq. and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered,
or omitted by you hereunder in good faith and in accordance with the
advice of such counsel;
(j) may perform any of your duties hereunder either directly or by or
through agents or attorneys and you shall not be liable or responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with reasonable care by you hereunder; and
(k) are not authorized, and shall have no obligation, to pay any brokers,
dealers, or soliciting fees to any person.
11. In the event any question or dispute arises with respect to the proper
interpretation of the Subscription Offer or your duties hereunder or the
rights of the Company or of any stockholders surrendering Warrants pursuant
to the Subscription Offer, you shall not be required to act and shall not be
held liable or responsible for your refusal to act until the question or
dispute has been judicially settled (and, if appropriate, you may file a
suit in interpleader or for a declaratory judgment for such purpose) by
final judgment rendered by a court of competent jurisdiction, binding on all
parties interested in the matter which is no longer subject to review or
appeal, or settled by a written document in form and substance satisfactory
to you and executed by the Company and each such stockholder and party. In
addition, you may require for such purpose, but shall not be obligated to
require, the execution of such written settlement by all the stockholders
and all other parties that may have an interest in the settlement.
12. Any instructions given to you orally, as permitted by any provision of this
Agreement, shall be confirmed in writing by the Company as soon as
practicable. You shall not be liable or responsible and shall be fully
authorized and protected for acting, or failing to act, in accordance with
any oral instructions which do not conform with the written confirmation
received in accordance with this Paragraph.
13. Whether or not any Warrants are surrendered to you, for your services as
Subscription Agent hereunder, the Company shall pay to you compensation in
accordance with the fee schedule attached as Exhibit A hereto, together with
reimbursement for out-of-pocket expenses, including reasonable fees and
disbursements of counsel.
14. The Company covenants to indemnify and hold you and your officers,
directors, employees, agents, contractors, subsidiaries and affiliates
harmless from and against any loss, liability,
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damage or expense (including without limitation any loss, liability, damage
or expense incurred for accepting Warrants tendered without a signature
guarantee and the fees and expenses of counsel) incurred (a) without gross
negligence or bad faith or (b) as a result of your acting or failing to act
upon the Company's instructions, arising out of or in connection with the
Subscription Offer, this Agreement or the administration of your duties
hereunder, including without limitation the costs and expenses of defending
and appealing against any action, proceeding, suit or claim in the premises.
You shall promptly notify the Company of any action, proceeding, suit or
claim by letter or telex or facsimile transmission confirmed by letter. The
Company shall be entitled to participate at its own expense in the defense
of any such action, proceeding, suit or claim. Anything in this agreement to
the contrary notwithstanding, in no event shall you be liable to the Company
for special, indirect or consequential loss or damages of any kind
whatsoever (including but not limited to lost profits), even if you have
been advised of the likelihood of such loss or damage and regardless of the
form of action.
15. If any provision of this Agreement shall be held illegal, invalid, or
unenforceable by any court, this Agreement shall be construed and enforced
as if such provision had not been contained herein and shall be deemed an
Agreement among us to the full extent permitted by applicable law.
16. The Company represents and warrants that (a) it is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, (b) the making and consummation of the Subscription Offer and
the execution, delivery and performance of all transactions contemplated
thereby (including without limitation this Agreement) have been duly
authorized by all necessary corporate action and will not result in a breach
of or constitute a default under the certificate of incorporation or bylaws
of the Company or any indenture, agreement or instrument to which it is a
party or is bound, (c) this Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid, binding and enforceable
obligation of it, (d) the Subscription Offer will comply in all material
respects with all applicable requirements of law and (e) to the best of its
knowledge, there is no litigation pending or threatened as of the date
hereof in connection with the Subscription Offer.
17. In the event that any claim of inconsistency between this Agreement and the
terms of the Subscription Offer arise, as they may from time to time be
amended, the terms of the Subscription Offer shall control, except with
respect to the duties, liabilities and rights, including compensation and
indemnification of you as Subscription Agent, which shall be controlled by
the terms of this Agreement.
18. Set forth in Exhibit B hereto is a list of the names and specimen signatures
of the persons authorized to act for the Company under this Agreement. The
Secretary of the Company shall, from time to time, certify to you the names
and signatures of any other persons authorized to act for the Company under
this Agreement.
19. Except as expressly set forth elsewhere in this Agreement, all notices,
instructions and communications under this Agreement shall be in writing,
shall be effective upon receipt and shall be addressed, if to the Company,
to its address set forth beneath its signature to this Agreement, or, if to
the Subscription Agent, to --
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Page 9
ChaseMellon Shareholder Services, L.L.C.,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Reorganization Department,
or to such other address as a party hereto shall notify the
other parties.
20. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to conflict of laws
rules or principles, and shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto; provided that this
Agreement may not be assigned by any party without the prior written consent
of all other parties.
21. No provision of this Agreement may be amended, modified or waived, except in
a written document signed by both parties.
Please acknowledge receipt of this letter and confirm your agreement concerning
your appointment as Subscription Agent, and the arrangements herein provided, by
signing and returning the enclosed copy hereof, whereupon this Agreement and
your acceptance of the terms and conditions herein provided shall constitute a
binding Agreement between us.
Very truly yours,
Wahlco Environmental Systems, Inc.
By:___________________________________
C. Xxxxxxx Xxxx
President & Chief Executive Officer
Address for notices:
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
ACCEPTED AS OF THE DATE
ABOVE FIRST WRITTEN:
ChaseMellon Shareholder Services, L.L.C.,
As Subscription Agent
By:___________________________________
Name:
Title:
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Exhibit List
Exhbit A Schedule of Fees
Exhibit B Specimen Signatures
Exhibit 1 Preliminary Prospectus
Exhibit 2 Letter of Instruction
Exhibit 3 Notice of Guaranteed Delivery
Exhibit 4 Form of Warrant
ChaseMellon Shareholder Services, L.L.C.
January 20, 1998
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EXHIBIT A
ChaseMellon Shareholder Services, L.L.C.
Schedule of Fees as Subscription Agent For
Wahlco Environmental Systems, Inc.
I. Set Up and Administrative Fee $2,500
II. Processing Basic subscriptions, each $10.00
III. Transferring subscription certificates, split-ups,
reissuing new certificates, round-ups, each $7.50
IV. Issuing subscription certificates to record date holders,
each and follow-up mailings $7.50
V. Processing over subscriptions, including proration and
refunds, each $3.00
VI. Sale of Rights for holders, each $7.00
VII. Subscriptions requiring additional handling (window items,
defective presentations, correspondence items, legal items,
and items not providing a taxpayer identification number),
each $10.00
VIII. Processing Guarantee of Delivery items, each $10.00
IX. Handling Selected Dealer payments, each $10.00
X. Broker fees for selling Rights, per Right By Appraisal
XI. Special Services By Appraisal
XII. Out-of-pocket Expenses (including but not limited to
postage, stationary, telephones, overnight couriers,
messengers, overtime, dinners, transportation, shipping
and trucking) Additional
XIII. Minimum Fee $25,000
ChaseMellon Shareholder Services, L.L.C.
January 20, 1998
Page 12
EXHIBIT B
[Wahlco Environmental Systems, Inc. Letterhead]
Name Position Specimen Signatures
C. Xxxxxxx Xxxx President & Chief Executive Officer _________________________
Xxxx Xxxxxxxx Vice President - Administration _________________________
A. Xxxx XxXxxxxx Vice President & Chief Financial _________________________
Officer
Xxxxx X. Xxxxxx Secretary & General Counsel _________________________
