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EXHIBIT 10.17
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
RUSH CREEK, LLC,
AQUA-CHEM, INC.,
XX-XXXXXX SALES AND SERVICE, INC.,
WHITNEY SUBORDINATED DEBT FUND, L.P.
AND
WHITNEY EQUITY PARTNERS, L.P.
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DATED AS OF DECEMBER 5, 1997
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ARTICLE 1 DEFINITIONS.................................................3
1.1 Definitions.................................................3
1.2 Accounting Terms: Financial Statements.....................14
1.3 Knowledge of the Company...................................15
ARTICLE 2 PURCHASE AND SALE OF THE SECURITIES........................15
2.1 Purchase and Sale of the WSDF Note.........................15
2.2 Purchase and Sale of WSDF Warrant..........................15
2.3 Purchase and Sale of the WEP Preferred Shares and the WEP
Shares.....................................................15
2.4 Fees at Closing; Annual Fees...............................15
2.5 Closing....................................................16
2.6 Financial Accounting Positions; Tax Reporting..............16
ARTICLE 3 CONDITIONS TO THE RESPECTIVE OBLIGATIONS
OF THE PURCHASERS TO PURCHASE THE SECURITIES...............17
3.1 Representations and Warranties.............................17
3.2 Compliance with this Agreement.............................17
3.3 Certificates...............................................17
3.4 Documents..................................................18
3.5 Purchase of Securities Permitted by Applicable Laws........18
3.6 Opinion of Counsel.........................................18
3.7 Approval of Counsel to the Purchasers......................18
3.8 Consents and Approvals.....................................18
3.9 Registration Rights Agreement..............................19
3.10 Operating Agreement........................................19
3.11 Certificate of Incorporation...............................19
3.12 Certificate of Organization................................19
3.13 No Material Judgment or Order..............................19
3.14 Pro Forma Balance Sheet....................................19
3.15 Goodstanding Certificates..................................19
3.16 Xxxxxx Employment Agreement................................19
3.17 Aqua-Chem Merger...........................................19
3.18 Senior Credit Facility; Subordination......................20
3.19 Management Capital Contribution............................20
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3.20 Stockholders' and Members' Agreement.......................20
3.21 Guaranty...................................................20
3.22 Payment of Thomasville Indebtedness and Release of Liens ..20
3.23 Payment of Monroe Indebtedness and Release of Liens .......20
3.24 Termination of 1982 Stockholders' Agreement................20
3.25 Termination of Special Security Agreement..................21
3.26 Termination of Interim Management Agreement................21
3.27 Amendment to Employment Agreements.........................21
3.28 Adoption of 1997 Stock Option Plan.........................21
ARTICLE 3A CONDITIONS TO THE RESPECTIVE OBLIGATIONS
OF THE PURCHASERS TO PURCHASE THE SECURITIES..............21
3A.1 Representations and Warranties.............................21
3A.2 Compliance with this Agreement.............................21
3A.3 Certificates...............................................21
3A.4 Documents..................................................22
3A.5 Purchase of Securities Permitted by Applicable Laws........22
3A.6 Opinion of Counsel.........................................22
3A.7 Approval of Counsel to the Purchasers......................22
3A.8 Consents and Approvals.....................................23
3A.9 No Material Judgment or Order..............................23
3A.10 Senior Credit Facility.....................................23
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS OF THE LLC, THE
COMPANY AND XX-XXXXXX......................................23
4.1 Representations and Warranties.............................23
4.2 Compliance with this Agreement.............................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............24
5.1 Existence and Power........................................24
5.2 Authorization; No Contravention............................24
5.3 Governmental Authorization; Third Party Consents...........24
5.4 Binding Effect.............................................25
5.5 No Legal Bar...............................................25
5.6 Litigation.................................................25
5.7 Compliance with Laws.......................................25
5.8 No Default or Breach.......................................25
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EXHIBIT 10.17
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5.9 Title to Properties........................................25
5.10 Use of Real Property.......................................26
5.11 Taxes......................................................27
5.12 Financial Condition........................................28
5.13 ERISA -- Prohibited Transactions...........................29
5.14 Disclosure.................................................29
5.15 Absence of Certain Changes or Events.......................29
5.16 Environmental Matters......................................30
5.17 Investment Company/Government Regulations..................30
5.18 Subsidiaries...............................................31
5.19 Capitalization.............................................32
5.20 Private Offering...........................................33
5.21 Broker's, Finder's or Similar Fees.........................33
5.22 Labor Relations............................................33
5.23 Employee Benefit Plans.....................................34
5.24 Patents, Trademarks, Etc...................................35
5.25 Potential Conflicts of Interest............................36
5.26 Trade Relations............................................37
5.27 Outstanding Borrowings.....................................37
5.28 Material Contracts.........................................37
5.29 Insurance..................................................37
5.30 Accounts Receivable........................................38
5.31 Inventory..................................................38
5.32 Products Liability.........................................38
5.33 Solvency...................................................38
5.34 Other Documents............................................38
5.35 Status of LLC..............................................39
5.36 Merger Agreement and Senior Loan Agreement; Representations
and Warranties.............................................39
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...........39
6.1 Authorization; No Contravention............................39
6.2 Binding Effect.............................................39
6.3 No Legal Bar...............................................39
6.4 Purchase for Own Account...................................39
6.5 ERISA......................................................40
6.6 Broker's, Finder's or Similar Fees.........................40
6.7 Governmental Authorization; Third Party Consent............40
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ARTICLE 7 INDEMNIFICATION............................................40
7.1 Indemnification............................................40
7.2 Notification...............................................41
7.3 Registration Rights Agreement..............................42
7.4 Environmental Basket.......................................42
ARTICLE 8 AFFIRMATIVE COVENANTS......................................43
8.1 Financial Statements and Other Information.................43
8.2 Preservation of Corporate Existence........................46
8.3 Payment of Obligations.....................................47
8.4 Compliance with Laws.......................................47
8.5 Reservation of Common Stock................................47
8.6 Inspection.................................................47
8.7 Payment of Note............................................48
8.8 Insurance..................................................48
8.9 Books and Records..........................................48
8.10 Use of Proceeds............................................48
8.11 Board Nominees.............................................48
8.12 Granting of Management Options.............................49
8.13 Whitney Director's Indemnification.........................49
8.14 Title Insurance............................................49
8.15 Landlord Consents. ........................................50
8.16 Xxxx County Judgment.......................................50
ARTICLE 9 NEGATIVE COVENANTS.........................................50
9.1 Fundamental Changes; Consolidations, Mergers and
Acquisitions...............................................50
9.2 Transactions with Affiliates...............................50
9.3 No Inconsistent Agreements.................................51
9.4 Limitation on Indebtedness.................................51
9.5 Limitation on Liens........................................53
9.6 Dispositions of Assets.....................................54
9.7 Limitations on Restricted Payments.........................54
9.8 Financial Covenants........................................55
9.9 Employee Benefit Plans.....................................56
9.10 Limitation on Business of the Company......................56
9.11 Investments................................................56
9.12 Contingent Obligations.....................................57
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9.13 Management Fees and Compensation.............................57
9.14 Fiscal Year..................................................57
9.15 Press Release; Public Offering Materials.....................57
9.16 Subsidiaries.................................................57
9.17 No Negative Pledges..........................................57
9.18 No Restrictions on Subsidiary Distributions to the Company...57
9.19 Bank Accounts. .............................................58
ARTICLE 10 PREPAYMENT...................................................58
10.1 Optional Prepayment..........................................58
10.2 Mandatory Prepayment.........................................58
ARTICLE 11 MISCELLANEOUS................................................58
11.1 Survival of Representations and Warranties...................58
11.2 Notices......................................................58
11.3 Successors and Assigns.......................................60
11.4 Amendment and Waiver.........................................60
11.5 Signatures; Counterparts.....................................60
11.6 Headings.....................................................61
11.7 GOVERNING LAW................................................61
11.8 Determinations, Request or Consents..........................61
11.9 JURISDICTION.................................................61
11.10 Severability.................................................61
11.11 Rules of Construction........................................61
11.12 Entire Agreement.............................................61
11.13 Certain Expenses.............................................62
11.14 Publicity....................................................62
11.15 Further Assurances...........................................62
11.16 Obligations of the Purchasers................................62
EXHIBITS
A Form of WSDF Note
B Form of WSDF Warrant
C Certificate of Incorporation
D Form of Operating Agreement
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E Financial Covenant Calculations
F Stockholders' and Members' Agreement
G Form of Registration Rights Agreement
H Form of Compliance Certificate
I Merger Agreement
J Contribution Agreement
K Xxxxxx Employment Agreement
L Guaranty
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT, dated as
of December 5, 1997, by and among RUSH CREEK LLC (the "LLC"), a Wisconsin
limited liability company, AQUA-CHEM, INC., ("AQUA-CHEM."), a Delaware
corporation (formerly known as A-C Acquisition Corp.), XX-XXXXXX SALES AND
SERVICE, INC. ("CB- XXXXXX"), a Delaware corporation, WHITNEY SUBORDINATED DEBT
FUND, L.P. ("WSDF"), a Delaware limited partnership, and WHITNEY EQUITY
PARTNERS, L.P., ("WEP" and together with WSDF, the "WHITNEY FUNDS"), a Delaware
limited partnership. The Whitney Funds are sometimes referred to herein as the
"PURCHASERS."
W I T N E S S E T H:
WHEREAS, Messrs. Xxxxxxx X. Xxxxxx, J. Xxxxx Xxxxxx, Xxxx X.
XxXxxxx, Xxxxx Xxxxxxx and Xxxxxxx Xxxxxx (collectively, "MANAGEMENT") currently
comprise the senior management team of Aqua-Chem;
WHEREAS, Aqua-Chem is a manufacturer of commercial and
industrial boilers, burners, combustion and emission controls, water
desalination and process evaporation systems for use in water treatment
facilities, process and utility industries and marine/military applications, and
other environmental and energy related machinery;
WHEREAS, Lyonnaise American Holding, Inc. ("LYONNAISE"), a
Delaware corporation, was the holder of eighty percent (80%) of the issued and
outstanding capital stock of Old Aqua-Chem, Inc. ("Old Aqua-Chem"), a Delaware
corporation, which merged with and into Aqua-Chem pursuant to the terms of the
Merger Agreement (as hereinafter defined), and Gestra Corp., N.V. ("GESTRA"), a
company organized in the Netherland Antilles, was the holder of the remaining
twenty percent (20%) of the same;
WHEREAS, Aqua-Chem was formed for the purpose of acquiring Old
Aqua-Chem;
WHEREAS, pursuant to the terms of the Securities Purchase
Agreement (the "Original Agreement"), dated as of July 31, 1997, by and among
the LLC, Aqua-Chem, XX-Xxxxxx and the Purchasers, Aqua-Chem sold to WEP, and WEP
purchased from Aqua-Chem. (i) 2,281.825 shares (the "WEP PREFERRED SHARES") of
Series C Redeemable Preferred Stock, par value $.01 per share, of Aqua-Chem (the
"SERIES C PREFERRED STOCK"), the terms, limitations and relative rights and
preferences of which are set forth in the Certificate of Incorporation (as
hereinafter defined) and (ii) 510,000 shares (the "WEP COMMON SHARES," and
together with the WEP Preferred Shares, the "WEP SHARES") of common stock, $0.01
par value per share, of Acquisition Corp. (the "COMMON
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STOCK"), in each case, upon the terms and subject to the conditions set forth in
the Original Agreement;
WHEREAS, pursuant to the terms of the Original Agreement,
Aqua-Chem and XX-Xxxxxx sold to WSDF, and WSDF purchased from Aqua-Chem and
XX-Xxxxxx a subordinated promissory note (the "WSDF NOTE"), due July 30, 2004,
in the principal amount of $21,000,000, and in connection therewith, Aqua-Chem
sold to WSDF, and WSDF purchased from Aqua-Chem., a warrant (the "WSDF WARRANT")
to purchase 176,471 shares of Common Stock, in each case upon the terms and
subject to the conditions hereinafter set forth;
WHEREAS, prior to the date of the Original Agreement, the
Xxxxxxx X. Xxxxxx Family LLC, a Michigan limited liability company, and Xxxxxxx
X. Xxxxxx, Trustee of the Xxxxxxx X. Xxxxxx Trust u/a/d May 10, 1997
(collectively, the "XXXXXX RELATED ENTITIES") were the sole members of the LLC;
WHEREAS, each of the Purchasers, the Xxxxxx Related Entities
and the Managers, other than Xxxxxx, own the Membership Units set forth opposite
their names on Schedule A to the Operating Agreement;
WHEREAS, the equity securities set forth opposite each of the
names of Purchasers, the Xxxxxx Related Entities and the Managers, other than
Xxxxxx, have been allocated to their respective capital accounts;
WHEREAS, concurrently with the purchase and sale of the WEP
Shares, the WSDF Note and the WSDF Warrant pursuant to the terms of the Original
Agreement, Aqua-Chem entered into a Revolving Credit and Term Loan Agreement
(the "SENIOR LOAN AGREEMENT"), dated as of July 31, 1997, with Comerica Bank
("COMERICA"), a Michigan banking corporation, individually and as agent
thereunder, providing for a secured term credit facility, and a secured
revolving credit facility (collectively, the "SENIOR CREDIT FACILITY");
WHEREAS, concurrently with the purchase and sale of the WEP
Shares, the WSDF Note and the WSDF Warrant pursuant to the terms of the Original
Agreement, the contribution of the Series C Preferred Stock and the Common Stock
to the LLC in exchange for Membership Units pursuant to the Contribution
Agreement and the consummation of the Senior Credit Facility pursuant to the
terms of the Senior Loan Agreement, Old Aqua-Chem merged (the "AQUA-CHEM
MERGER") with and into Aqua-Chem., pursuant to the terms of the Agreement and
Plan of Reorganization (the "MERGER AGREEMENT"), dated as of July 31, 1997, by
and among Lyonnaise, Gestra, the LLC, Old Aqua-Chem, Aqua-Chem and Xxxxxx, a
copy of which is attached hereto as Exhibit I;
WHEREAS, the proceeds from (i) the purchase by the Purchasers
of the WEP Shares, the WSDF Note and the WSDF Warrant, and (ii) the Senior
Credit Facility were used in part to finance the Aqua-Chem Merger;
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WHEREAS, on the date hereof, Aqua-Chem is entering into an
Amended and Restated Revolving Credit and Term Loan Agreement (the "AMENDED AND
RESTATED SENIOR LOAN AGREEMENT"), dated as of the date hereof, with Comerica, as
structuring, documentation and administrative agent for the financial
institutions from time to time signatory thereto (collectively, the "BANKS"),
and the Banks; and
WHEREAS, in connection with the entering into of the Amended
and Restated Senior Loan Agreement, the LLC, the Company, XX-Xxxxxx and the
Purchasers desire to amend and restate the Original Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"AFFILIATE" shall mean any Person (a) directly or indirectly
controlling, controlled by, or under common control with, the Company, (b)
directly or indirectly owning or holding five percent (5%) or more of any equity
interest in the Company, or (c) five percent (5%) or more of whose voting stock
or other equity interest is directly or indirectly owned or held by the Company.
For purposes of this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by" and under "common control with") means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATED GROUP" shall have the meaning set forth in Section
1504(a) of the Code.
"AGREEMENT" shall mean this amended and restated Agreement,
including the exhibits and schedules hereto, as the same may be amended,
supplemented or modified in accordance with the terms hereof; provided, however,
that with respect to the period from and after July 31, 1997 and ending on the
date hereof "AGREEMENT" shall mean the Original Agreement.
"ASSET DISPOSITION" shall mean the disposition, whether by
sale, lease, transfer, loss, damage, destruction, condemnation or otherwise of
any of the following: (a) any of the equity interest or stock of the Company or
any of its Subsidiaries or (b) any or all of the assets of the Company or its
Subsidiaries other than sales of inventory in the ordinary course of business.
"NET PROCEEDS" of any Asset Disposition means cash proceeds received by the
Company or any of its
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Subsidiaries from any Asset Disposition (including insurance proceeds, awards of
condemnation, and payments under notes or other debt securities received in
connection with any Asset Disposition), net of (x) the costs of such sale,
lease, transfer or other disposition (including taxes attributable to such sale,
lease or transfer), and (y) amounts applied to repayment of Indebtedness secured
by a Lien on the asset or property disposed.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law or executive order to close.
"BY-LAWS" shall mean the by-laws of each of the Company and
XX-Xxxxxx as in effect on the Closing Date.
"CANADIAN OVERDRAFT LOC" is defined in Section 9.4(j).
"CAPITAL EXPENDITURES" shall be determined as set forth in
Exhibit E hereto.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP consistently applied.
"CASH" shall mean the currency of the United States of
America.
"CERTIFICATE OF INCORPORATION" shall mean the Certificate of
Incorporation of each of the Company and XX-Xxxxxx as in effect on the Closing
Date.
"CERTIFICATE OF ORGANIZATION" shall mean the Certificate of
Organization of the LLC as in effect on the Closing Date.
"CLOSING" shall have the meaning assigned to that term in
Section 2.5.
"CLOSING DATE" shall have the meaning assigned to that term in
Section 2.5.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute thereto.
"COMERICA BANK" shall mean Comerica Bank, a Michigan banking
corporation.
"COMMISSION" shall mean the Securities and Exchange Commission
or any similar agency then having jurisdiction to enforce the Securities Act.
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"COMMON STOCK" shall have the meaning assigned to that term in
the fifth Whereas clause hereof, or any other capital stock of the Company into
which such stock is reclassified or reconstituted.
"COMPANY" shall mean Aqua-Chem, the surviving corporation of
the Aqua-Chem Merger; provided, however, that with respect to all periods prior
to the effective time of the Aqua-Chem Merger, "COMPANY" shall mean Old
Aqua-Chem.
"COMPLIANCE CERTIFICATE" shall have the meaning given in
Section 8.1(c).
"CONDITION OF THE COMPANY" shall mean the assets, business,
properties, operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
"CONTINGENT OBLIGATION" as applied to any Person, shall mean
any direct or indirect liability, contingent or otherwise, of that Person: (i)
with respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings; or (iii)
under any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"CONTRIBUTION AGREEMENT" shall mean the Contribution Agreement
in substantially the form attached hereto as Exhibit J.
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"DEFINED BENEFIT PLAN" shall mean a defined benefit plan
within the meaning of Section 3(35) of ERISA or Section 414(j) of the Code,
whether funded or unfunded, qualified or non-qualified (whether or not subject
to ERISA or the Code).
