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Exhibit 99.2
[Chempower Letterhead]
January 15, 1997
American Eco Corporation
Sub Acquisition Corp.
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx
President and CEO
Re: Agreement and Plan of Merger by and among American Eco Corporation, Sub
Acquisition Corp., and Chempower, Inc., dated as of September 10, 1996
(the "Merger Agreement")
Gentlemen:
As you are aware, the date upon which the Merger Agreement shall become
terminable by either American Eco Corporation ("American Eco") or Chempower,
Inc. ("Chempower") in the event that the merger contemplated thereby (the
"Merger") has not been consummated is January 31, 1997. In order to enable the
shareholders of each of our companies to realize the benefits of this Merger,
this letter shall serve to confirm the agreement of American Eco and Chempower
to waive certain of the termination rights of each party under the Merger
Agreement, for the purposes and subject to the conditions and limitations stated
herein. Unless otherwise defined herein, defined terms used herein shall have
the meanings ascribed to them in the Merger Agreement.
Specifically, subject to the terms, conditions, and limitation stated herein,
American Eco and Chempower each agrees to waive until the date (the "Section
7.01(b)(i) Waiver Expiration Date) that is the later of:
(i) February 28, 1997; and
(ii) the earlier of (A) the date which is two business days after the
expiration of the waiting period, or any extensions thereof, applicable
to the Merger under the Xxxx-Xxxxx-Xxxxxx Act and (B) March 31, 1997,
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its right pursuant to Section 7.01(b)(i) to terminate the Merger Agreement for
failure of the Effective Time to occur on or before January 31, 1997.
Notwithstanding the immediately preceding sentence, the foregoing waiver by
Chempower of its termination right under Section 7.01(b)(i) shall nevertheless
expire on February 15, 1997 if American Eco does not file its Notification and
Report Form under the Xxxx-Xxxxx-Xxxxxx Act with the Federal Trade Commission
and the Antitrust Division of the Department of Justice by January 27, 1997, and
thereafter promptly respond to any written or oral comments or requests for
additional information or documenting material by the Federal Trade Commission
or the Antitrust Division of the Department of Justice.
Chempower further agrees, subject to the terms, conditions, and limitations
stated herein, to waive until February 15, 1997 its rights to terminate the
Merger Agreement pursuant to Section 7.01(d)(iv) due to (a) American Eco's
failure to provide Chempower with reasonable evidence that alternative Financing
had been obtained within thirty (30) days of the date upon which American Eco
notified Chempower that it had terminated its financing commitment with
Canaccord Capital Corporation (which termination occurred on or about October
18, 1996); and (b) the failure of American Eco, in any event, to obtain
Financing by January 15, 1997.
The purpose of this waiver is to provide American Eco with additional time
within which to obtain the financing needed to pay the Merger Consideration, and
the purchase price (the "Real Property Purchase Price") to be paid pursuant to
the Real Property Purchase Agreement, dated September 10, 1996 (the "Real
Property Agreement"), between American Eco and Holiday Properties, an Ohio
general partnership ("Holiday"), in full in cash at closing, as contemplated
respectively by the Merger Agreement and the Real Property Agreement (the
"Transaction Financing"). American Eco shall have until February 15, 1997 to
obtain either:
(i) the Transaction Financing, or
(ii) alternative financing (including at least $10,000,000 in cash,
plus financing for payment of interest on the deferred amounts
contemplated by clause (B) below, provided by American Eco, from
sources independent of Chempower and not to be secured by any interest
in the assets or stock of Chempower), on terms and conditions mutually
satisfactory to Chempower, the Principal Shareholders (as hereinafter
defined) Holiday, and American Eco, that would provide for:
(A) payment of the Merger Consideration in full in cash at
closing to shareholders and optionholders of Chempower other
than Xxxxxx X. Xxxx ("Xxxx"), Xxxxxxxx X. Xxxx ("JPK"),
Xxxxxxxx X. Xxxx ("KMK"), Xxxxxx X. Xxxxxxxxx ("EMR"), and
Xxxx X. Xxxxxxxxx ("MLR") (Xxxx, EMR, MLR, JPK, and KMK are
hereinafter referred to as, collectively, the "Principal
Shareholders" and, individually, a "Principal Shareholder");
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(B) deferral, for a period of no longer than one year and one
day from the effective date of the Merger, of a portion of the
Merger Consideration payable to the Principal Shareholders
and a portion of the Real Property Purchase Price (such
deferred portion to be evidenced by promissory notes of
Chempower, guaranteed by, and with monthly payments of
interest thereon reimbursed monthly to Chempower by, American
Eco), the amount of such Merger Consideration and Real
Property Purchase Price to be deferred and the terms and
conditions of such deferral, including, without limitation,
interest (which shall be payable monthly in arrears and
computed at a per annum rate of 7% for the first two months
following the consummation of the Merger, 8% for the third
and fourth months, 9% for the fifth and sixth months, 10% for