"EBITDA" shall be determined as set forth in Exhibit E hereto.
"ENVIRONMENTAL COSTS" shall mean (i) any costs, charges,
expenses, losses, payments, damages, obligations and liabilities arising out of
or attributable to response costs or the costs of corrective action, including
the cost of any investigation, monitoring, sampling, removal, restoration,
remediation, remedial response or remedial work or permit acquisition which is
undertaken, suffered, paid, awarded, assessed or otherwise incurred, arising out
of or attributable to violations of Environmental Laws or the presence or
migration of Hazardous Materials on, above, under or originating from any
property, plant, equipment or facility owned or used by the Company or any
Subsidiary, and (ii) any claims by Persons other than any Governmental Authority
for contribution or damages (including, without limitation, claims relating to
personal injury or death, property damage restitution, trespass, breach of duty,
strict liability, nuisance and claims commonly known as "toxic torts") arising
out of or attributable to any violation of Environmental Laws. Environmental
Costs shall not include any costs, charges, expenses, losses, payments, damages,
obligations, and liabilities arising out of or attributed to friable or damaged
asbestos, or asbestos containing material.
"ENVIRONMENTAL LAWS" shall mean any applicable past, present
or future Federal, state, territorial, provincial or local law, common law
doctrine, rule, order, decree, judgment, injunction, license, permit or
regulation relating to environmental matters, including those pertaining to land
use, air, soil, surface water, ground water (including the protection, cleanup,
removal, remediation or damage thereof), public or employee health or safety or
any other environmental matter, together with any other laws (Federal, state,
territorial, provincial or local) relating to emissions, discharges, releases or
threatened releases of any pollutant or contaminant including, without
limitation, medical, chemical, biological, biohazardous or radioactive waste and
materials, into ambient air, land, surface water, groundwater, personal property
or structures, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, discharge or
handling of any contaminant, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42
U.S.C. 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), as such laws
have been, or are, amended, modified or supplemented heretofore or from time to
time hereafter and any analogous future Federal, or present or future state or
local laws, statutes and regulations promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
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"ERISA AFFILIATE" shall mean a corporation that is or was a
member of a controlled group of corporations with the Company within the meaning
of section 4001(a) or (b) of ERISA or section 414(b) of the Code, a trade or
business (including a sole proprietorship, partnership, trust, estate or
corporation) that is under common control with Company within the meaning of
section 414(m) of the Code, or a trade or business which together with Company
is treated as a single employer under section 414(o) of the Code.
"EVENT OF DEFAULT" shall have the meaning assigned to such
term in the Note.
"EXERCISABLE SHARES" shall have the meaning assigned to that
term in Section 8.5 hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
"FIXED CHARGE COVERAGE" shall be determined as set forth in
Exhibit E hereto.
"GAAP" shall mean generally accepted accounting principles in
effect from time to time within the United States.
"GOVERNMENTAL AUTHORITY" shall mean the government of any
nation, state, city, locality or other political subdivision of any thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"GUARANTY" shall mean the Guaranty in substantially the form
attached hereto as Exhibit L.
"HAZARDOUS MATERIALS" shall mean (i) any chemical pollutant,
contaminant, pesticide, petroleum or petroleum product or by product radioactive
substance, solid waste (hazardous or extremely hazardous), special, dangerous or
toxic waste, hazardous or toxic substance, chemical or material regulated,
listed, referred to, limited or prohibited under any Environmental Law,
including without limitation: (i) friable or damaged asbestos,
asbestos-containing material, polychlorinated biphenyls (PCBs), solvents and
waste oil; (ii) any "hazardous substance" as defined under CERCLA or any
environmental law, statute, regulation or rule; and (iii) any hazardous waste
defined under RCRA or any Environmental Law; and (iv) even if not prohibited,
listed, limited or regulated by an Environmental Law, all pollutants,
contaminants, hazardous, dangerous or toxic chemical materials, wastes or any
other substances, including without limitation, any industrial process or
pollution control waste (whether or not hazardous within the meaning of RCRA)
which could pose a hazard to the environment, or the health and safety of any
person or impair the use or value of any portion of the Property of the Company.
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"INDEBTEDNESS" shall mean as to any Person (a) all obligations
of such Person for borrowed money (including, without limitation, reimbursement
and all other obligations with respect to surety bonds, unfunded credit
commitments, letters of credit and bankers' acceptances, whether or not
matured), (b) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (e)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"INITIAL PUBLIC OFFERING" shall mean the initial public
offering by either the Company or any of its subsidiaries of its capital stock
pursuant to a registration statement on Form S-1 or otherwise under the
Securities Act.
"INTEREST COVERAGE" shall be determined as set forth in
Exhibit E hereto.
"INTEREST EXPENSES" shall mean, with respect to the Company
and its Subsidiaries on a consolidated basis for any period, the sum of (a)
gross interest expenses of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP consistently applied,
including (i) the amortization of debt discounts, (ii) the amortization of all
fees payable in connection with the incurrence of Indebtedness to the extent
included in interest expense, (iii) the portion of any payments or accruals with
respect to Capital Lease Obligations allocable to interest expense and (iv) all
commissions paid to factors during such period, and (b) any other capitalized
interest of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP consistently applied.
"INVESTMENT" shall mean (i) any direct or indirect purchase or
other acquisition by the Company or any of its Subsidiaries of any beneficial
interest in, including stock, partnership interest or other equity securities
of, any other Person (other than a Person that prior to the relevant purchase or
acquisition was a Subsidiary of the Company) or (ii) any direct or indirect
loan, advance or capital contribution by the Company or any of its Subsidiaries
to any other Person (other than a Subsidiary of the Company), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus
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the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-offs, write-downs or write-offs with respect to
such Investment.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences) including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease Obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
"LIQUIDITY EVENT" shall mean an Initial Public Offering and
any Organic Transaction, as defined in the Certificate of Incorporation.
"MEMBERSHIP UNITS" shall have the meaning assigned to such
term in the Operating Agreement.
"MERGER AGREEMENT" shall have the meaning set forth in the
eleventh Whereas clause.
"MERGER TRANSACTION DOCUMENTS" shall mean the Merger Agreement
and all agreements, instruments and other documents contemplated thereunder,
including without limitation, the certificate of merger evidencing the Aqua-Chem
Merger.
"XXXXXX EMPLOYMENT AGREEMENT" shall mean the Employment
Agreement between the Company and Xxxxxxx X. Xxxxxx, in substantially the form
attached hereto as Exhibit K.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan within
the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the
Code.
"NET INCOME" shall mean, for any period, the net income (or
loss) of the Company and its Subsidiaries on a consolidated basis for such
period, as determined in accordance with GAAP consistently applied, but
excluding any extraordinary gains or losses and any insurance proceeds received
by the Company or any of its Subsidiaries.
"NET PROCEEDS" shall have the meaning set forth within the
definition of "Asset Disposition."
"NOTE" shall mean the WSDF Note.
"OLD AQUA-CHEM" shall have the meaning assigned to such term
in the third Whereas clause.
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"OPERATING AGREEMENT" shall mean the LLC's operating agreement
substantially in the Form attached hereto as Exhibit D.
"OPERATING CASH FLOW" shall be determined as set forth in
Exhibit E hereto.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the
fifth Whereas clause.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the
Company and its Subsidiaries for money borrowed that is outstanding at the
relevant time of determination.
"PERMITTED ACQUISITION" shall mean any acquisition by purchase
or otherwise of all or substantially all of the business or assets of any other
Person, provided that with respect to such acquisition, the Company has obtained
the prior written consent of the Purchasers with respect to such acquisition
(such consent to be provided in the sole discretion of the Purchasers).
"PERMITTED INVESTMENTS" shall mean, with respect to any
Person:
(a) Noncallable direct general obligations of the
United States of America or obligations the payment of principal of interest on
which is unconditionally guaranteed by the United States of America.
(b) Obligations of a state of the United States, the
District of Columbia or any possession of the United States, or any political
subdivision thereof, which are described in Section 103(a) of the Code and are
graded in any of the highest three (3) major grades as determined by at least
one Rating Agency; or secured, as to payments of principal and interest, by a
letter of credit provided by a financial institution or insurance provided by a
bond insurance company which in each case is itself or its debt is rated in one
of the highest three (3) major grades as determined by at least one Rating
Agency;
(c) Banker's acceptances, commercial accounts, demand
deposit accounts, certificates of deposit, or depository receipts issued by or
maintained with any bank, trust company, savings and loan association, savings
bank or other financial institution whose deposits are insured by the Federal
Deposit Insurance Corporation and whose reported capital and surplus equal at
least $500,000,000, provided that such minimum capital and surplus requirement
shall not apply to demand deposit accounts maintained by the Company or any of
its Subsidiaries in the ordinary course of business;
(d) Commercial paper rated at the time of purchase
within the two highest classifications established by not less than two Rating
Agencies, and which matures within 270 days after the date of issue;
(e) Secured repurchase agreements against obligations
itemized in paragraph (a) above, and executed by a bank or trust company or by
members of the association of
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primary dealers or other recognized dealers in United States government
securities, the market value of which must be maintained at levels at least
equal to the amounts advanced; and
(f) Any fund or other pooling arrangement which
exclusively purchases and holds the investments itemized in (a) though (e)
above.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, Governmental Authority or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PLANS" shall have the meaning assigned to that term in
Section 5.23 of this Agreement.
"PRO FORMA BALANCE SHEET" shall mean the pro forma
consolidated balance sheet of the Company and its Subsidiaries delivered
pursuant to Section 3.14.
"RATING AGENCY" shall mean Xxxxx'x Investor Services, Standard
and Poor's Ratings Group or any other nationally reorganized statistical rating
organization which is acceptable to the Purchasers.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement substantially in the form attached hereto as Exhibit G.
"REQUIREMENTS OF LAW" shall mean as to any Person, the
Certificate of Incorporation, By-laws, Operating Agreement or other
organizational or governing documents of such Person, and any law, treaty, rule,
regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable or binding upon such Person or any of its property or to
which such Person or any of its property is subject or pertaining to any or all
of the transactions contemplated or referred to herein.
"RESTRICTED PAYMENT"shall mean: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock, limited liability company interest, or partnership interest of the
Company or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock, limited liability
company interest, or partnership interest to the holders of that class; (ii) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock, limited liability company interest or partnership interest
of the Company or any of its Subsidiaries now or hereafter outstanding; (iii)
any payment or prepayment of interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness subordinated to the
Indebtedness existing pursuant to the Note and this Agreement; (iv) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to
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acquire shares of any class of stock, limited liability company interest, or
partnership interest of the Company or any of its Subsidiaries now or hereafter
outstanding; and (v) any payment under any noncompete agreement.
"SECURITIES" shall mean, collectively, the Note, the Warrant
and the Shares.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations
thereunder as the same shall be in effect at the time.
"SENIOR CREDIT FACILITY" shall have the meaning assigned to it
in the tenth Whereas clause.
"SENIOR CREDIT FACILITY TRANSACTION DOCUMENTS" shall mean the
Senior Loan Agreement and all of the agreements instruments and other documents
contemplated thereunder, including, without limitation, the corresponding
promissory notes and the Subordination Agreement.
"SENIOR INDEBTEDNESS" shall mean all Indebtedness of the
Company and its Subsidiaries currently outstanding or incurred in the future
pursuant to any borrowing by the Company or any of its Subsidiaries from any
bank or institutional lender having total assets (together with its affiliates)
in excess of $500,000,000, and any renewals, extensions, refinancings or
refundings thereof.
"SENIOR LOAN AGREEMENT" shall mean the Senior Loan Agreement,
as defined in the tenth Whereas clause, with respect to the period from and
after July 31, 1997 and ending on the date hereof, and the Amended and Restated
Senior Loan Agreement with respect to all periods from and after the date
hereof.
"SERIES C PREFERRED STOCK" shall have the meaning ascribed to
such term in the fifth Whereas clause.
"SHARES" shall mean the WEP Shares.
"SOLVENT" shall mean, with respect to the Company and its
Subsidiaries considered as a whole, based on the Pro Forma Balance Sheet, (i)
the assets and the property of the Company and its Subsidiaries, considered as a
whole, exceed the aggregate liabilities (including contingent and unliquidated
liabilities) of the Company and its Subsidiaries, considered as a whole, (ii)
after giving effect to the transactions contemplated by this Agreement, the
Company and its Subsidiaries, considered as a whole, will not be left with
unreasonably small capital, and (iii) after giving effect to the transactions
contemplated by this Agreement, the Company and its Subsidiaries, considered as
a whole, are able to both service and pay their liabilities as they mature. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that is likely to
become an actual or matured liability.
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"STOCKHOLDERS' AND MEMBERS' AGREEMENT" shall mean the
Stockholders' and Members' Agreement substantially in the form attached hereto
as Exhibit F.
"SUBSIDIARY" shall mean, with respect to any Person, a
corporation or other entity of which 50% or more of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"SUBORDINATION AGREEMENT" shall have the meaning set forth in
the Senior Loan Agreement.
"TANGIBLE NET WORTH" shall mean, as of the date of
determination thereof, the difference between the aggregate sum of (i) the par
value of all classes of capital stock of the Company and its Subsidiaries (or
value stated on the books of the Company and its Subsidiaries), (ii) capital
contributed in excess of par of the capital stock of all classes of capital
stock of the Company and its Subsidiaries, and (iii) the amount of surplus (or
deficit) or retained earnings, whether capital, earned or otherwise, of the
Company and it Subsidiaries, less the sum of the stated value of treasury stock,
patents, trademarks, trade names, copyrights, goodwill and other like and
similar intangible assets of the Company and its Subsidiaries.
"TAX" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on-minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TOTAL CONSIDERATION" shall mean the total consideration paid
with respect to any such acquisition, including without limitation (u) all
payments made in cash and property, (v) all payments made in stock, (w) the
amounts paid or to be paid pursuant to non-compete agreements and consulting
agreements, (x) the amount of debt assumed (and in the case of a stock
acquisition, the amount of debt of the Person to be acquired) (y) the amount of
seller subordinated indebtedness incurred in connection with such acquisition
and (z) the amount of all transaction fees.
"TOTAL FUNDED INDEBTEDNESS" shall be determined as set forth
in Exhibit E hereto.
"TRANSACTION DOCUMENTS" shall mean collectively, this
Agreement, the Note, the Guaranty, the Warrant, the Registration Rights
Agreement, the Stockholders' and Members' Agreement, the Operating Agreement,
the Contribution Agreement, the By-Laws, the Xxxxxx
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Employment Agreement, the Certificate of Incorporation, the Certificate of
Organization, the Senior Credit Facility Transaction Documents, and the Merger
Transaction Documents.
"WARRANT" shall mean the WSDF Warrant.
"WEP COMMON SHARES" shall have the meaning set forth in the
fifth Whereas clause.
"WEP SHARES" shall have the meaning set forth in the fifth
Whereas clause.
"WEP PREFERRED SHARES" shall have the meaning assigned to that
term in the fifth Whereas clause.
"WHITNEY" shall mean X.X. Xxxxxxx & Co.
"WSDF NOTE" shall mean the subordinated promissory note in the
principal amount of $21,000,000 referred to in the sixth Whereas clause hereof,
which promissory note is substantially in the form attached hereto as Exhibit A.
"WSDF WARRANT" shall mean the warrant referred to in the sixth
Whereas clause hereof, which warrant is substantially in the form attached as
hereto as Exhibit B.
1.2 ACCOUNTING TERMS: FINANCIAL STATEMENTS. All accounting
terms used herein and not expressly defined in this Agreement shall have the
respective meanings given to them in conformance with GAAP. Financial statements
and other information furnished pursuant to the Agreement or the other
Transaction Documents shall be prepared in accordance with GAAP as in effect at
the time of such preparation. No "Accounting Changes" (as defined below) shall
affect financial covenants, standards or terms in this Agreement; provided that
the Company shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "ACCOUNTING CHANGES" means: (a)
changes in accounting principles required by GAAP and implemented by the
Company; (b) changes in accounting principles recommended by the Company's
certified public accountants and implemented thereby; and (c) changes in
carrying value of the Company's or any of its Subsidiaries' assets, liabilities
or equity accounts resulting from (i) the application of purchase accounting
principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the purchase and
sale of the Securities or their other transactions described in the Transaction
Documents, or (ii) as the result of any other adjustments that, in each case,
were applicable to, but not included in, the Pro Forma Balance Sheet. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including, but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made.
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1.3 KNOWLEDGE OF THE COMPANY. All references to the knowledge
of the Company or to facts known by the Company shall mean actual knowledge or
notice of its Chairman, Chief Executive Officer, President, Chief Financial
Officer or other executive officer, including without limitation, Management or
any Chief Executive Officer, Chief Financial Officer or other executive officer
of any Subsidiary or division thereof or knowledge which such Person could
reasonably have acquired through the exercise of due inquiry.
ARTICLE 2
PURCHASE AND SALE OF THE SECURITIES
2.1 PURCHASE AND SALE OF THE WSDF NOTE. Subject to the terms
and conditions herein set forth: (a) the Company and XX-Xxxxxx jointly issued
and sold to WSDF, and WSDF acquired from the Company and XX-Xxxxxx on the
Closing Date, the WSDF Note substantially in the form attached hereto as Exhibit
A, appropriately completed in conformity therewith. The purchase price paid for
the WSDF Note was $20,900,000.
2.2 PURCHASE AND SALE OF WSDF WARRANT. Subject to the terms
and conditions herein set forth, the Company issued and sold to WSDF, and WSDF
acquired from the Company on the Closing Date, the WSDF Warrant substantially in
the form attached hereto as Exhibit B, appropriately completed in conformity
therewith. The purchase price paid for the WSDF Warrant was $100,000.
2.3 PURCHASE AND SALE OF THE WEP PREFERRED SHARES AND THE WEP
COMMON SHARES. Subject to the terms and conditions herein set forth, the Company
issued and sold to WEP and WEP acquired from the Company on the Closing Date,
the WEP Preferred Shares and the WEP Common Shares. The WEP Preferred Shares
shall have the powers, rights and preferences set forth in the Certificate of
Incorporation, a copy of which is attached hereto as Exhibit C. The aggregate
purchase price paid for the WEP Preferred Shares was $2,199,000 and the
aggregate purchase price paid for the WEP Common Shares was $ 51,000.
2.4 FEES AT CLOSING; ANNUAL FEES. Concurrently with the
execution of the Original Agreement, the Company (a) paid to Whitney a debt
placement fee of $630,000 and a transaction fee of $210,000 for an aggregate fee
amount of $840,000, and (b) reimbursed all of the Purchasers' reasonable
out-of-pocket expenses (including, without limitation, lawyers' fees, charges
and disbursements and consultants' fees and expenses and any other due diligence
expenses) incurred in connection with (i) the negotiation and execution and
delivery of the Original Agreement and the Transaction Documents and (ii) the
transactions contemplated by the Original Agreement and the Transaction
Documents, which payments were made by wire transfer of immediately available
funds to an account or accounts designated by the Purchasers. Concurrently with
the execution hereof, the Company shall reimburse all of the Purchasers'
reasonable out-of-pocket expenses (including, without limitation, lawyers' fees,
charges and disbursements and consultants'
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fees and expenses and any other due diligence expenses) incurred in connection
with (i) the negotiation and execution and delivery of this Agreement and the
Transaction Documents and (ii) the transactions contemplated by this Agreement
and the Transaction Documents, which payments shall be made by wire transfer of
immediately available funds to an account or accounts designated by the
Purchasers. Subject to the Senior Credit Facility Transaction documents, the
Company also shall pay Whitney an annual monitoring fee of $50,000 payable
annually on each January 1 of each year, or if any such date shall not be a
Business Day, on the next succeeding Business Day to occur after such date,
beginning on January 1, 1998 and ending upon consummation of an Initial Public
Offering. Upon consummation of an Initial Public Offering, the Company shall pay
any unpaid portion of the annual monitoring fees (calculated on a daily basis)
within five (5) Business Days after receipt by either the Company or any of its
Subsidiaries of the proceeds of such Initial Public Offering. The annual
monitoring fee shall be junior in right of payment to the Note. In addition to
the annual monitoring fee, the Company shall also be entitled to a recognition
fee which shall accrue at a rate of $25,000 per annum, beginning on the Closing
Date, and payable on a Liquidity Event.
2.5 CLOSING. The purchase and issuance of the Securities took
place at the closing (the "CLOSING") held at the offices of Xxxxx Xxxxxxxxxxx
Xxxxx S.C., 2100 Bank Xxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 at 9:00 a.m.,
Central Daylight Time, on Thursday, July 31, 1997 (the "CLOSING DATE"). At the
Closing, (a) the Company and XX-Xxxxxx delivered the WSDF Note against delivery
by WSDF to the Company of the purchase price therefor, (b) the Company delivered
the WSDF Warrant to WSDF against delivery by WSDF to the Company of the purchase
price therefor, (c) the Company delivered stock certificates representing the
WEP Shares to WEP against delivery by WEP to the Company of the purchase price
therefor, in each case such purchase price was paid by wire transfer of
immediately available funds, and (d) LLC executed and delivered the Guaranty.
2.6 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING. Each of the
parties hereto agrees to take reporting and other positions with respect to the
Securities which are consistent with the purchase price of the Securities set
forth herein for all financial accounting purposes, unless otherwise required by
applicable GAAP or Commission rules (in which case the parties agree only to
take positions inconsistent with the purchase price of the Securities set forth
herein provided that the Purchasers have consented thereto, which consent shall
not be unreasonably withheld). Each of the parties to this Agreement agrees to
take reporting and other positions with respect to the Securities which are
consistent with the purchase price of the Securities set forth herein for all
other purposes, including without limitation, for all Federal, state and local
tax purposes.
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ARTICLE 3
CONDITIONS TO THE RESPECTIVE OBLIGATIONS OF THE PURCHASERS
TO PURCHASE THE SECURITIES
The obligation of the Purchasers to purchase the Note, the
Warrant and the WEP Shares, to pay the purchase prices therefor at the Closing
and to perform any obligations hereunder were subject to the satisfaction as
determined by, or waived by, the Purchasers of the following conditions on or
before the Closing Date. WSDF shall not have been obligated to purchase either
the WSDF Note or the WSDF Warrant unless the purchase and sale of the WSDF Note
and the WSDF Warrant had occurred simultaneously with the purchase and sale of
the WEP Shares. WEP shall not have been obligated to purchase the WEP Shares
unless the purchase and sale of the WEP Shares had occurred simultaneously with
the purchase and sale of the WSDF Note and the WSDF Warrant.
3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the LLC, the Company and XX-Xxxxxx contained in Article 5 hereof
shall be true and correct at and as of the Closing Date as if made at and as of
such date.
3.2 COMPLIANCE WITH THIS AGREEMENT. The LLC, the Company and
XX-Xxxxxx shall have performed and complied with all of its agreements and
conditions set forth or contemplated herein that are required to be performed or
complied with by the LLC, the Company or XX-Xxxxxx on or before the Closing
Date.
3.3 CERTIFICATES.
(a) The Purchasers shall have received a certificate
from the LLC, dated the Closing Date and signed by a manager of the LLC
certifying (a) that the attached copies of the Certificate of Organization of
the Company, together with its Operating Agreement, which, among other things,
approves this Agreement and the other Transaction Documents to which the LLC is
a party and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect, and (b)
as to the incumbency and specimen signature of each member and manager of the
LLC executing any Transaction Document to which the LLC is a party or any other
document delivered in connection herewith on behalf of the LLC.
(b) The Purchasers shall have received a certificate
from each of the Company and XX-Xxxxxx, dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each of the Company and XX-Xxxxxx,
certifying (a) that the attached copies of the Certificate of Incorporation,
By-Laws and the resolutions of the Board of Directors of each of the Company and
XX-Xxxxxx approving the Agreement and the other Transaction Documents to which
the Company is a party and the transactions contemplated hereby and thereby, are
all true, complete and correct and remain unamended and in full force and
effect, and (b) as to the incumbency and specimen signature of each officer of
each of the Company and XX-Xxxxxx executing any
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Transaction Document to which the Company or XX-Xxxxxx is a party or any other
document delivered in connection herewith on behalf of the Company or XX-Xxxxxx.
3.4 DOCUMENTS. The Purchasers shall have received true,
complete and correct copies of such agreements, schedules, exhibits,
certificates, documents, financial information and filings as they may request
in connection with or relating to the transactions contemplated hereby, all in
form and substance satisfactory to the Purchasers.
3.5 PURCHASE OF SECURITIES PERMITTED BY APPLICABLE LAWS. The
acquisition of and payment for the Securities to be acquired by the Purchasers
hereunder and the consummation of the transactions contemplated hereby and by
the Transaction Documents (a) shall not be prohibited by any Requirement of Law,
(b) shall not subject the Purchasers to any penalty or other onerous condition
under or pursuant to any Requirement of Law, and (c) shall be permitted by all
Requirements of Law to which the Purchasers or the transactions contemplated by
or referred to herein or in the Transaction Documents are subject; and the
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3.6 OPINION OF COUNSEL. The Purchasers shall have received an
opinion of outside counsel to the LLC, the Company and its Subsidiaries, dated
as of the Closing Date, relating to the transactions contemplated by or referred
to herein, in form and substance acceptable to the Purchasers.
3.7 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and
proceedings hereunder and all agreements, schedules, exhibits, certificates,
financial information, filings and other documents required to be delivered by
the LLC and the Company and each of its Subsidiaries hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall have been in form and substance acceptable to Xxxxxxxx
Xxxxx Singer & Xxxxxxxxx, LLP, counsel to the Purchasers, in its reasonable
judgment (including, without limitation, the opinions of counsel referred to in
Sections 3.6 hereof).
3.8 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of the LLC, or the Company or
any of its Subsidiaries necessary, desirable, or required in connection with the
execution, delivery or performance (including, without limitation, the payment
of interest on the Note and the issuance of Common Stock upon the exercise of
the Warrant) by the LLC, or the Company or any of its Subsidiaries, or
enforcement against the LLC, or the Company or any of its Subsidiaries, of the
Transaction Documents to which each is a party shall have been obtained and be
in full force and effect, and the Purchasers shall have been furnished with
appropriate evidence thereof, and all waiting periods shall have lapsed without
extension or the imposition of any conditions or restrictions.
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3.9 REGISTRATION RIGHTS AGREEMENT. The LLC and the Company
shall have duly executed and delivered the Registration Rights Agreement, in
form and substance satisfactory to the Purchasers.
3.10 OPERATING AGREEMENT. The Operating Agreement shall have
been duly executed and delivered by all of the parties thereto, in form and
substance satisfactory to the Purchasers.
3.11 CERTIFICATE OF INCORPORATION. The Company shall have
amended its Certificate of Incorporation and By-laws (among other things,
increasing the size of the Board of Directors of the Company to six members and
including an indemnification provision), in form and substance satisfactory to
the Purchasers.
3.12 CERTIFICATE OF ORGANIZATION. The LLC shall have amended
its Certificate of Organization, in form and substance satisfactory to the
Purchasers.
3.13 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirement of Law which, in the judgment of the Purchasers, would prohibit the
consummation of the transactions contemplated under the Transaction Documents or
subject the Purchasers to any penalty or other onerous condition under or
pursuant to any Requirement of Law if the transactions contemplated under the
Transaction Documents were to be consummated.
3.14 PRO FORMA BALANCE SHEET. The Company shall have delivered
to the Purchasers as of the Closing Date a pro forma consolidated balance sheet
of the Company and its Subsidiaries, certified by the chief financial officer of
the Company that it fairly presents the pro forma adjustments reflecting the
consummation of the transactions contemplated in this Agreement, including all
material fees and expenses in connection therewith, subject to normal year-end
audit adjustments.
3.15 GOODSTANDING CERTIFICATES. The LLC, the Company and
XX-Xxxxxx shall have delivered to the Purchasers as of the Closing Date,
goodstanding certificates for the LLC, Acquisition Corp., Old Aqua-Chem and each
of Old Aqua-Chem's Subsidiaries for each of their respective jurisdictions of
incorporation and all other jurisdictions where they do business.
3.16 XXXXXX EMPLOYMENT AGREEMENT. Xxxxxxx X. Xxxxxx shall have
duly executed and delivered to the Company an employment agreement between him
and the Company, in form satisfactory to the Purchasers.
3.17 AQUA-CHEM MERGER. The Aqua-Chem Merger shall have been
consummated on terms and conditions satisfactory to the Purchasers. The
Purchasers shall have received a certificate from each of Acquisition Corp. and
Old Aqua-Chem, dated the Closing Date, and signed
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EXHIBIT 10.17
by the Secretary or an Assistant Secretary of each of Acquisition Corp. and Old
Aqua-Chem certifying that the attached copies of the resolutions of the Board of
Directors and the stockholders of each of Acquisition Corp. and Old Aqua-Chem
approving the Aqua-Chem Merger, the execution and delivery of the Merger
Transaction Documents, and the performance of the obligations thereunder. The
Purchasers shall have also received a copy of a certificate of merger evidencing
the Aqua-Chem Merger and certified by the Secretary of State of Delaware.
3.18 SENIOR CREDIT FACILITY; SUBORDINATION. The Senior Credit
Facility shall have been consummated on terms and conditions satisfactory to the
Purchasers. The Whitney Funds shall have entered into the Subordination
Agreement, which such agreement shall be in form and substance satisfactory to
the Purchasers.
3.19 MANAGEMENT CAPITAL CONTRIBUTION. Management (other than
Xxxxxx) shall have delivered to the Purchasers, evidence of its aggregate
$505,000 subscription and capital contribution to the Company, and such evidence
shall be satisfactory to the Purchasers.
3.20 STOCKHOLDERS' AND MEMBERS' AGREEMENT. The Stockholders'
and Members' Agreement shall have been duly executed and delivered by all
parties thereto, in form and substance satisfactory to the Purchasers.
3.21 GUARANTY. The LLC shall have executed and delivered the
Guaranty.
3.22 PAYMENT OF THOMASVILLE INDEBTEDNESS AND RELEASE OF
LIENS. The Company shall have delivered evidence of payment in full into escrow
of the Indebtedness under the Loan Agreement, dated October 1, 1995, between
Old Aqua Chem and Thomasville Payroll Development Authority (entered into in
connection the issuance of the Thomasville Payroll Development Authority
$3,000,000 Adjustable Rate Industrial Development Revenue Bonds Series 1995, due
on October 1, 2007) (the "Thomasville IRBs") and the release of all Liens in
connection therewith, in form and substance satisfactory to the Purchasers.
3.23 PAYMENT OF MONROE INDEBTEDNESS AND RELEASE OF LIENS. The
Company shall have delivered evidence of payment in full into escrow of the
Indebtedness under the Loan Agreement, dated September 1, 1995, between Old
Aqua-Chem and the City of Monroe, Wisconsin (entered into in connection the
issuance of the City of Monroe, Wisconsin $1,900,000 Adjustable Rate Industrial
Development Revenue Bonds Series 1995, due on September 1, 2005) (the Monroe
IRBs") and the release of all Liens in connection therewith, in form and
substance satisfactory to the Purchasers.
3.24 TERMINATION OF 1982 STOCKHOLDERS' AGREEMENT. The Company
shall have delivered evidence of the termination of the Stockholders' Agreement,
dated February 1, 1982, between Lyonnaise and Gestra, as amended, in form and
substance satisfactory to the Purchasers.
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3.25 TERMINATION OF SPECIAL SECURITY AGREEMENT. The Company
shall have delivered evidence of the termination of the Special Security
Agreement, dated June 20, 1986, between Lyonnaise des Eaux, Lyonnaise, Rezayat
Trading Company, Dexin Investments N.V., Gestra, Old Aqua-Chem and the United
States Department of Defense, as amended, in form and substance satisfactory to
the Purchasers.
3.26 TERMINATION OF INTERIM MANAGEMENT AGREEMENT. The Company
shall have delivered evidence of the termination of the Interim Management
Agreement, made July 8, 1996, between the Company, X. Xxxxxx Management, Inc.
and Xxxxxx, as amended, in form and substance satisfactory to the Purchasers.
3.27 AMENDMENT TO EMPLOYMENT AGREEMENTS. The Company shall
have delivered evidence of execution and delivery by the Company and each of
Barton, McNally, Xxxxxxx and Xxxxxx of an amendment to their respective
employment agreements, as in effect on the Closing Date, with Old-Aqua Chem, in
form and substance satisfactory to the Purchasers.
3.28 ADOPTION OF 1997 STOCK OPTION PLAN. The Company shall
have delivered evidence of the adoption of the Aqua-Chem, Inc. 1997 Stock Option
Plan, in form and substance satisfactory to the Purchasers.
ARTICLE 3A
CONDITIONS TO THE RESPECTIVE OBLIGATIONS OF THE PURCHASERS
TO PURCHASE THE SECURITIES
The obligation of the Purchasers to perform any of their
obligations hereunder are subject to the satisfaction as determined by, or
waived by, the Purchasers of the following conditions on or before the date
hereof.
3A.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the LLC, the Company and XX-Xxxxxx contained in Article 5 hereof
shall be true and correct at and as of the Closing Date and as of the date
hereof as if made at and as of such dates.
3A.2 COMPLIANCE WITH THIS AGREEMENT. The LLC, the Company and
XX-Xxxxxx shall have performed and complied with all of its agreements and
conditions set forth or contemplated herein that are required to be performed or
complied with by the LLC, the Company or XX-Xxxxxx on or before the date hereof.
3A.3 CERTIFICATES.
(a) The Purchasers shall have received a certificate
from the LLC, dated the date hereof and signed by a manager of the LLC
certifying (a) that the attached copies of the Certificate of Organization of
the Company, together with its Operating Agreement, which, among
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other things, approves this Agreement and the other Transaction Documents to
which the LLC is a party and the transactions contemplated hereby and thereby,
are all true, complete and correct and remain unamended and in full force and
effect, and (b) as to the incumbency and specimen signature of each member and
manager of the LLC executing any Transaction Document to which the LLC is a
party or any other document delivered in connection herewith on behalf of the
LLC.
(b) The Purchasers shall have received a certificate
from each of the Company and XX-Xxxxxx, dated the date hereof and signed by the
Secretary or an Assistant Secretary of each of the Company and XX-Xxxxxx,
certifying (a) that the attached copies of the Certificate of Incorporation,
By-Laws and the resolutions of the Board of Directors of each of the Company and
XX-Xxxxxx approving the Agreement and the other Transaction Documents to which
the Company is a party and the transactions contemplated hereby and thereby, are
all true, complete and correct and remain unamended and in full force and
effect, and (b) as to the incumbency and specimen signature of each officer of
each of the Company and XX-Xxxxxx executing any Transaction Document to which
the Company or XX-Xxxxxx is a party or any other document delivered in
connection herewith on behalf of the Company or XX-Xxxxxx.
3A.4 DOCUMENTS. The Purchasers shall have received true,
complete and correct copies of such agreements, schedules, exhibits,
certificates, documents, financial information and filings as they may request
in connection with or relating to the transactions contemplated hereby, all in
form and substance satisfactory to the Purchasers.
3A.5 PURCHASE OF SECURITIES PERMITTED BY APPLICABLE LAWS. The
acquisition of and payment for the Securities acquired by the Purchasers
hereunder and the consummation of the transactions contemplated hereby and by
the Transaction Documents (a) shall not be prohibited by any Requirement of Law,
(b) shall not subject the Purchasers to any penalty or other onerous condition
under or pursuant to any Requirement of Law, and (c) shall be permitted by all
Requirements of Law to which the Purchasers or the transactions contemplated by
or referred to herein or in the Transaction Documents are subject; and the
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3A.6 OPINION OF COUNSEL. The Purchasers shall have received an
opinion of outside counsel to the LLC, the Company and its Subsidiaries, dated
as of the date hereof, relating to the transactions contemplated by or referred
to herein, in form and substance acceptable to the Purchasers.
3A.7 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and
proceedings hereunder and all agreements, schedules, exhibits, certificates,
financial information, filings and other documents required to be delivered by
the LLC and the Company and each of its Subsidiaries hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall have been in form and substance acceptable to Xxxxxxxx
Xxxxx Singer
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& Xxxxxxxxx, LLP, counsel to the Purchasers, in its reasonable judgment
(including, without limitation, the opinions of counsel referred to in Sections
3A.6 hereof).