the seventh through ninth months, and 11% thereafter, until
paid in full), prepayment requirements, operating and
financial covenants (including, without limitation, provision
for the Board of Directors of Chempower, post-Merger, to
consist of a total of three directors, two of whom will be
designated by the Principal Shareholders and one of whom will
be designated by American Eco, and for the Board of Directors
of American Eco, post-Merger, to include one director
designated by the Principal Shareholders), and security for
the deferred amounts (including, at the election of the
Principal Shareholders and Holiday, a pledge of all of the
outstanding capital stock of Chempower and a lien on and
security interest in all of the assets and properties of
Chempower (such pledge and lien and security interest to be
prior in interest to all other secured creditors, other than
secured creditors providing financing on terms and conditions
approved by the Principal Shareholders and Holiday for
payment of amounts deferred as contemplated by this clause
(B) or paid to the Principal Shareholders or Holiday at
closing as contemplated by clause (C) below)), to be mutually
satisfactory to the Principal Shareholders, Holiday, and
American Eco; and
(C) payment in cash at closing to the Principal Shareholders
and Holiday, respectively, of the portion of the Merger
Consideration and the portion of the Real Property Purchase
Price not deferred as contemplated by clause (B) above (such
alternative financing is hereinafter referred to as the
"Alternative Financing").
In the event that the Transaction Financing or the Alternative Financing has not
been secured (including, without limitation, by reason of the failure of the
Principal Shareholders, Holiday and American Eco to agree on mutually
satisfactory terms and conditions for the Alternative Financing) on or before
February 15, 1997 ("secured" for this purpose meaning that the obligation of the
provider or providers of the financing to provide the financing is subject to no
material unfulfilled condition other than the consummation of the Merger), the
Merger Agreement shall again become terminable by Chempower on the same terms
and with all of the same effects as if Chempower had never waived its right to
terminate the Merger Agreement pursuant to Section 7.01(b)(i) or 7.01(d)(iv),
and, in the event that Chempower elects to so terminate the Merger Agreement, in
addition to the payment of expenses contemplated by Section 7.03 of the Merger
Agreement, American Eco will also pay to
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Chempower a termination fee of $1,000,000 in cash. By entering into this letter
agreement, American Eco acknowledges that, without limiting the foregoing
sentence, the result shall be that, if the Transaction Financing or the
Alternative Financing is not secured on or before February 15, 1997, Chempower
shall, from and after February 15, 1997, have the same right to terminate the
Merger Agreement and to be reimbursed by American Eco for its actual expenses
incurred in connection with the Merger Agreement as it has as of the date
hereof (prior to giving effect to this letter), and American Eco acknowledges
and agrees that Chempower presently has that right.
Moreover, in any event, if the Effective Time of the Merger has not occurred on
or before the Section 7.01(b)(i) Waiver Expiration Date, the Merger Agreement
shall again become terminable by either party on the same terms and with all of
the same effects as if neither party had waived such termination rights under
Section 7.01 (b)(i) of the Merger Agreement. In addition, whether or not
American Eco secures the Transaction Financing or the Additional Financing on or
before February 15, 1997, American Eco shall in no event have any right to
terminate the Merger Agreement pursuant to Section 7.01(b)(1) of the Merger
Agreement until the day after the Section 7.01(b)(i) Waiver Expiration Date.
If you agree with the terms and conditions set forth herein, please acknowledge
your acceptance thereof by signing in the space indicated below. Your signature
also constitutes American Eco and Sub Acquisition Corp.'s representation and
warranty that entering into this letter agreement has been authorized and
approved by their respective Boards of Directors and that no further corporate
approvals are required in connection therewith. Chempower also represents and
warrants to you that its entering into this letter agreement has been authorized
and approved by its Board of Directors and that no further corporate approvals
are required in connection therewith.
As always, we have enjoyed working with you and appreciate your continued
cooperation in working towards a successful consummation of the Merger. As
contemplated by Section 5.06 of the Merger Agreement, we will cooperate with you
in issuing promptly an appropriate press release disclosing our agreement with
respect to the matters covered by this letter.
Very truly yours,
CHEMPOWER, INC.
By:/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Chairman, President and
Chief Executive Officer
AGREED AND ACCEPTED this 15th
day of January, 1997:
AMERICAN ECO CORPORATION
/s/ Xxxxxxx X. XxXxxxxx
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By: Xxxxxxx X. XxXxxxxx
Title: President and CEO
SUB ACQUISITION CORP.
/s/ Xxxxxxx X. XxXxxxxx
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By: Xxxxxxx X. XxXxxxxx
Title: President