3A.8 CONSENTS AND APPROVALS. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons in respect of all Requirements of Law
and with respect to those Contractual Obligations of the LLC, or the Company or
any of its Subsidiaries necessary, desirable, or required in connection with the
execution, delivery or performance (including, without limitation, the payment
of interest on the Note and the issuance of Common Stock upon the exercise of
the Warrant) by the LLC, or the Company or any of its Subsidiaries, or
enforcement against the LLC, or the Company or any of its Subsidiaries, of the
Transaction Documents to which each is a party shall have been obtained and be
in full force and effect, and the Purchasers shall have been furnished with
appropriate evidence thereof, and all waiting periods shall have lapsed without
extension or the imposition of any conditions or restrictions.
3A.9 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the
date hereof any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirement of Law which, in the judgment of the Purchasers, would prohibit the
consummation of the transactions contemplated under the Transaction Documents or
subject the Purchasers to any penalty or other onerous condition under or
pursuant to any Requirement of Law if the transactions contemplated under the
Transaction Documents were to be consummated.
3A.10 SENIOR CREDIT FACILITY. The modification of the Senior
Credit Facility shall have been consummated on terms and conditions satisfactory
to the Purchasers.
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS
OF THE LLC, THE COMPANY AND XX-XXXXXX
The obligations of the Company to issue and sell the
Securities (and the obligation of XX-Xxxxxx to issue and sell the Note), and the
obligations of the Company and the LLC to perform their other obligations
hereunder relating thereto were subject to the satisfaction as determined by, or
waived by, the LLC and the Company of the following conditions on or before the
Closing Date:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in Article 6 hereof shall be true and
correct at and as of the Closing Date as if made at and as of such date.
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4.2 COMPLIANCE WITH THIS AGREEMENT. The Purchasers shall have
performed and complied with all of their respective agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by the Purchasers on or before the Closing Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The LLC, the Company and XX-Xxxxxx hereby jointly and
severally represent and warrant, as of the Closing Date and as of the date
hereof, to the Purchasers as follows:
5.1 EXISTENCE AND POWER. Each of the LLC, and the Company and
each of its Subsidiaries: (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (b) has all
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged; (c) is, duly qualified,
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to do so
would not have a material adverse effect on the Condition of the Company; and
(d) has the power and authority to execute, deliver and perform its obligations
under each Transaction Document to which it is or will be a party and to borrow
hereunder.
5.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each of the LLC, the Company and XX-Xxxxxx of each
Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby, including without limitation the
issuance of the Securities: (a) has been duly authorized by all necessary
action; (b) does not contravene the terms of (i) the LLC's Certificate of
Organization, or any amendment thereof, (ii) the Company's Certificate of
Incorporation, By-laws or any amendment thereto, or any such documents of any of
the Company's Subsidiaries; and (c) will not violate, conflict with or result in
any breach or contravention of or the creation of any Lien under, any
Contractual Obligation of any of the LLC, or the Company or any of its
Subsidiaries or any Requirement of Law applicable to any of the LLC, or the
Company or any of its Subsidiaries.
5.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any Requirement of Law, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by (including, without limitation, the payment of
interest on the Note and the issuance of Common Stock upon the exercise of the
Warrant), or enforcement against, any of the LLC, or the Company or its
Subsidiaries of the Transaction Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby, other than the
expiration of the waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976.
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5.4 BINDING EFFECT. Each of the Transaction Documents to which
it is a party has been duly executed and delivered by the LLC, the Company or
XX-Xxxxxx, as the case may be, and constitutes the legal, valid and binding
obligation of the LLC, the Company or XX-Xxxxxx, as the case may be, enforceable
against the LLC, the Company or XX-Xxxxxx, as the case may be, in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and
performance of the Transaction Documents nor the issuance of or performance of
the terms of the Securities will violate any Requirement of Law or any
Contractual Obligation of the LLC or the Company or any of its Subsidiaries.
Neither the LLC nor the Company (nor any of its Subsidiaries) has previously
entered into any agreement which is currently in effect or to which the LLC or
the Company or any of its Subsidiaries is currently bound, granting any rights
to any Person which are inconsistent with the rights to be granted by the LLC or
the Company or any of its Subsidiaries, as the case may be, in the Transaction
Documents.
5.6 LITIGATION. Except as set forth on Schedule 5.6, there are
no material legal actions, suits, proceedings, claims or disputes pending or
threatened, at law, in equity, in arbitration or before any Governmental
Authority against or affecting the LLC, or the Company or any of its
Subsidiaries (or, as applicable, to the Company's knowledge, any of their
respective shareholders, directors, officers, employees or agents). No
injunction, writ, temporary restraining order, decree or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of the Transaction
Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.7,
the LLC, and the Company and each of its Subsidiaries are in compliance with all
Requirements of Law except where such non-compliance would not have a material
adverse effect on the Condition of the Company.
5.8 NO DEFAULT OR BREACH. No event has occurred and is
continuing or would result from the incurring of obligations by the LLC, or the
Company or any of its Subsidiaries under the Transaction Documents which
constitutes or, with the giving of notice or lapse of time or both, would
constitute an Event of Default. Neither the LLC, nor the Company (nor any of its
Subsidiaries) is in default under or with respect to any Contractual Obligation
in any material respect.
5.9 TITLE TO PROPERTIES.
(a) The Company and/or its Subsidiaries have good and
marketable title in and to all real property reflected on the Pro Forma Balance
Sheet or used in connection with their business free and clear of all liens,
encumbrances, liabilities, claims, rights and restrictions except as provided on
Schedule 5.9(a).
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(b) The Company and/or its Subsidiaries hold all of
the right, title and interest of the tenant under the leases reflected on the
Pro Forma Balance Sheet or used in connection with the business of the Company
free and clear of all liens, encumbrances, liabilities, claims, rights and
restrictions except as provided on Schedule 5.9(b) or except where the failure
to do so would not have a material adverse effect on the Condition of the
Company.
5.10 USE OF REAL PROPERTY. Except as set forth on Schedule
5.10, the owned and leased real properties reflected on the Pro Forma Balance
Sheet or used in connection with the business of the Company and its
Subsidiaries, are used and operated in compliance and conformity with all
applicable leases, contracts, commitments, licenses and permits, except to the
extent that the failure so to conform would not materially adversely affect the
Condition of the Company; neither the Company nor any of its Subsidiaries has
received notice of violation of any applicable zoning or building regulation,
ordinance or other law, order, regulation or requirement relating to the
operations of either the Company or any of its Subsidiaries; and there is no
such violation except to the extent that such violation would not have a
material adverse effect on the Condition of the Company. Except as set forth on
Schedule 5.10, all structures, improvements and other buildings that are owned
or covered by leases reflected on the Pro Forma Balance Sheet or used in
connection with the business of the Company and its Subsidiaries, comply with
all applicable ordinances, codes, regulations and requirements (except where non
compliance would not have a material adverse effect on the Condition of the
Company), have a valid and subsisting certificate of occupancy for their present
use (except where the failure to obtain such a certificate of occupancy would
not have a material adverse effect on the Condition of the Company), and neither
the Company nor any Subsidiary thereof has received any written notice from any
Governmental Authority which is still outstanding of any failure to obtain any
certificate, permit, license or approval with respect to the real property, or
any intended revocation, modification or cancellation of same, and no law or
regulation presently in effect or condition precludes or materially restricts
continuation of the present use of such properties. The Company enjoys peaceful
and undisturbed possession under each of the leased real properties reflected on
the Pro Forma Balance Sheet or used in connection with the business of the
Company and its Subsidiaries except where the failure to enjoy such possession
would not have a material adverse effect on the Condition of the Company. There
is no default on the part of the Company or any of its Subsidiaries or event or
condition which with notice or lapse of terms, or both, would constitute a
default on the part of the Company or any of its Subsidiaries under any such
lease except where such default would not have a material adverse effect on the
Condition of the Company. There are no material service contracts, maintenance
contracts, union contracts, concession agreements, licenses, agency agreements
or any other written contracts or agreements affecting the real property or the
leased property reflected on the Pro Forma Balance Sheet or used in connection
with the business of the Company and its Subsidiaries, or the operation thereof,
other than those listed on Schedule 5.10, except for contracts or agreements
(oral or written) which are cancelable on no more than thirty (30) days' notice.
There are no pending or, to the knowledge of the Company, threatened
condemnation or eminent domain proceedings that would affect any part of the
real property or the leased property reflected on the Pro Forma Balance Sheet or
used in connection with the business of the Company and its Subsidiaries. There
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against the real property or
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the leased property on the Pro Forma Balance Sheet or used in connection with
the business of the Company and its Subsidiaries, at law or in equity, before
any federal, state, municipal or governmental department, commission, board,
bureau, agency or instrumentality which would in any way affect title to such
real property or the leased property.
5.11 TAXES.
(a) Each of the Company and its Subsidiaries has
filed all Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by the Company or
any of its Subsidiaries (whether or not shown on any Tax Return) have been paid
or reserved for on the Company's Financial Statements. The Company and all of
its Subsidiaries have timely filed all Tax Returns, or currently are the
beneficiaries of valid extensions of time within which to file any Tax Return
except as described on Schedule 5.11. No claim has ever been made by a
Governmental Authority in a jurisdiction where the Company or any of
Subsidiaries does not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction which claim
has not currently been resolved, except as described on Schedule 5.11. There are
no Liens on any of the assets of the Company or any of its Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) Except as set forth on Schedule 5.11, each of the
Company and its Subsidiaries has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractors, creditor, stockholder, or other third party.
(c) Neither the Company nor its Subsidiaries
reasonably expects any Governmental Authority to assess any additional Taxes for
any period for which Tax Returns have been filed. Except as set forth on
Schedule 5.11, there is no dispute or claim concerning any Tax Liability of the
Company or any of its Subsidiaries either (i) claimed or raised by any
Governmental Authority in writing or (ii) as to which the Company has knowledge
based upon personal contact with any agent of such authority. The Company has
made available to the Purchasers correct and complete copies of all federal
income Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by any of the Company and its Subsidiaries since December
31, 1992.
(d) Except as listed on Schedule 5.11, none of the
Company and its Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) Neither the Company nor any of its Subsidiaries
has filed a consent under Code Section 341(f) concerning collapsible
corporations. Neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Code Section 280G. Neither the Company nor any
of its Subsidiaries has been a United
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States real property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Each of the Company and its Subsidiaries has disclosed on its
federal income Tax Returns all positions taken therein that could reasonably
give rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6621. Except as set forth on Schedule 5.11, immediately
following the Aqua-Chem Merger, neither the Company nor any of its Subsidiaries
shall be a party to any Tax allocation or sharing agreement, and neither the
Company nor any of its Subsidiaries shall be a member of an Affiliated Group
filing a consolidated federal income Tax Return other than a group consisting
of the Company and its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries
has any liability for the Taxes of any person or entity other than the Company
and its Subsidiaries (i) under Reg. Section 1.1502-6 (or any similar provision
of state, local or foreign law), (ii) as a transferee or successor, (iii) by
contract, or (iv) otherwise.
(g) To the Company's knowledge, no amounts will now
or in the future be due or owing by the Company or the LLC or any of their
respective Subsidiaries or Affiliates under the Tax Reporting and
Indemnification Agreement, dated as of the date hereof, among Lyonnaise, Gestra,
Old Aqua-Chem, A-C Acquisition Corp. and the LLC.
5.12 FINANCIAL CONDITION.
(a) The Company has furnished the Purchasers with
true and complete copies of (i) the audited consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 1994, December 31, 1995 and
December 31, 1996 and the related consolidated statements of income,
Stockholders equity and cash flow, together with the notes thereto, of the
Company and its Subsidiaries for the years ended December 31, 1994, December 31,
1995 and December 31, 1996 (the "AUDITED FINANCIAL STATEMENTS"), and (ii) the
unaudited consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of June 30, 1997 and the related consolidated and consolidating
statements of income, Stockholders equity and cash flow, together with the notes
thereto, of the Company and its Subsidiaries for the six (6) month period ended
June 30, 1997 (the "1997 FINANCIAL STATEMENTS"). The Audited Financial
Statements and the 1997 Financial Statements fairly present, in all material
respects, the financial position of the Company and each of its Subsidiaries as
of the respective dates thereof, and the results of operations and cash flows of
the Company and each of its Subsidiaries as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved, except as otherwise set forth in the notes
thereto and subject, in the case of the 1997 Financial Statements, to normal
year-end audit adjustments.
(b) The Pro Forma Balance Sheet delivered to the
Purchasers sets forth the assets and liabilities of the Company and each of its
Subsidiaries on a pro forma consolidated basis after taking into account the
consummation of the transactions contemplated in this Agreement as of the
Closing Date in question. The Pro Forma Balance Sheet has been prepared by the
Company in accordance with GAAP, consistently applied, and fairly presents in
all material respects the assets
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and liabilities of the Company and its Subsidiaries on a consolidated basis,
reflecting the consummation of the transactions contemplated in this Agreement,
based on the assumptions set forth therein as of the Closing Date, and subject
to normal year-end audit adjustments.
(c) The projections of the Company and its Subsidiaries
on a consolidated basis heretofore delivered to the Purchasers (i) were
prepared by the Company in the ordinary course of its operations consistent
with past practice, (ii) are the most current projections prepared by the
Company relating to the periods covered thereby, and (iii) are based on
assumptions which were reasonable when made and such assumptions and projections
are reasonable on the date hereof. Neither the Company not any of its
Subsidiaries have delivered to any Person any later dated projections.
5.13 ERISA -- PROHIBITED TRANSACTIONS. The execution and
delivery of the Transaction Documents, the purchase and sale of the Securities
hereunder and the consummation of the transactions contemplated hereby and
thereby will not result in any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code.
5.14 DISCLOSURE.
(a) Agreement and Other Documents. This Agreement,
together with all exhibits and schedules hereto, and the agreements,
certificates and other documents furnished to the Purchasers by the Company and
its Subsidiaries at the Closing, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading.
(b) Material Adverse Effects. There is no fact known
to the Company, which the Company has not disclosed to the Purchasers in writing
which materially adversely affects or, insofar as the Company can reasonably
foresee, could materially adversely affect, the Condition of the Company or the
ability of the Company or any of its Subsidiaries to perform their obligations
under the Transaction Documents, or any agreement or other document contemplated
thereby to which it is a party.
5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1996, except as set forth on Schedule 5.15, neither the Company nor any of its
Subsidiaries has (i) issued any stock, bonds or other corporate securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent), other
than in the ordinary course of business, in excess of $10,000, (iii) discharged
or satisfied any lien or incurred or paid any obligation or liability (absolute
or contingent), other than in the ordinary course of business, in excess of
$10,000, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, (vi) sold, assigned or transferred any of its tangible assets, or
canceled any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) suffered any losses of property, or waived any rights of substantial
value, (ix)
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suffered any adverse change in the Condition of the Company or its Subsidiaries,
(x) expended any material amount, granted any bonuses or extraordinary salary
increases, (xi) entered into any transaction not in the ordinary course of
business involving consideration in excess of $50,000 except as otherwise
contemplated hereby or (xii) entered into any agreement or transaction, or
amended or terminated any agreement, with an Affiliate. To the knowledge of the
Company, no adverse change in the Condition of the Company or its Subsidiaries
is threatened or reasonably likely to occur.
5.16 ENVIRONMENTAL MATTERS. Except as described on Schedule
5.16:
(a) The property, assets and operations of the Company
and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws; there are no Hazardous Materials stored or otherwise
located in, on or under any of the property or assets of the Company or its
Subsidiaries including the groundwater except in compliance with applicable
Environmental Laws.
(b) None of the property, assets or operations of the
Company or its Subsidiaries is the subject of any Federal, state or local
investigation evaluating whether (i) any remedial action is needed to respond to
a release or threatened release of any Hazardous Materials into the environment
or (ii) any release or threatened release of any Hazardous Materials into the
environment is in contravention of any Environmental Law.
(c) Neither the Company nor its Subsidiaries has
received any notice or claim, nor are there pending, threatened or reasonably
anticipated, lawsuits or proceedings against any of them, with respect to
violations of an Environmental Law or in connection with the presence of or
exposure to any Hazardous Materials in the environment or any release or
threatened release of any Hazardous Materials into the environment, and neither
the Company nor its Subsidiaries is or was the owner or operator of any property
which (i) pursuant to any Environmental Law has been placed on any list of
Hazardous Materials disposal sites, including, without limitation, the "NATIONAL
PRIORITIES LIST" or "CERCLIS LIST," (ii) has, or had, any subsurface storage
tanks located thereon, or (iii) has ever been used as or for a waste disposal
facility, a mine, a gasoline service station or, other than for petroleum
substances stored in the ordinary course of business, a petroleum products
storage facility.
(d) Neither the Company nor any of its Subsidiaries
has any present or contingent liability in connection with the presence either
on or off the property or assets of the Company or its Subsidiaries of any
Hazardous Materials in the environment or any release or threatened release of
any Hazardous Materials into the environment.
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. The Company is
not an "investment company" within the meaning of the Investment Company Act of
1940, as amended. Neither the Company nor its Subsidiaries is subject to
regulation under the Public Utility Holding
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Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce
Act, or any federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.18 SUBSIDIARIES.
(a) As of the Closing Date and the date hereof after
giving effect to the transactions contemplated hereby and in the other
Transaction Documents, including without limitation, the Contribution
Agreement, Schedule 5.18 sets forth a complete and accurate list of all of the
Subsidiaries of the LLC together with their respective jurisdictions of
incorporation or organization. Except as set forth on Schedule 5.18, each such
Subsidiary is wholly owned by the LLC. All of the outstanding shares of capital
stock of the Subsidiaries that are corporations are validly issued, fully paid
and nonassessable. Except as set forth on Schedule 5.18, as of the Closing Date
and as of the date hereof, all of the outstanding shares of capital stock of,
or other ownership interests in, each of the Subsidiaries are owned by the LLC
or by a wholly owned Subsidiary free and clear of any Liens, claims, charges or
encumbrances. Except as set forth on Schedule 5.18, no Subsidiary has
outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating the Subsidiary to
issue, transfer or sell any securities of the Subsidiary.
(b) Except for the Subsidiaries of the LLC set forth
in Schedule, the LLC does not own of record or beneficially, directly or
indirectly, (i) any shares of outstanding capital stock or securities
convertible into capital stock of any other corporation, and (ii) any equity,
voting or participating interest in any limited liability company, partnership,
joint venture or other non-corporate business enterprises.
(c) As of the Closing Date after giving effect to the
transactions contemplated hereby and in the other Transaction Documents,
including without limitation, the Merger Transaction Documents, Schedule 5.18
sets forth a complete and accurate list of all of the Subsidiaries of the
Company together with their respective jurisdictions of incorporation or
organization. Except as set forth on Schedule 5.18, each such Subsidiary is
wholly owned by the Company. All of the outstanding shares of capital stock of
the Subsidiaries that are corporations are validly issued, fully paid and
nonassessable (subject to Section 180.0622 of the Wisconsin Statutes). Except as
set forth on Schedule 5.18, as of the Closing Date and as of the date hereof and
the date hereof, all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Subsidiaries are owned by the Company or by
a wholly owned Subsidiary free and clear of any Liens, claims, charges or
encumbrances. No Subsidiary has outstanding options, warrants, subscriptions,
calls, rights, convertible securities or other agreements or commitments
obligating the Subsidiary to issue, transfer or sell any securities of the
Subsidiary.
(d) Except for the Subsidiaries of the Company set
forth in Schedule 5.18, the Company does not own of record or beneficially,
directly or indirectly, (i) any shares of outstanding capital stock or
securities convertible into capital stock of any other corporation, and (ii)
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any equity, voting or participating interest in any limited liability company,
partnership, joint venture or other non-corporate business enterprises.
5.19 CAPITALIZATION.
(a) As of the Closing Date and as of the date hereof
after giving effect to the transactions contemplated hereby and in the other
Transaction Documents, including, without limitation, the Contribution
Agreement, the LLC shall have authorized: 1,742.55 Class A-1 Membership Units,
510,000 Class A-2 Membership Units, 176,471 Class B Membership Units, 722.247
Class C-1 Membership Units, 101.245 Class D-1 Membership Units, 118.086 Class
E-1 Membership Units, 37.09 Class F-1 Membership Units, 33.782 Class G-1
Membership Units, 349,500 Class C-2 Membership Units, 49,000 Class D-2
Membership Units, 57,200 Class E-2 Membership Units, 18,000 Class F-2 Membership
Units, and 16,300 Class G-2 membership Units. All of such Membership Units are
issued and outstanding. The Company has no Membership or other equity interests
held in treasury. All outstanding equity interests of the LLC are validly
issued, fully paid and nonassessable. Schedule 5.19 (a) provides an accurate
list of (A) all members owning the issued and outstanding equity interests in
the LLC, together with the number held by each immediately following the
Closing, and (B) all of the holders of warrants, options, rights and securities
convertible into equity interests in the LLC, together with the number of equity
interests in the LLC to be issued upon the exercise or conversion of such
warrants, options, rights and convertible securities.
(b) On the Closing Date and as of the date hereof,
except for the equity interests and securities set forth in Sections 5.19(a) and
5.19(c), there will be no outstanding securities convertible into or
exchangeable for equity interests in the LLC or any of its Subsidiaries or
options, warrants or other rights to purchase or subscribe to equity interests
in the LLC or any of its Subsidiaries or contracts, commitments, agreements,
understandings or arrangements of any kind to which the LLC or any of its
Subsidiaries is a party relating to the issuance of any equity interests in the
LLC or any of its Subsidiaries, any such convertible or exchangeable securities
or any such options, warrants or rights.
(c) As of the Closing Date and as of the date hereof,
after giving effect to the transactions contemplated hereby and in the
Transaction Documents, including without limitation, the Merger Transaction
Documents, the Company shall have authorized: 130 shares of Series A Preferred
Stock, par value $.01 per share ("SERIES A PREFERRED STOCK"), all of which are
issued and outstanding; 130 shares of Series B Redeemable Preferred Stock, par
value $.01 per share (the "SERIES B PREFERRED STOCK"), all of which are issued
and outstanding; 6,000 shares of Series C Redeemable Preferred Stock, 2,755 of
which are issued and outstanding; and 2,000,000 shares of Common Stock, of which
1,000,000 shares are issued and outstanding. 61,919 shares of Common Stock are
reserved for issuance pursuant to the exercise of stock options issuable in
accordance with the terms of one or more stock option plans of the Company,
which plans has been approved by the Board of Directors and by WEP and WSDF (the
"MANAGEMENT OPTIONS"). The Company has no shares of capital stock held in
Treasury. The Warrant, the Management Options and all outstanding
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of capital stock of the Company have been duly authorized by all necessary
corporate action. All outstanding shares of capital stock of the Company are,
and the shares of Common Stock issuable upon the exercise of the Warrant and the
Management Options, when issued in accordance with the terms thereof, will be
validly issued, fully paid and, subject to the provisions of Section 180.0622 of
the Wisconsin Statutes, non-assessable. Schedule 5.19(b) provides an accurate
list of (A) all stockholders owning the issued and outstanding Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Common
Stock, together with the number held by each immediately following the Closing,
and (B) all the holders of warrants, options, rights and securities convertible
into Common Stock, together with the number of shares of Common Stock to be
issued upon the exercise or conversion of such warrant, options, rights and
convertible securities.
(d) On the Closing Date and as of the date hereof,
except for the Warrant and Management Options, there will be no outstanding
securities convertible into or exchangeable for capital stock of the Company or
any of its Subsidiaries or options, warrants or other rights to purchase or
subscribe to capital stock of the Company or any of its Subsidiaries or
contracts, commitments, agreements, understandings or arrangements or any kind
to which the Company or any of its Subsidiaries is a party relating to the
issuance of any capital stock of the Company or any of its Subsidiaries, any
such convertible or exchangeable securities or any such options, warrants or
rights.
5.20 PRIVATE OFFERING. No form of general solicitation or
general advertising was used by the Company, its Subsidiaries, or its or their
representatives in connection with the offer or sale of the Securities. No
registration of the Securities or Common Stock issuable upon the exercise of the
Warrant pursuant to the provisions of the Securities Act or the state securities
or "blue sky" laws will be required by the offer, sale or exercise of the
Warrant. The Company agrees that neither it, nor anyone acting on its behalf,
will offer or sell the Securities or any other security so as to require the
registration of the Securities or Common Stock issuable upon the exercise of the
Warrant or Common Stock issuable upon conversion of the Shares pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
unless such Securities or Common Stock issuable upon the exercise of the Warrant
or Common Stock issuable upon conversion of the Shares are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. Except as provided in
Section 2.4 or as set forth on Schedule 5.21 there are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection with the
transactions contemplated hereby or in any other Transaction Documents based on
any agreement, arrangement or understanding with the Company or any of its
Subsidiaries, or any action taken by any such entity. Any such brokerage
commissions, finders' fees or similar fees or commissions set forth on Schedule
5.21 shall be paid by the Company.
5.22 LABOR RELATIONS. Neither the Company nor any of its
Subsidiaries has committed or is engaged in any unfair labor practice. Except as
set forth in Schedule 5.22, there is
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(a) no unfair labor practice complaint pending or threatened against the Company
or any of its Subsidiaries before the National Labor Relations Board and no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements is so pending or threatened, (b) no strike, labor dispute,
slowdown or stoppage pending or threatened against the Company or any of its
Subsidiaries, (c) no union representation question existing with respect to the
employees of the Company or any of its Subsidiaries and no union organizing
activities are taking place, and (d) no employment contract with any employee or
independent contractor of the Company or any Subsidiary. The Company and each
Subsidiary is in compliance in all material respects with all federal, state or
other applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours. Except as set forth on Schedule
5.22, neither the Company, nor any of its Subsidiaries, is a party to any
collective bargaining agreement.
5.23 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans and Liabilities. Neither
the Company nor any ERISA Affiliate has contributed to nor has any actual or
contingent, direct or indirect, liability in respect of any employee benefit
plan (as defined in Section 3(3) of ERISA) or other employee benefit arrangement
(collectively, the "PLANS"), within the five-consecutive-year period immediately
preceding the first day of the year in which the Closing Date occurs other than
those liabilities with respect to such Plans specifically described on Schedule
5.23(a). Schedule 5.23(a) sets forth all Plans. Except as set forth on Schedule
5.23(a), at no time during such five year period has the Company or any ERISA
Affiliate participated in or contributed to any Multiemployer Plan, nor during
such period has the Company or any ERISA Affiliate had an obligation to
participate in or contribute to any such Multiemployer Plan. No agreement
subject to section 4204 of ERISA has been entered into in connection with the
transactions contemplated in this Agreement. There are no outstanding
liabilities of the Company or any ERISA Affiliate to any employee benefit plans
previously maintained by the Company or any ERISA Affiliate, and the Company is
not aware of any potential liabilities in connection therewith. There are no
actions, suits or claims, other than for benefits in the ordinary course,
pending or threatened against the Company or the Plans which might subject the
Company to any material liability. The Company has delivered to the Purchasers
accurate and complete copies of all of the Plans.
(b) Plan Compliance. The Company and its Subsidiaries
are in compliance in all material respects with all reporting, disclosure and
registration requirements applicable to it under the Code, as amended (the
"Code"), ERISA and all federal and state securities laws, and Department of
Labor, Internal Revenue Service and Commission rules and regulations promulgated
thereunder, with respect to all of the Plans, and is not subject to any
liability, whether asserted or not, for any penalties to any Governmental
Authority for late filing of any return, report or other governmental filing. No
civil or criminal action brought pursuant to the provisions of Title I, Subtitle
B, Part 5 of ERISA or any other federal or state law is pending or threatened
against any fiduciary of the Plans. No Plan, or any fiduciary thereof, has been,
or is currently, the direct or indirect subject of an audit, investigation or
examination by any Governmental Authority. All of the Plans comply currently,
and have complied in the past, both as to form and operation, in all
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material respects, with their terms and with all Requirements of Law. Each of
the Plans maintained by Company or a Subsidiary that is an "employee benefit
pension plan" (within the meaning of Section 3(2)(A) of ERISA) has obtained a
favorable determination (covering all changes or amendments applicable under
Requirements of Law) from the Internal Revenue Service as to its qualification
under Sections 401(a) and 501(a) of the Code or is within the remedial amendment
period (as provided in Section 401(b) of the Code) for making any required
changes or amendments, and nothing has occurred before or after the date of each
such determination letter a would adversely affect such qualification. All
amounts that are currently owing to plan participants, or contributions required
to be made to the Plans have been timely paid or contributed with respect to all
periods prior to the date hereof or provided for by adequate reserves on the Pro
Forma Balance Sheet
(c) Prohibited Transactions. Except as set forth on
Schedule 5.23(c), no Plan, nor any related trust, nor the Company, nor any
Subsidiary thereof, nor any trustee, administrator or other "party in interest"
or "disqualified person" (within the meaning of Section 3(14) of ERISA or
Section 4975(e)(2) of the Code, respectively) with respect to the Plans, has
engaged in any nonexempt "prohibited transaction" (within the meaning of Section
406 of ERISA or Section 4975(c) of the Code, respectively) with respect to the
participation of Company or its Subsidiaries therein, which could subject any of
the Plans or related trusts, or any trustee, administrator or other fiduciary of
any such Plan, or the Company, its Subsidiaries or the Purchasers, or any other
party dealing with the Plans, to the penalties or excise tax imposed on
prohibited transactions by Section 502 of ERISA or Section 4975 of the Code
which could have a material adverse effect on the Condition of the Company.
(d) COBRA. Except as set for in Schedule 5.23(d), (i)
the Company and each of its Subsidiaries has complied with the continuation
coverage requirements of group health plans provided in Section 4980B of the
Code, Sections 601 et seq. of ERISA, the Family and Medical Leave Act of 1994,
and the regulations promulgated thereunder, and (ii) to the knowledge of the
Company, there are no individual claims by any employee of the Company or any of
its Subsidiaries for any illness, medical condition or accident which is
expected, individually or in the aggregate with all other such illnesses,
medical conditions or accidents involving other employees of the company or its
Subsidiaries to have a material adverse effect on the Condition of the Company
within the twelve (12)-month period following the Closing Date.
(e) Miscellaneous. Except as set forth on Schedule
5.23(e), neither the Company, its Subsidiaries, nor any Plan provides for or
promises retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of the Company or any of its
Subsidiaries, other than continuation coverage required by section 4980B of the
Code. Neither the Company nor any of its Subsidiaries is a party to or obligated
under any agreement, plan, contract or other arrangements that will result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of section 280G of the Code.
5.24 PATENTS, TRADEMARKS, ETC. The Company and its
Subsidiaries own or are licensed or otherwise have the right to use all patents,
trademarks, service marks, trade names,
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copyrights, licenses, franchises and other rights (collectively, the "RIGHTS")
being used to conduct their businesses as now operated (a complete list of
licenses or other contracts relating to the Company's and its Subsidiaries'
Rights and of registrations of patents, trademarks, service marks and copyrights
including any applications therefor constituting such Rights, is attached hereto
as Schedule 5.24). No Right or product, process, method, substance or other
material presently sold by or employed by the Company or any of its
Subsidiaries, or which the Company or any of its Subsidiaries contemplates
selling or employing, infringes upon the Rights that are owned by others except
where such infringement would not have a material adverse effect on the
condition of the Company. No litigation is pending and no claim has been made
against the Company or any of its Subsidiaries or is threatened, contesting the
right of the Company or any of its Subsidiaries to sell or use any Right or
product, process, method, substance or other material presently sold by or
employed by the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries has asserted any claim of infringement, misappropriation or
misuse by any Person of any Rights owned by the Company or any of its
Subsidiaries or to which they have exclusive use. Except as set forth on
Schedule 5.24, no employee, officer or consultant of the Company or any of its
Subsidiaries has any proprietary, financial or other interest in any Rights
owned or used by the Company or its Subsidiaries in their businesses. Except as
set forth on Schedule 5.24, neither the Company nor any of its Subsidiaries has
any obligation to compensate any Person for the use of any Rights and neither
the Company nor any of its Subsidiaries has granted any license or other right
to use any of the Rights of the Company or it Subsidiaries, whether requiring
the payment of royalties or not. The Company and its Subsidiaries have taken all
reasonable measures to protect and preserve the security, confidentiality and
value of their Rights, including trade secrets and other confidential
information. All material trade secrets and other confidential information of
the Company and its Subsidiaries are not part of the public domain or knowledge,
nor have they been used, divulged or appropriated for the benefit of any Person
other than the Company or its Subsidiaries or otherwise to the detriment of the
Company or its Subsidiaries. No employee or consultant of the Company or its
Subsidiaries has used any material trade secrets or other material confidential
information of any other Person in the course of his work for the Company or its
Subsidiaries. No patent, invention, device, principle or any statute, law, rule,
regulation, standard or code is pending or proposed which would materially
restrict the Company's ability to use any of the Rights.
5.25 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on
Schedule 5.25, no officer or director, stockholder or other security holder
(other than Lyonnaise and Gestra) of the Company or any of its Subsidiaries: (a)
owns, directly or indirectly, any interest in (excepting less than 5% stock
holdings for investment purposes in securities of publicly held and traded
companies), or is an officer, director, employee or consultant of, any Person
that is, or is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent or customer of, or lender to or borrower from, the
Company or any of its Subsidiaries; (b) owns, directly or indirectly, in whole
or in part, any tangible or intangible property that the Company or any of its
Subsidiaries used in the conduct of business; or (c) has any cause of action or
other claim whatsoever against, or owes or has advanced any amount to, the
Company or any of its Subsidiaries, except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements existing on the date hereof.
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5.26 TRADE RELATIONS. Except for the Xxxx Deere flywheel and
pulley business, there exists no actual or threatened termination, cancellation
or limitation of, or any adverse modification or change in, the business
relationship of the Company, its Subsidiaries or their business with any
customer or any group of customers whose purchases are individually or in the
aggregate material to the business of the Company or any such Subsidiary, or
with any material supplier, and there exists no present condition or state of
facts or circumstances that would materially adversely affect the Condition of
the Company or prevent the Company or its Subsidiaries from conducting their
business after the consummation of the transactions contemplated by this
Agreement, in substantially the same manner in which such business has
heretofore been conducted. in substantially the same manner in which such
business has heretofore been conducted.
5.27 OUTSTANDING BORROWINGS. Schedule 5.27 lists (i) the
amount of all Outstanding Borrowings of the Company and its Subsidiaries (other
than Indebtedness under this Agreement or the Senior Loan Agreement) as of the
closing of the transactions contemplated hereby, (ii) the Liens that relate to
such Outstanding Borrowings and that encumber the assets of the Company and its
Subsidiaries, (iii) the name of each lender thereof, and (iv) the amount of any
unfunded commitments available to the Company in connection with any Outstanding
Borrowings.
5.28 MATERIAL CONTRACTS. Neither the Company nor any
Subsidiary is a party to any Contractual Obligation, or is subject to any
charge, corporate restriction, judgment, injunction, decree, or Requirement of
Law, materially adversely affecting the Condition of the Company. Schedule 5.28
lists all contracts, agreements and commitments of the Company and its
Subsidiaries as of the Closing Date and as of the date hereof, whether written
or oral, other than (a) the Transaction Documents, (b) purchase orders in the
ordinary course of business, and (c) any other contracts, agreements and
commitments of the Company that do not extend beyond one year and involve the
receipt or payment of not more than $500,000. Neither the LLC, nor the Company
or any of its Subsidiaries (i) is in default under any of the contracts,
agreements and commitments set forth on Schedule 5.28, or (ii) has notice of a
default involving any other party to such contracts, agreements or commitments.
5.29 INSURANCE. Schedule 5.29 accurately summarizes all of the
insurance policies or programs of the Company and each Subsidiary in effect as
of the date hereof, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
All such policies are in full force and effect, are underwritten by financially
sound and reputable insurers, are sufficient for all applicable Requirements of
Law and otherwise are in compliance with the criteria set forth in Section 8.8
hereof. Except as disclosed on Schedule 5.29, all such policies will remain in
full force and effect and will not in any way be affected by, or terminate or
lapse by reason of any of the transactions contemplated by the Transaction
Documents. The Company shall obtain and maintain insurance policies of
substantially equivalent coverage and from insurance providers of substantially
equivalent quality, in each case reasonably satisfactory to Purchasers, in
replacement of the insurance policies listed on Schedule 5.29.
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5.30 ACCOUNTS RECEIVABLE. Schedule 5.30 sets forth a true and
correct list of all accounts receivable of the Company and the Subsidiaries as
of June 30, 1997, which net of reserves and allowances, will be reflected on the
Company's financial statements dated as of such date. All such accounts
receivable of the Company and the Subsidiaries reflected in Schedule 5.30
represent transactions actually made in the ordinary course of business, and
were calculated in accordance with GAAP. All such accounts receivable are legal,
valid and binding obligations, of the respective amount debtors and are
collectible, net of such reserves and allowances.
5.31 INVENTORY. Schedule 5.31 sets forth an accurate summary
list of all inventory of the Company and the Subsidiaries as of June 30, 1997
and will be reflected on the Company's financial statements as of such date. To
the knowledge of the Company all work in process and finished goods inventory is
free of any material defect or other deficiency.
5.32 PRODUCTS LIABILITY. Except as set forth on Schedule 5.32,
there is no action, suit, proceeding or to the knowledge of the Company, inquiry
or investigation pending by or before any Governmental Authority against the
Company or any of the Subsidiaries relating to any product alleged to have been
sold by the Company or any of the Subsidiaries and alleged to have been sold by
the Company or any of the Subsidiaries and alleged to have been defective, or
improperly designed or manufactured, nor to the knowledge of the Company is
there any valid basis for any such action, proceeding or investigation.
5.33 SOLVENCY. The LLC, and the Company and its Subsidiaries,
taken as a whole, are Solvent.
5.34 OTHER DOCUMENTS. The LLC and the Company have delivered
or made available to the Purchasers true, complete and correct copies of all
agreements, schedules, exhibits, certificates, financial information, filings
and other documents relating to the LLC, and the Company and its Subsidiaries,
and all amendments and modifications thereto. Such documents comprise a full and
complete copy of all agreements and understandings between the parties thereto
with respect to the subject matter thereof and all transactions related thereto,
and there are no written agreements, understandings or side agreements, nor any
material oral agreements, understandings or side agreements not contained
therein that relate to or modify the substance thereof. Each of such documents
to which it is a party has been duly authorized by all necessary action on the
part of the LLC, and the Company and its Subsidiaries, was validly executed and
delivered by the LLC, and the Company and its Subsidiaries and is the legal,
valid and binding obligation of the LLC, and the Company and its Subsidiaries
and their successors, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting creditors' rights generally and by
general principles of equity relating to enforceability. Each of such documents
is in full force and effect, and none of their provisions have been waived by
any party thereto.
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5.35 STATUS OF LLC. For the period beginning on the date of
formation of the LLC and ending immediately prior to the Closing Date, the LLC
has conducted no business or operation (other than organizational activities),
owned no assets and had no liabilities.
5.36 MERGER AGREEMENT AND SENIOR LOAN AGREEMENT;
REPRESENTATIONS AND WARRANTIES. The representations and warranties made in each
of the Merger Agreement and the Senior Loan Agreement by the parties thereto are
true, correct and accurate as of the Closing Date and as of the date hereof.
5.37 COVENANTS. The Company and XX-Xxxxxx have performed and
complied with all of its obligations contemplated herein that are required to be
performed or complied with by the LLC, the Company and XX-Xxxxxx on or before
the date hereof.
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally but not jointly, hereby represents
and warrants, as of the Closing Date and as of the date hereof, as to itself as
follows:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by it of this Agreement: (a) is within its power and authority
and has been duly authorized by all necessary action; (b) does not contravene
the terms of its organizational documents or any amendment thereof; and (c) will
not violate, conflict with or result in any breach or contravention of any of
its Contractual Obligations, or any order or decree directly relating to it.
6.2 BINDING EFFECT. This Agreement has been duly executed and
delivered by it and this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of
this Agreement by it will not violate any Requirement of Law applicable to it.
6.4 PURCHASE FOR OWN ACCOUNT. The Securities acquired by it
pursuant to this Agreement were acquired for its own account and with no
intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to its right at all
times to sell or otherwise dispose of all or any part of the WSDF Note or the
WSDF Warrant, in the case of WSDF, or the WEP Shares, in the case of WEP, under
an effective registration statement under the
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Securities Act, or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of its property
being at all times within its control. If a Purchaser should in the future
decide to dispose of any of the Securities, such Purchaser understands and
agrees that it may do so only in compliance with the Securities Act and
applicable state securities laws, as then in effect. It agrees to the imprinting
of a legend on certificates representing all of the Securities to the following
effect: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS."
6.5 ERISA. No part of the funds used by it to purchase the
Securities hereunder constitutes assets of any "employee benefit plan" (as
defined in Section 3(3) of ERISA) or "plan" (as defined in Section 4975 of the
Code) listed on Schedule 5.23(b).
6.6 BROKER'S, FINDER'S OR SIMILAR FEES. Except as set forth on
Schedule 5.21, there are no brokerage commissions, finder's fees or similar fees
or commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with it or any action taken
by it.
6.7 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any Requirement of Law, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by it or enforcement against it of this Agreement or the
transactions contemplated hereby, other than the expiration of the waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION. In addition to all other sums due
hereunder or provided for in this Agreement, the LLC, the Company and XX-Xxxxxx
jointly and severally agree to indemnify and hold harmless the Purchasers and
their respective Affiliates and each of their respective officers, directors,
agents, employees, subsidiaries, partners, attorneys, accountants and
controlling persons (each, an "INDEMNIFIED PARTY") to the fullest extent
permitted by law from and against any and all losses, claims, damages, expenses
(including, without limitation, reasonable fees, disbursements and other charges
of counsel incurred by an Indemnified Party in any action or proceeding between
any of the LLC, the Company and the Company's Subsidiaries and such Indemnified
Party (or Indemnified Parties) or between an Indemnified Party (or Indemnified
Parties) and any third party
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or otherwise) or other liabilities, losses, or diminution in value
(collectively, "LIABILITIES") resulting from or arising out of (a) any breach of
any representation or warranty, covenant or agreement of the LLC, the Company,
or XX-Xxxxxx in this Agreement, the Certificate of Incorporation, the
Registration Rights Agreement, the Stockholders' and Members' Agreement, the
Note, the Warrant, or the other Transaction Documents, including, without
limitation, the failure to make payment when due of amounts owing pursuant to
this Agreement, the Note, the Shares or the other Transaction Documents, on the
due date thereof (whether at the scheduled maturity, by acceleration or
otherwise) or any legal, administrative or other actions (including, without
limitation, actions brought by any of the Purchasers, the LLC, the Company, the
Company's Subsidiaries or any equity holders of the LLC or the Company or the
Company's Subsidiaries or derivative actions brought by any Person claiming
through or in the name of the LLC or the Company or the Company's Subsidiaries),
proceedings or investigations (whether formal or informal), or written threats
thereof, based upon, relating to or arising out of the Transaction Documents,
the transactions contemplated thereby, or any Indemnified Party's role therein
or in the transactions contemplated thereby and (b) all Environmental Costs
incurred by the LLC, or the Company or its Subsidiaries on or after the Closing
Date; provided, however, that the LLC, the Company and the Company's
Subsidiaries shall not be liable under this Section 7.1 to an Indemnified Party:
(i) for any amount paid by the Indemnified Party in settlement of claims by the
Indemnified Party without the LLC's, the Company's or XX-Xxxxxx'x consent
(which consent shall not be unreasonably withheld), as the case may be, (ii) to
the extent that it is finally judicially determined that such Liabilities
resulted primarily from the willful misconduct or gross negligence of such
Indemnified Party or (iii) to the extent that it is finally judicially
determined that such Liabilities resulted primarily from the breach by such
Indemnified Party of any representation, warranty, covenant or other agreement
of such Indemnified Party contained in this Agreement; provided, further, that
if and to the extent that such indemnification is unenforceable for any reason,
the LLC, the Company and the Company's Subsidiaries shall make the maximum
contribution to the payment and satisfaction of such Liabilities which shall be
permissible under applicable laws. In connection with the obligation of the LLC,
the Company or XX-Xxxxxx to indemnify for expenses as set forth above, the LLC,
the Company and XX-Xxxxxx further agree, upon presentation of appropriate
invoices containing reasonable detail, to reimburse each Indemnified Party for
all such expenses (including fees, disbursements and other charges of counsel
incurred by an Indemnified Party in any action or proceeding between the LLC,
the Company, or XX-Xxxxxx and such Indemnified Party (or Indemnified Parties) or
between an Indemnified Party (or Indemnified Parties) and any third party or
otherwise) as they are incurred by such Indemnified Party; provided, however,
that if an Indemnified Party is reimbursed hereunder for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Liabilities in question resulted primarily from
(x) the willful misconduct or gross negligence of such Indemnified Party or (y)
the breach by such Indemnified Party of any representation, warranty, covenant
or other agreement of such Indemnified Party contained in this Agreement or any
other Transaction Document.
7.2 NOTIFICATION. Each Indemnified Party under this Article 7
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the LLC, the
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Company or XX-Xxxxxx under this Article 7, notify the LLC, the Company or
XX-Xxxxxx, as the case may be, in writing of the commencement thereof. The
omission of any Indemnified Party so to notify the LLC, the Company or
XX-Xxxxxx, as the case may be, of any such action shall not relieve the LLC, the
Company or the Company's Subsidiaries, as the case may be, from any liability
which it may have to such Indemnified Party unless, and only to the extent that,
such omission results in the forfeiture by the LLC, the Company or XX-Xxxxxx, as
the case may be, of substantive rights or defenses. In case any such action,
claim or other proceeding shall be brought against any Indemnified Party and it
shall notify the LLC, the Company or XX-Xxxxxx, as the case may be, of the
commencement thereof, the LLC, the Company or XX-Xxxxxx, as the case may be,
shall be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense. Notwithstanding the foregoing, in any
action, claim or proceeding in which the LLC, the Company or XX-Xxxxxx, as the
case may be, on the one hand, and an Indemnified Party, on the other hand, is,
or is reasonably likely to become, a party, such Indemnified Party shall have
the right to employ separate counsel at the expense of the LLC, the Company or
XX-Xxxxxx, as the case may be, and to control its own defense of such action,
claim or proceeding if, in the reasonable opinion of counsel to such Indemnified
Party, a conflict or potential conflict exists between the LLC, the Company or
XX-Xxxxxx, as the case may be, on the one hand, and such Indemnified Party, on
the other hand, that would make such separate representation advisable;
provided, however, that in no event shall the LLC, the Company or XX-Xxxxxx, as
the case may be, be required to pay fees and expenses under this Article 7 for
more than one firm of attorneys in any jurisdiction in any one legal action or
group of related legal actions. The LLC, the Company and XX-Xxxxxx agree that
they will not, without the prior written consent of the Purchasers, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchasers and each other Indemnified Party from
all liability arising or that may arise out of such claim, action or proceeding.
The LLC, the Company and XX-Xxxxxx shall not be liable for any settlement of any
claim, action or proceeding effected against an Indemnified Party without its
written consent, which consent shall not be unreasonably withheld. The rights
accorded to Indemnified Parties hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise.
7.3 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to
the contrary in this Article 7, the indemnification and contribution provisions
of the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
7.4 ENVIRONMENTAL BASKET. Notwithstanding any other provision
in this Article 7, the LLC, the Company and XX-Xxxxxx shall be obligated to
indemnify the Indemnified Partes with respect to any Liabilities resulting from
or arising out of (a) any breach of the representations or warranties set forth
in Section 5.16 of this Agreement, and (b) any Environmental Costs arising
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on or after the Closing Date, only after the aggregate amount of all such
Liabilities exceeds $3,000,000.
ARTICLE 8
AFFIRMATIVE COVENANTS
Until the payment by the Company of all principal of and
interest on the Note and all other amounts due at the time of payment of such
principal and interest to Purchasers under this Agreement and the other
Transaction Documents, including, without limitation, all fees, expenses and
amounts due at such time in respect of indemnity obligations under Article 7,
and for so long as any shares of WEP Preferred Shares are outstanding, the LLC
and the Company hereby covenant and agree with the Purchasers as follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
shall maintain, and cause each of its Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP
(it being understood that monthly financial statements are not required to have
footnote disclosures). The Company shall deliver to the Purchasers each of the
financial statements and other reports described below:
(a) Monthly and Quarterly Financial. As soon as
available and in any event within thirty (30) days after the end of each month,
the Company shall deliver (i) the consolidated and consolidating balance sheets
of the Company and its Subsidiaries, as at the end of such month and the related
consolidated and consolidating statements of income, Stockholders equity and
cash flow for such month and for the period from the beginning of the then
current fiscal year of the Company to the end of such month (and, with respect
to financial statements delivered for months that are also the last month of any
fiscal quarter, accompanied by the related consolidated and consolidating
statements of income, Stockholders equity and cash flow for such fiscal quarter)
and (ii) a schedule of the outstanding Indebtedness for borrowed money of the
Company and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.
(b) Year-End Financial. As soon as available and in
any event within ninety (90) days after the end of the fiscal year of the
Company, the Company shall deliver (i) the audited consolidated and Company
prepared consolidating balance sheets of the Company and its Subsidiaries as at
the end of such year and the related consolidated and consolidating statements
of income, Stockholders equity and cash flow for such fiscal year, (ii) a
schedule of the outstanding Indebtedness for borrowed money of the Company and
its Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan, and (iii) a report with respect to
the financial statements from KPMG Peat Marwick, LLP or another "Big Six" firm
of certified public
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accountants selected by the Company and reasonably acceptable to the Purchasers,
which report shall be prepared in accordance with Statement of Auditing
Standards No. 58 (the "STATEMENT") entitled "Reports on Audited Financial
Statements" and such report shall be "Unqualified" (as such term is defined in
such Statement), other than with respect to qualifications regarding changes in
accounting policies. Together with each delivery of financial statements of the
Companies and their Subsidiaries pursuant to this subsection 8.1(b), the Company
shall deliver to the Purchasers a copy of a letter from the Company to such
accounting firm, which letter shall have been delivered to such accounting firm
prior to its delivery of such financial statements, stating that an intent of
the Company in engaging the accounting firm's professional services to prepare
the audit report relating to such financial statements was to benefit and
influence the Purchasers and their successors or assigns. Such letter shall
state that the Purchasers intend to rely on the audit report and the accounting
firm's professional services provided to the Companies and their Subsidiaries.
(c) Company's Compliance Certificate. Together with
each delivery of quarterly and annual financial statements of the Company and
its Subsidiaries pursuant to Sections 8.1(a) and 8.1(b) above, the Company shall
deliver or cause to be delivered a fully and properly completed compliance
certificate (in substantially the form attached hereto as Exhibit H and referred
to as a "COMPLIANCE CERTIFICATE") signed by the chief executive officer or chief
financial officer of the Company.
(d) Accountants' Reports. Promptly upon receipt
thereof, the Company shall deliver copies of all significant reports submitted
by the Company's firm of certified public accountants in connection with each
annual, interim or special audit or review of any type of the financial
statements or related internal control systems of the Company and its
Subsidiaries made by such accountants, including any comment letter submitted by
such accountants to managements in connection with their services.
(e) Management Reports. Together with each delivery
of financial statements of the Company and its Subsidiaries pursuant to
subsections 8.1(a) and 8.1(b), the Company will deliver a management report (i)
describing the operations and financial condition of the Company and its
Subsidiaries for the month then ended and the portion of the current fiscal year
then elapsed (or for the fiscal year then ended in the case of year-end
financial), (ii) setting forth in comparative form the corresponding figures for
the corresponding periods of the previous fiscal year and the corresponding
figures from the most recent projections for the current fiscal year delivered
pursuant to subsection 8.1(f) and (iii) discussing the reasons for any
significant variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of the Company to
the effect that such information fairly presents the results of operations and
financial condition of the Company and its Subsidiaries as at the dates and for
the periods indicated.
(f) Projections. On or before December 31, 1997, the
Company shall prepare and deliver to the Purchasers projections of the Company
and its Subsidiaries for the three-month period ending on March 31, 1998, on a
month-to-month basis. On or before the earlier of (i)
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the first Board of Directors meeting of the Company held in March 1998 and (ii)
March 31, 1998, the Company shall prepare and deliver to the Purchasers
projections of the Company and its Subsidiaries for the next succeeding fiscal
year, on a month-to-month basis, and for the following two (2) fiscal years on a
quarter-to-quarter basis. Thereafter, no earlier than sixty (60) days prior nor
later than thirty (30) days prior to the end of each fiscal year beginning with
the fiscal year ending on March 31, 1999, the Company shall prepare and deliver
to the Purchasers projections of the Company and its Subsidiaries for the next
succeeding fiscal year, on a month-to-month basis and for the following two (2)
fiscal years on a quarter-to-quarter basis; provided, however, that if a meeting
of the Board of Directors shall have been duly called to be held on a day that
is within the thirty (30) day period prior to the end of such fiscal year, such
projections shall be prepared and delivered no earlier than sixty (60) days
prior to the end of such fiscal year nor later than the first such meeting of
the Board of Directors.
(g) SEC Filings and Press Releases. Promptly upon
their becoming available, the Company shall deliver copies of (i) all financial
statements, reports, notices and proxy statements sent or made available by the
Company or any of its Subsidiaries to their security holders, (ii) all regular
and periodic reports and all registration statements and prospectuses, if any,
filed by the Company or any of its Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by the Company or any of its Subsidiaries to the public concerning
material developments in the business the Company or any of its Subsidiaries.
(h) Events of Default, Etc. Promptly upon any officer
of the Company obtaining knowledge of any of the following events or conditions,
the Company shall deliver copies of all notices given or received by the Company
or any of its Subsidiaries with respect to any such event of condition and a
certificate of the Company's chief executive officer specifying the nature and
period of existence of such event or condition and what action the Company has
taken, is taking and proposes to take with respect thereto: (i) any condition or
event that constitutes an Event of Default; (ii) any notice that any Person has
given to the Company or any of its Subsidiaries or any other action taken with
respect to a claimed default or event or condition in any other agreement to
which the Company or any of its Subsidiaries is a party; or (iii) any event or
condition that could reasonably be expected to result in any material adverse
effect on the Condition of the Company.
(i) Litigation. Promptly upon any officer of the
Company obtaining knowledge of (i) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or affecting the
Company or any of its Subsidiaries or any property of the Company or any of its
Subsidiaries not previously disclosed by the Company to the Purchasers or (ii)
any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting the
Company or any of its Subsidiaries or any property of the Company or any of its
Subsidiaries which, in each case (i.e. clause (i) and (ii)), is reasonably
likely to have a material adverse effect on the Condition of the Company, the
Company will promptly give notice thereof to the Purchasers and provide such
other information as may be
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reasonably available to them to enable the Purchasers and their respective
counsel to evaluate such matter.
(j) Subsidiaries. Not less than fifteen (15) days
prior to creating a Subsidiary or acquiring the stock of a Person, such that
such Person will become a Subsidiary, the Company shall notify the Purchasers of
the Company's or any of its Subsidiary's intention to create such Subsidiary or
acquire such stock, and following such notice, such Subsidiary will not be
created or acquired until the Company has caused such Subsidiary to execute a
joinder to this Agreement, the Note and the other Transaction Documents (other
than the Merger Transaction Documents and the Senior Credit Facility Documents)
in form and substance satisfactory to the Purchasers, or the Guaranty.
(k) Supplemented Schedules; Notice of Corporate
Changes. Within ninety (90) days after the end of the fiscal year of the
Company, the Company shall supplement in writing and deliver to the Purchasers
revisions of Schedules 5.6, 5.7, 5.16, 5.18, 5.19(a), 5.21, 5.22, 5.23, 5.24,
5.25, 5.27, 5.29, 5.30, 5.31 and 9.13 annexed to this Agreement to the extent
necessary to disclose new or changed facts or circumstances after the Closing
Date; provided that subsequent disclosures shall not constitute a cure or waiver
of any Event of Default resulting from the matters disclosed. The Company shall
provide prompt written notice to the Purchasers of (i) all jurisdictions in
which the Company or any of its Subsidiaries becomes qualified after the Closing
Date to transact business, and (ii) any material change after the Closing Date
in the authorized and issued capital stock or other equity interests of the
Company or any of its Subsidiaries or any other material amendment to their
charter, by-laws or other organization documents, such notice, in each case, to
identify the applicable jurisdictions or capital structures, as applicable.
(l) No Defaults. The Company shall deliver to the
Purchasers concurrently with the delivery of the financial statements referred
to in Section 8.1(b), a certificate of the Company's Chief Financial Officer
stating that to his or her knowledge no Event of Default shall have occurred
during the period covered thereby, except as specified in such certificate.
(m) Other Information. With reasonable promptness,
the Company shall deliver such other information and data with respect to the
Company or any of its Subsidiaries as from time to time may be reasonably
required by the Purchasers.
8.2 PRESERVATION OF CORPORATE EXISTENCE. The Company shall,
and shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect
its corporate existence, except as otherwise permitted by Section 9.1;
(b) conduct its business in accordance with sound
business practices, keep its properties in good working order and condition
(normal wear and tear excepted), and from time to time make all needed repairs
to, renewals of or replacements of its properties (except to the extent
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that any of such properties are obsolete or are being replaced) so that the
efficiency of its business operations shall be fully maintained and preserved;
and
(c) file or cause to be filed in a timely manner all
reports, applications, estimates and licenses that shall be required by a
Governmental Authority.
8.3 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause
each of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including without
limitation:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which the Company, and each of
its Subsidiaries is obligated to pay, which are due and which, if unpaid, might
by law become a Lien upon its property, unless the same are being contested in
good faith by appropriate proceedings and adequate reserves in accordance with
GAAP are being maintained by the Company or such Subsidiary; and
(c) all payments of principal, interest and other
amounts when due on Indebtedness, except with respect to trade payables which
may be paid in the ordinary course of business, consistent with past practices.
8.4 COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law (including all applicable Environmental Laws) and with the
directions of any Governmental Authority having jurisdiction over them or their
business or property (including all applicable Environmental Laws).
8.5 RESERVATION OF COMMON STOCK. The Company shall at all
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance or delivery upon exercise of the Warrant and the
Management Options, the maximum number of shares of Common Stock that may be
issuable or deliverable upon such exercise (the "EXERCISABLE SHARES"). The
Exercisable Shares shall, when issued or delivered in accordance with the
Warrant or the Management Options, as the case may be, be duly and validly
issued and fully paid and non-assessable. The Company shall issue such capital
stock in accordance with the provisions of the Warrant or the Management Options
with respect to the Common Stock, as the case may be, and shall otherwise
comply, in each case, with the terms thereof.
8.6 INSPECTION. The Company will permit, and will cause each
of its Subsidiaries to permit, representatives of the Purchasers to visit and
inspect any of their properties, to examine their corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
their affairs, finances and accounts with their respective directors, officers
and
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independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice.
8.7 PAYMENT OF NOTE. The Company shall pay the principal of,
interest on and other amounts due in respect of, the Note on the dates and in
the manner provided in the Note.
8.8 INSURANCE. The Company and its Subsidiaries shall maintain
or cause to be maintained in good repair, working order and condition all
material properties used in their respective businesses and will make or cause
to be made all appropriate repairs, renewals and replacements thereof. The
Company and its Subsidiaries will maintain or cause to be maintained with
financially sound and reputable insurers that have a rating of "A" or better as
established by Best's Rating Guide (or an equivalent rating with such other
publication of a similar nature as shall be in current use), public liability
and property damage insurance with respect to their respective businesses and
properties against loss or damage of the kinds customarily carried or maintained
by companies of established reputation engaged in similar businesses and in
amounts acceptable to Purchasers and will deliver evidence thereof to
Purchasers. Without limiting the foregoing, the Company and its Subsidiaries
will establish no later than two (2) months after the Closing Date and maintain
at all times thereafter (a) business interruption insurance in an amount
reasonably satisfactory to the Whitney Funds, and (b) directors' and officers'
liability insurance coverage for each of the members of the Boards of Directors
of the Company and its Subsidiaries, and the Managers of the LLC, in each case
in amounts reasonably satisfactory to the Whitney Funds; provided, however, that
the Company shall not be obligated to purchase such insurance in the event that
reasonable terms and pricing are not commercially available.
8.9 BOOKS AND RECORDS. The Company shall, and shall cause each
of its Subsidiaries to, keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Company and each of its Subsidiaries in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.
8.10 USE OF PROCEEDS. The Company shall use the proceeds of
the sale of Securities hereunder only as follows: (i) for the payment of fees
and expenses in connection with the transactions contemplated hereunder and in
the other Transaction Documents, (ii) in connection with the Aqua-Chem Merger,
and (iii) for general corporate purposes.
8.11 BOARD NOMINEES.
(a) The Company shall maintain a six-member Board of
Directors, and the Company shall use its best efforts to have (i) two nominees
designated by Whitney (or the Whitney Funds) elected to the Company's Board of
Directors, (ii) two nominees designated by Management elected to the Company's
Board of Directors, (iii) two "independent" nominees who are agreeable to each
of Whitney (or the Whitney Funds) and Management elected to the Company's Board
of Directors, and (v) two nominees of Whitney (or the Whitney Funds) elected to
each of the
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Company's audit committee and compensation committee, in each case one of which
shall be elected as Chairman of such committee; provided, however, that if there
is a breach of any provision of any Transaction Document, at the option of
Whitney (or the Whitney Funds) the size of the Board of Directors of the Company
shall be increased to nine, and the Company shall use its best efforts to have
three additional nominees designated by Whitney (or the Whitney Funds) elected
to the Board of Directors of the Company. All such directors shall hold office
until their respective successors shall have been elected and shall have
qualified. The Company shall provide to such directors the same information
concerning the Company and its Subsidiaries, and access thereto, provided to
other members of the Company's Board of Directors. The reasonable travel
expenses incurred by any such director or manager in attending any such meetings
shall be reimbursed by the Company to the extent consistent with the Company's
then existing policy of reimbursing directors generally for such expenses.
(b) In the event that Whitney (or the Whitney Funds)
shall not have a designee serving on the Board of Directors of the Company for
any reason, the Company shall give Whitney and the Whitney Funds notice of (in
the same manner as notice is given to directors), and permit one Person
designated by Whitney (or the Whitney Funds) to attend as observer, all meetings
of the Company's Board of Directors and all executive and other committee
meetings of the Board of Directors and shall provide to Whitney and the Whitney
Funds the same information concerning the Company and its Subsidiaries, and
access thereto, provided to members of the Company's Board of Directors. The
reasonable travel expenses incurred by any such designee of Whitney (or the
Whitney Funds) in attending any board or committee meetings shall be reimbursed
by the Company to the extent consistent with the Company's then existing policy
of reimbursing directors generally for such expenses.
8.12 GRANTING OF MANAGEMENT OPTIONS. The Company may grant no
more than 61,919 Management Options. If the Management Options are granted, the
Company shall grant the Management Options at an exercise price equal to at
least the per share fair market value of the Common Stock (as determined by the
Company's Board of Directors) at the time of such grant or grants, as the case
may be.
8.13 WHITNEY DIRECTOR'S INDEMNIFICATION. The Company shall
indemnify the members of the Board of Directors of the Company designated by
Whitney (or the Whitney Funds) to the fullest extent permitted by applicable
law. The Company shall enter into indemnification agreements in form and
substance reasonably satisfactory to Whitney.
8.14 TITLE INSURANCE. The Company shall, within ninety (90)
days of the Closing Date, with respect to the properties described in clauses
(i) and (ii) below, and one hundred eighty (180) days of the Closing Date, with
respect to the property described in clause (iii) below, deliver, or cause to be
delivered, to the Purchasers, title insurance policies issued by First American
Title Insurance Company, or such other title insurance company reasonably
satisfactory to the Purchasers for the properties located at (i) 000 Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx, Xxxxxx, (ii) Xxxxxx Street, Lebanon, Pennsylvania
(the "Lebanon Property"), and (iii) Poniente 148 No. 973, Col. Industrial
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Vallejo, Xxxxxx Xxxx 00000, X.X., Xxxxxx, insuring good and marketable title to
each such property in the name of the Company or the Subsidiary represented to
the Purchasers to be the owner of such property, which title policies shall
contain such endorsements as the Purchasers may reasonably request, and which
shall be subject only to the mortgage liens in connection with the Senior Credit
Facility and such other exceptions to coverage that do not render title
unmarketable, do not prevent or restrict the use of such properties for each of
their respective current uses, and are otherwise approved by the Purchasers,
such approval not to be unreasonably withheld or delayed.
8.15 LANDLORD CONSENTS. The Company shall, within ninety (90)
days of the Closing Date, deliver or cause to be delivered, to the Purchasers,
consents to the assignment by operation of law of the leases for the following
two premises in connection with the Aqua-Chem Merger: (a) the company's
headquarters, located at 0000 X. 000xx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, and
(b) 0000 X. Xxxxxx Xxxxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000.
8.16 XXXX COUNTY JUDGMENT Within forty five days after the
closing date, the Company will resolve all issues relating to the Xxxx County
Judgment referenced on Schedule 5.27 to the satisfaction of the Purchasers.
ARTICLE 9
NEGATIVE COVENANTS
Until the payment by the Company of all principal of and
interest on the Note and all other amounts due at the time of payment of such
principal and interest to the Purchasers under this Agreement and the other
Transaction Documents, including, without limitation, all fees, expenses and
amounts due at such time in respect of indemnity obligations under Article 7,
the Company hereby covenants and agrees with the Purchasers as follows:
9.1 FUNDAMENTAL CHANGES; CONSOLIDATIONS, MERGERS AND
ACQUISITIONS. The Company shall not, and shall not permit any of its
Subsidiaries directly or indirectly to: (a) amend, modify or waive any term or
provision of its certificate of incorporation, by-laws or other organization or
governing agreements and documents, unless required by law; (b) enter into any
transaction of merger or consolidation; (c) liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution); or (d) acquire by purchase or
otherwise all or any substantial part of the business or assets of any other
Person, other than Permitted Acquisitions.
9.2 TRANSACTIONS WITH AFFILIATES. Except in the ordinary
course of business and consistent with past practices, the Company shall not,
and shall not permit any of its Subsidiaries to, (a) enter into any transaction
or agreement with, or make any payment (other than pursuant to agreements
existing on the date hereof or subsequently approved by the Purchasers) to, any
Affiliate, (b) amend or terminate any existing agreement with any Affiliate, (c)
purchase from or provide to an Affiliate any selling, general, management or
administrative services, (d) directly or indirectly
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make any sales to or purchases from an Affiliate or (e) increase the
compensation being paid to an Affiliate.
9.3 NO INCONSISTENT AGREEMENTS. Other than with respect to the
Senior Credit Facility, including without limitation the Senior Credit Facility
Transaction Documents, none of the Company nor any of its Subsidiaries shall
enter into any Contractual Obligation or enter into any amendment or other
modification to any currently existing Contractual Obligation of the Company, or
any of their Subsidiaries, which by its terms restricts or prohibits the ability
of the Company to pay the principal of or interest on the Note or to fully
satisfy all of the obligations under the Transaction Documents of the Company.
Subject to the Subordination Agreement, none of the Company nor any of its
Subsidiaries shall amend or modify any Senior Credit Facility Transaction
Document if such amendment or modification would materially adversely effect
either the Purchasers or the Condition of the Company.
9.4 LIMITATION ON INDEBTEDNESS. The Company shall not, and
shall not cause, suffer or permit any of its Subsidiaries to, directly or
indirectly, collectively and in the aggregate, issue, assume or otherwise incur
any Indebtedness, other than:
(a) Indebtedness created under the Transaction Documents
(other than the Senior Credit Facility Transaction Documents and the Merger
Transaction Documents);
(b) Senior Indebtedness, up to an aggregate outstanding
principal amount of $70,000,000; (less escrowed amounts with respect to the
Thomasville IRBs and the Monroe IRBs)
(c) Indebtedness listed on Schedule 5.27;
(d) Non-current liabilities for post-employment healthcare and
other insurance benefits;
(e) Trade payables, accrued expenses and payment and
performance bonds, in each case arising in the ordinary course of business;
(f) Indebtedness secured by a Lien permitted under Section
9.5;
(g) Indebtedness between and/or among the Company and its
Subsidiaries; provided that the obligations of such Indebtedness shall:
(i) be subordinated in right of payment to all
Indebtedness under the Note and this Agreement from and after such time
as any portion of the Indebtedness under the Note and this Agreement
shall become due and payable (whether at stated maturity, by
acceleration or otherwise); and
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(ii) have such other terms and provisions as the
Purchasers may reasonably require;
(h) Subject to the terms and conditions of the Subordination
Agreement, refinancings, refundings or extensions of the foregoing; provided,
that any such refinancings, refundings or extensions shall not:
(i) exceed the principal amount permitted under
Sections 9.4(b), 9.4(c) hereof;
(ii) shorten the maturity (or weighted average life
to maturity) of such Indebtedness or convert a revolving credit
facility into a facility which provides for the amortization of
principal;
(iii) increase the interest rate applicable to such
Indebtedness;
(iv) upon the occurrence and during the continuance
of an Event of Default, cause any covenants or undertakings (whether
affirmative or negative) of the Company or its Subsidiaries in respect
of such Indebtedness to be more restrictive than such covenants or
undertakings had been prior to such refinancing, refunding or
extension;
(v) facilitate the exercise or enforcement of any
remedies of any obligee of such Indebtedness in respect of any default
or event of default thereunder;
(vi) materially and adversely affect any obligations
under the Transaction Documents to Purchasers; or
(vii) result in any amendments or modifications of
any of the subordination provisions applicable to such Indebtedness;
(i) Indebtedness in an aggregate amount not to exceed $750,000
at any one time outstanding evidenced by notes of the Company issued to former
officers and employees of the Company;
(j) An unsecured overdraft line of credit or similar credit
arrangement maintained by the Company in the ordinary course of business with a
bank or other financial institution in Canada, in an amount not to exceed
$500,000 (the "Canadian Overdraft LOC");
(k) Indebtedness assumed in connection with Permitted
Acquisitions, provided that such Indebtedness was not entered into, extended or
renewed in contemplation of such acquisition (including Indebtedness secured by
Liens permitted by 9.5(e)), provided that the aggregate amount of all such
Indebtedness shall not exceed $1,500,000 at any one time outstanding; and
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(l) Additional Indebtedness not exceeding $250,000 in the
aggregate principal amount at any one time outstanding.
9.5 LIMITATION ON LIENS. The LLC and the Company will not, nor
will either permit any of its respective Subsidiaries, directly or indirectly,
to create, incur, assume or permit to exist any Lien on or with respect to any
property or asset (including any document or instrument with respect to goods or
accounts receivable) of the Company or its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except Permitted
Encumbrances. "PERMITTED ENCUMBRANCES" means the following:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or which are being contested in good faith
with a reserve or other appropriate provision having been made thereof;
(b) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred in the
ordinary course of business for sums not more than thirty (30) days delinquent
or which are being contested in good faith; provided that a reserve or other
appropriate provision shall have been made therefor and the aggregate amount of
such Liens is less than $250,000;
(c) Deposits in an aggregate amount not to exceed $1,500,000
made in the ordinary course of business to secure liability to insurance
carriers in respect of workers' compensation insurance and other commercial
insurance;
(d) Liens for purchase money obligations to acquire assets;
provided that:
(i) such Lien attaches to such asset concurrently
with or within 10 days after the acquisition thereof;
(ii) does not exceed the purchase price of such
asset;
(iii) the Indebtedness secured by all such Liens,
shall not exceed $1,000,000; and
(iv) any such Lien encumbers only the asset so
purchased;
(e) Any attachment or judgment Lien not constituting an Event
of Default;
(f) Leases or subleases granted to others not interfering in
any material respect with the business of the Company or its Subsidiaries;
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(g) Easements, rights of way, restrictions and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
(h) Liens existing on the date hereof (including, without
limitation, Liens under the Senior Credit Facility Transaction Documents) and
renewals and extensions thereof, which Liens are set forth on Schedule 5.27;
(i) Deposits to secure (i) the performance of bids, trade
contracts (other than for borrowed money), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature in an
amount not to exceed $5,000,000 at any one time, or (iii) the performance of
leases permitted hereunder, in each case incurred on terms, in amounts and
otherwise in ordinary course of business; and
(j) Any Liens securing Indebtedness assumed pursuant to a
Permitted Acquisition, provided that such a Lien is limited to the property so
acquired, and was not entered into, extended or renewed in contemplation of such
acquisition.
9.6 DISPOSITIONS OF ASSETS. The Company will not, nor will it
permit any of its Subsidiaries, directly or indirectly, to: convey, sell
(pursuant to a sale/leaseback or otherwise), lease, sublease, transfer or
otherwise dispose of, or grant any Person an option to acquire, in one
transaction or a series of transactions, any of its property, business or
assets, or the capital stock of or other equity interests in any of its
Subsidiaries, whether now owned or hereafter acquired, except for:
(a) inventory leased or sold in the ordinary course of
business;
(b) obsolete or worn out property, property no longer useful
in the conduct of Company's or any Subsidiary's business or property from closed
offices, in each case disposed of in the ordinary course of business; and
(c) the lease or sale of the assets remaining at the Lebanon
Property for approximately $1,500,000, (ii) the sale of the Xxxx Deere line of
business located at the Company's Monroe, Wisconsin facility for approximately
$2,000,000, (iii) Asset Dispositions in which the sales price is at least the
fair market value of the assets sold and the aggregate amount of such Asset
Dispositions is less than One Million Five Hundred Thousand Dollars ($1,500,000)
in any fiscal year, and (iv) other Asset Dispositions approved by the
Purchasers.
9.7 LIMITATIONS ON RESTRICTED PAYMENTS. The Company shall not,
and shall not permit any of its Subsidiaries to declare, or make any Restricted
Payment, except: (a) as expressly permitted under the Transaction Documents, (b)
with respect to the Series C Preferred Stock, (c) that the Company's
Subsidiaries may make distributions and pay dividends to the Company, and (d) so
long as no Event of Default has occurred and is continuing or would occur after
giving effect thereto, the Company may redeem stock of former officers and
employees of the Company.
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9.8 FINANCIAL COVENANTS. The Company covenants and agrees that
until payment in full of all Indebtedness hereunder and under the Note, the
Company shall comply with and shall cause each of its Subsidiaries to comply
with all covenants in this Section 9.8 applicable to such Person.
(a) Interest Coverage. The Company shall not permit Interest
Coverage for any twelve (12) month period ending on the last day of each fiscal
quarter during any of the periods set forth below to be less than the ratio set
forth below for such period:
Period Ratio
------ -----
Closing Date to and including December 31, 1997 2.50:1.00
January 1, 1998 to and including December 31, 1999 2.25:1.00
January 1, 2000 to and including December 31, 2000 3.00:1.00
January 1, 2001 and thereafter 3.25:1.00
"INTEREST COVERAGE" will be calculated as illustrated on Exhibit E hereto.
(b) Fixed Charge Coverage. The Company shall not permit Fixed
Charge Coverage for any twelve (12) month period ending on the last day of each
fiscal quarter from and after the Closing Date to be less than 1.00:1.00.
"FIXED CHARGE COVERAGE" will be calculated as illustrated on Exhibit E hereto.
(c) Total Funded Indebtedness Leverage Test. The Company shall
not permit the ratio of Total Funded Indebtedness as of the last day of any
fiscal quarter during any of the periods set forth below to EBITDA for the
twelve (12) month period ending on the last day of such fiscal quarter to be
greater than the ratio set forth below for such period:
Period Ratio
------ -----
Closing Date to and including June 30, 1998 5.00:1.00
July 1, 1998 to and including December 31, 1999 4.50:1.00
January 1, 2000 and thereafter 3.75:1.00
(d) Capital Expenditures. The Company shall not permit Capital
Expenditures (as defined in Exhibit E hereto) in any fiscal year to exceed the
amounts set forth below for each corresponding period:
Period Amount
------ ------
Fiscal year ending March 31, 1998 $5,500,000
All fiscal years ending after March 31, 1998 $4,000,000
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To the extent that Capital Expenditures in any fiscal year are less than the
applicable amounts set forth above, the difference may be carried over and used
in the next immediately succeeding fiscal year (in addition to the applicable
Capital Expenditure amount for such fiscal year), provided that there shall be
no carry-over of such unused amount in any subsequent fiscal year, and provided
further that for purposes of calculating the amount which may be carried over,
all Capital Expenditures shall be first applied to the Capital Expenditure
amount set forth above for the fiscal year in question (and if there are excess
expenditures, then and only then to the carry-over amount from the immediately
preceding fiscal year, if any).
(e) Minimum Tangible Net Worth Test. The Adjusted Tangible Net
Worth at the end of each fiscal quarter shall be equal to or greater than the
Base Tangible Net Worth amount for such fiscal quarter. Adjusted Tangible Net
Worth shall mean, as of the date in question, Tangible Net Worth as of such date
plus an amount equal to the aggregate outstanding principal amount of the Note
as of such date. Base Tangible Net Worth shall mean (A) $16,800,000, plus (B)
(on a cumulative basis) for each fiscal quarter, the sum of (I) fifty percent
(50%) of Net Income (if positive) earned in each fiscal quarter commencing after
the Closing Date and (II) one hundred percent (100%) of the cash proceeds of the
issuance of any and all shares, share capital, interests, participations,
warrants, options or other equivalents (however designated) if capital stock of
a corporation and any and all equivalent ownership interests of a Person other
than a corporation.
9.9 EMPLOYEE BENEFIT PLANS. The Company shall not, and shall
not permit any of its Subsidiaries or any ERISA Affiliate, without the prior
approval of the Purchasers, (a) to establish or contribute to any employee
benefit plan (within the meaning of Section 3(3) of ERISA) or other employee
benefit arrangement which (i) is subject to Title IV of ERISA or is otherwise a
Defined Benefit Plan, Multiemployer Plan or multiple employer plan (within the
meaning of Section 413(c) of the Code); or (ii) provides post-retirement welfare
benefits or "parachute payments" (within the meaning of Section 280G(b) of the
Code); or (b) to amend any Plan if the effect of such amendment would cause such
Plan to be a plan or arrangement described in clause (a)(i) hereof or to provide
any of the benefits described in clause (a)(ii) hereof.
9.10 LIMITATION ON BUSINESS OF THE COMPANY. Neither the
Company nor any of its Subsidiaries shall engage in any business or transaction
other than the business in which it or any of its Subsidiaries is currently
engaged and the transactions contemplated by, or permitted under, the
Transaction Documents.
9.11 INVESTMENTS. Except in the ordinary course of business
and consistent with past practices, the Company shall not, and it shall not
permit any of its respective Subsidiaries, directly or indirectly, to make or
own any Investment in any Person except: (a) Permitted Investments; (b) they may
make intercompany loans and investments to the extent permitted under Sections
9.2 or 9.4; and (c) they may make loans and advances to employees for moving,
relocation entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $500,000 in the aggregate at any time
outstanding.
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9.12 CONTINGENT OBLIGATIONS. The Company shall not, nor shall
it permit any of its Subsidiaries directly or indirectly to create or become or
be liable with respect to any Contingent Obligation except those; (a) resulting
from endorsements of negotiable instruments for collection in the ordinary
course of business; (b) arising under the Transaction Documents; (c) arising
with respect to customary indemnification and purchase price adjustment
obligations incurred in connection with any Asset Dispositions; (d) incurred in
the ordinary course of business with respect to surety and appeal bonds,
performance and return-of-money bonds and similar obligations not exceeding any
time outstanding $5,000,000 in aggregate liability; (e) incurred with respect to
any Indebtedness permitted pursuant to Section 9.4 hereof; (f) not permitted by
clauses (a) through (f) above so long as any such Contingent Obligations, in the
aggregate at any time outstanding do not exceed $50,000.
9.13 MANAGEMENT FEES AND COMPENSATION. The Company shall not,
nor shall it permit any of its Subsidiaries, directly or indirectly, to pay any
management, consulting or similar fees to any Affiliate or to any director,
officer or employee of the Company or any of its Subsidiaries except reasonable
director's fees and expenses and except as set forth on Schedule 9.13.
Notwithstanding the foregoing, no payments may be made with respect to any items
set forth on Schedule 9.13 upon the incurrence and during the continuation of an
Event of Default.
9.14 FISCAL YEAR. The Company and its Subsidiaries shall not
change their fiscal year without the prior consent of the Purchasers.
9.15 PRESS RELEASE; PUBLIC OFFERING MATERIALS. The Company
shall not, nor shall the Company permit any of its Subsidiaries to, disclose a
name of either the Purchasers or any of their respective Affiliates in any press
release or in any prospectus, proxy statement or other materials filed with the
governmental entity relating to a public offering of the capital stock or other
equity interest of the Company or any of its Subsidiaries without such
Purchaser's or such Affiliate's prior written consent which shall not be
unreasonably withheld.
9.16 SUBSIDIARIES. Except as permitted in Section 8.1(j), the
Company shall not, nor shall any of the Subsidiaries be permitted to, directly
or indirectly, to establish, create or acquire any new Subsidiary.
9.17 NO NEGATIVE PLEDGES. Except pursuant to the Senior Credit
Facility Transaction Documents and the Canadian Overdraft LOC, the Company will
not and will not permit any of its Subsidiaries directly or indirectly to enter
into or assume any agreement prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter acquired.
9.18 NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE
COMPANY. Except pursuant to the Senior Credit Facility Transaction Documents and
except as otherwise provided herein, the Company will not and will not permit
any of its Subsidiaries directly or indirectly to create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or
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restriction of any kind on the ability of the Company or any such Subsidiary to:
(a) pay dividends or make any other distribution on any of such Subsidiary's
capital stock owned by the Company or any Subsidiary; (b) subject to
subordination provisions for the benefit of Purchasers, pay any Indebtedness
owed to the Company or any other Subsidiary; (c) make loans or advances to the
Company or any other Subsidiary; or (d) transfer any of its property or assets
to the Company or any other Subsidiary.
9.19 BANK ACCOUNTS. The Company will not and will not permit
any of its Subsidiaries to establish any new bank accounts without prior
telephonic or written notice to the Purchasers, which notice, if telephonic,
shall be followed by written confirmation.
ARTICLE 10
PREPAYMENT
10.1 OPTIONAL PREPAYMENT. The Company may prepay outstanding
principal (together with accrued interest) on the Note at any time without
penalty.
10.2 MANDATORY PREPAYMENT. Subject to Section 7 of the Note,
the Company shall prepay outstanding principal (together with accrued interest)
on the Note in accordance with the "MANDATORY PREPAYMENT" provisions set forth
in Section 3 of the Note.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of the Purchasers,
acceptance of the Securities and payment therefor, or termination of this
Agreement.
11.2 NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
(a) if to WSDF:
Whitney Subordinated Debt Fund, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx
Xx. Xxxxxx X. X'Xxxxx
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with a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to WEP:
Whitney Equity Partners, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx
Xx. Xxxxxx X. X'Xxxxx
with a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(c) if to the LLC, the Company or XX-Xxxxxx:
c/o Aqua-Chem, Inc.
0000 Xx. 000xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxx Xxxxxxxxxxx Xxxxx S.C.
Suite 2100
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
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All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Subject to applicable securities laws and the terms of the
Operating Agreement and the Stockholders' and Members' Agreement, the Purchasers
may assign any of their respective rights under any of the Transaction Documents
to any Person and any holder of the Note, the Membership Units, the Shares, the
Warrant or the Common Stock issuable upon exercise of the Warrant may assign the
Note, the Membership Units, the Shares, the Warrant or the Common Stock issuable
upon exercise of the Warrant to any Person. The Company may not assign any of
its rights under this Agreement without the prior written consent of the
Purchasers. Except as provided in Article 7, no Person other than the parties
hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the Transaction Documents.
11.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the
parties hereto in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
parties hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or
to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any party from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by all of the parties hereto, and (ii) only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances.
11.5 SIGNATURES; COUNTERPARTS. Telefacsimile transmissions of
any executed original document and/or retransmission of any executed
telefacsimile transmission shall be deemed to be the same as the delivery of an
executed original. At the request of any party hereto, the other parties hereto
shall confirm telefacsimile transmissions by executing duplicate original
documents and delivering the same to the requesting party or parties. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
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11.6 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
11.8 DETERMINATIONS, REQUEST OR CONSENTS. All determinations,
requests, consents, waivers or amendments to be made by the Purchasers in their
respective opinions or judgments or with their approval or otherwise pursuant to
the Transaction Documents shall be made (i) with respect to the WSDF Note, by
the holder of the WSDF Note, (ii) with respect to the WSDF Warrant, by the
holder of the WSDF Warrant, and (iii) with respect to the WEP Units, by the
holder(s) of the WEP Units.
11.9 JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTE, THE MEMBERSHIP UNITS, THE SHARES, THE
WARRANT OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO
THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT THE SUCH COURTS
ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 11.2, SUCH SERVICE TO
BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
11.10 SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
11.11 RULES OF CONSTRUCTION. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.
11.12 ENTIRE AGREEMENT. This Agreement, together with the
exhibits and schedules hereto and the other Transaction Documents, is intended
by the parties as a final expression of their
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agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, and the other
Transaction Documents supersede all prior agreements and understandings between
the parties with respect to such subject matter.
11.13 CERTAIN EXPENSES. The Company will pay all expenses of
the Purchasers (including fees, charges and disbursements of counsel) in
connection with any amendment, supplement, modification or waiver of or to any
provision of this Agreement (including, without limitation, a response to a
request by the Company for the Purchasers' consent to any action otherwise
prohibited hereunder), the Operating Agreement, the Note, the Warrant or any
other Transaction Document, or consent to any departure by the Company from, the
terms of any provision of this Agreement, the Operating Agreement, the Note, the
Warrant or any other Transaction Document.
11.14 PUBLICITY. Except as may be required by applicable law,
none of the parties hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other party
hereto. If any announcement is required by law to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.
11.15 FURTHER ASSURANCES. Each of the parties shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
11.16 OBLIGATIONS OF THE PURCHASERS. Each Purchaser's
obligation and the obligations of the Company hereunder are subject to the
execution and delivery of this Agreement by the other Purchasers. The
obligations of each Purchaser shall be several and not joint and no Purchaser
shall be liable or responsible for the acts of any other Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective officers hereunto
duly authorized as of the date first above written.
RUSH CREEK LLC
By: /s/ J. Xxxxx Xxxxxx
--------------------------------------
Name: J. Xxxxx Xxxxxx
Title: Manager
AQUA-CHEM, INC.
By: /s/ J. Xxxxx Xxxxxx
--------------------------------------
Name: J. Xxxxx Xxxxxx
Title: VP
XX-XXXXXX SALES AND SERVICE, INC.
By: /s/ J. Xxxxx Xxxxxx
--------------------------------------
Name: J. Xxxxx Xxxxxx
Title: XX
XXXXXXX SUBORDINATED DEBT FUND, L.P.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
A General Partner
WHITNEY EQUITY PARTNERS, L.P.
By: X.X. Xxxxxxx Equity Partners LLC,
Its General Partner
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-Fact
[SIGNATURE PAGE TO AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT]
71
EXHIBIT 10.17
EXHIBIT E
Financial Covenant Calculations
1. Calculation of INTEREST COVERAGE as set forth in Section 9.8(a).
EBITDA:
Net income (or loss) of the Company and its Subsidiaries,
for the period in question, on a consolidated basis determined
in accordance with GAAP, but excluding: (a) the income (or
loss) of any Person (other than Subsidiaries of the Company)
in which the Company or any of its Subsidiaries has an ownership
interest, unless received by the Company or its Subsidiaries in
a cash distribution; and (b) the income (or loss) of any Person
accrued prior to the date it became a Subsidiary of the Company
or is merged into or consolidated with the Company. $ __________
Plus: Any provision for (or less any benefit from) income and
franchise taxes included in the determination of net
income __________
Interest Expenses net of Interest Income, deducted in
the determination of net income __________
Depreciation deducted in the determination of net income __________
Amortization deducted in determining net income __________
Losses (or less gains) from Asset Dispositions or other
non-cash items included in the determination of net income
(excluding sales, expenses or losses related to current
assets) __________
Extraordinary losses (or less gains), as defined under GAAP,
net of related tax effects included in the determination of
net income __________
Other expenses (as set forth in the Company's financial
statements) __________
Expenses of the transactions completed pursuant to the
Transaction Documents included in the determination of net
income provided that such expenses were included in the Pro
Forma Balance Sheet, or disclosed in the notes thereto __________
Less: Other income __________
EBITDA $ __________
Interest Coverage:
Interest expenses, net of interest income, included in the
determination of net income of the Company and its Subsidiaries
on a consolidated basis $ __________
Less: Amortization of capitalized fees and expenses incurred
with respect to the Transaction Documents included in
interest expense __________
E-1
72
EXHIBIT 10.17
Interest paid in kind (PIK) and included in interest
expense _______________
INTEREST EXPENSES $_______________
ACTUAL INTEREST COVERAGE (EBITDA DIVIDED BY INTEREST EXPENSES) _______________
Required Interest Coverage _______________
In Compliance _______________
Yes/No
2. Calculation of FIXED CHARGE COVERAGE as set forth
in Section 9.8(b).
FIXED CHARGES:
Interest Expenses $_______________
Plus: Any provision for (benefit from) income or
franchise taxes included in the determination of
net income _______________
Scheduled payments of principal with respect
to all Indebtedness (including the principal
portion of scheduled payments of Capital Lease
Obligations) of the Company and its Subsidiaries
on a consolidated basis _______________
All rental and lease expenses of the Company and
its Subsidiaries on a consolidated basis _______________
FIXED CHARGES $_______________
OPERATING CASH FLOW:
EBITDA (calculated in accordance with Section 9.8(a)). $_______________
Plus: All rental and lease expenses of the Company and its
Subsidiaries on a consolidated basis _______________
OPERATING CASH FLOW $_______________
ACTUAL FIXED CHARGE COVERAGE (OPERATING CASH FLOW DIVIDED
BY FIXED CHARGES) _______________
Required Fixed Charge Coverage _______________
In Compliance _______________
Yes/No
3. Calculation of Total Funded Indebtedness Leverage
as set forth in Section 9.8(c).
TOTAL FUNDED INDEBTEDNESS:
Senior Indebtedness $_______________
E-2
73
EXHIBIT 10.17
Plus: Subordinated Indebtedness (as defined in the WSDF Note) _______
Less: All reimbursement obligations in respect of letters of credit _______
Total Funded Indebtedness $_______
EBITDA (calculated in accordance with Item No. 1 of this Exhibit): $_______
Actual Total Funded Indebtedness Leverage (Total Funded Indebtedness
divided by Adjusted Operating Cash Flow) _______
Required Total Funded Indebtedness Leverage _______
In Compliance _______
Yes/No
4. Calculation of Capital Expenditures
CAPITAL EXPENDITURES are defined as follows:
Amount capitalized as capital expenditures for the period in question,
under GAAP, as property, plant, and equipment or similar fixed asset
accounts
$_______
Plus: deposits made during such period in connection with
property, plant, and equipment; less deposits of a prior
period included above _______
CAPITAL EXPENDITURES _______
Less: Portion of Capital Expenditures financed under
capital leases or other Indebtedness _______
UNFINANCED CAPITAL EXPENDITURES/ACTUAL CAPITAL EXPENDITURES (used in
calculation of Fixed Charge Coverage) $_______
5. Calculation of Minimum Tangible Net Worth
ACTUAL TANGIBLE NET WORTH _______
REQUIRED MINIMUM TANGIBLE NET WORTH _______
IN COMPLIANCE _______
Yes/No
E-3
