THIS RESTRUCTURING AGREEMENT, dated as of January 30, 1998 (this
"Restructuring Agreement"), is entered into by and among WAHLCO
ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation (the "Company"), and
XXX ACQUISITION CORP., a Delaware corporation ("WESAC"); WEXFORD MANAGEMENT
LLC, a Connecticut limited liability company ("Wexford Management");
WEXFORD CAPITAL PARTNERS II, L.P., a Delaware limited partnership ("Capital
Partners"); WEXFORD OVERSEAS PARTNERS I, L.P., a Delaware limited
partnership ("Overseas Partners"); WEXFORD SPECIAL SITUATIONS 1996, L.P., a
Delaware limited partnership ("Wexford Special Situations"); WEXFORD
SPECIAL SITUATIONS 1996 INSTITUTIONAL, L.P., a Delaware limited partnership
("Wexford Special Institutional"); WEXFORD SPECIAL SITUATIONS 1996 LIMITED,
a Cayman Islands exempted company partnership ("Wexford Special Limited",
and WEXFORD-EURIS SPECIAL SITUATIONS 1996, L.P., a Delaware limited
partnership ("Wexford Euris"); C. Xxxxxxx Xxxx, an individual, Xxxxx X.
Xxxx, an individual, Maarten Xxxxxxx, an individual, Xxxxxxx Xxxxxx
Xxxxxxx-Xxxxxxx, an individual, and Xxxxxxx Xxxxxxx, an individual (each,
an "Individual Party," and collectively, the "Individual Parties").
RECITALS
A. The Company has experienced losses for each of the past six
years and as of September 30, 1997, the consolidated stockholders' equity
of the Company was approximately negative $5.2 million.
B. The Wexford Funds have been the principal sources of working
capital and loans to the Company since May 1995.
C. In order to improve the financial condition of the Company, the
Company has devised the Restructuring Plan, which contemplates the Rights
Offering, the Silicon Valley Bank Repayment, the WESAC Debt Conversion, the
New 1998 Credit Agreement, the Reverse Stock Split, the Funding Debt
Conversion and the WESAC Liquidation.
D. The parties acknowledge that the consummation of each
constituent transaction in the Restructuring Plan is contingent upon the
consummation of each other constituent transaction.
E. Approval of certain of the constituent transactions in the
Restructuring Plan requires the approval of the stockholders of the
Company, and the Reverse Stock Split requires the approval of the New York
Stock Exchange.
F. The Restructuring Plan has been approved by the board of
directors of the Company as being in the best interests of the Company and
its stockholders, and the board of directors has recommended approval by
the stockholders of the Company of each constituent transaction that
requires stockholder approval.
G. On the terms and subject to the conditions contained herein,
the parties desire to implement the Restructuring Plan.
1. Definitions.
1.1. "Agent" mean Wexford Management, in its capacity as agent for the
lenders pursuant to the 1998 Credit Agreement.
1.2. "Average Closing Price" means the average of the closing price for the
Company's Common Stock on the New York Stock Exchange for the 20 trading
days prior to the effective date of the Reverse Stock Split.
1.3. "Basic Subscription Privilege" has the meaning assigned to such term
in Section 2.1(c) hereof.
1.4. "Capital Partners" has the meaning assigned to such term in the
recitals to this Restructuring Agreement.
1.5. "Capital Stock" shall mean any class or series of capital stock of the
Company.
1.6. "Closing Date" is that date on which all of the transactions
contemplated by this Restructuring Agreement, other than the Rights
Offering, the Reverse Stock Split and the WESAC Liquidation are
simultaneously consummated, at a closing to be held on April 15, 1998 at
10:00 a.m. at a location to be designated by Wexford or at such other time
as the parties hereto shall agree.
1.7. "Company" means Wahlco Environmental Systems, Inc., a Delaware
corporation.
1.8. "Conversion Debt" means the aggregate sum of approximately $11,606,000
million, which the Company will owe to WESAC as of March 31, 1998, together
with interest accruing thereon after such date at the rate of approximately
$125,000 per month through the Closing Date.
1.9. "Cross-Receipt" means a cross-receipt in form and substance
satisfactory to the Agents, by which the Company certifies to the Agent
that the Restructuring Conditions have been duly met.
1.10. "Governmental Authority" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof
or any other governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, body, agency, bureau or entity
(including any arbitrator with authority to bind a party at law).
1.11. [Intentionally omitted.]
1.12. "Liquidation Plan" means the Plan of Liquidation adopted by the board
of directors and approved by the stockholders and creditors of WESAC, in
substantially the form of Exhibit A attached hereto.
1.13. "1998 Credit Agreement" means that certain Amended and Restated
Credit Agreement dated as of January 30, 1998, in the form attached hereto
as Exhibit B among the Company, the parties named as Lenders therein, and
Wexford Management, as Agent.
1.14. "1998 Loan Documents" means each document or agreement required to be
executed and delivered in connection with the execution and delivery of the
1998 Credit Agreement.
1.15. "Overseas Partners" has the meaning assigned to such term in the
recitals to this Restructuring Agreement.
1.16. "Oversubscription Privilege" has the meaning assigned to such term in
Section 2.3 hereof.
1.17. "Permitted Investments" means (a) direct obligations of the United
States of America (including obligations issued or held in book-entry form
on the books of the Department of the Treasury of the United States of
America) or obligations the timely payment of the principal of, or interest
on, which are fully guaranteed by the United States of America; (b)
obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following: Export-Import Bank of the United
States, Federal Housing Administration or other agency or instrumentality
of the United States; (c) repurchase agreements with financial institutions
or savings and loan associations having a combined capital surplus of at
least $500,000,000 fully secured by collateral security described in
clauses (a) or (b) of this definition and continuously having a market
value of at least equal to the amount so invested; (d) interest-bearing
demand or time deposits (including certificates of deposit) which are
either (i) insured by the Federal Deposit Insurance Corporation, or (ii)
held in banks and savings and loan associations, having general obligations
rated at least "AA" or equivalent by S&P or Xxxxx'x, or if not so rated,
secured at all times, in the manner and to the extent provided by law, by
collateral security described in clauses (a) or (b) of this definition, of
a market value of no less than the amount of moneys so invested; (e)
commercial paper rated (on the date of acquisition thereof) at least A-1 or
P-1 or equivalent by S&P or Xxxxx'x, respectively (or an equivalent rating
by another nationally recognized credit rating agency of similar standing
if neither of such corporations is then in the business of rating
commercial paper), maturing not more than 90 days from the date of creation
thereof; and (f) any corporate evidence of indebtedness rated at least "A-"
or equivalent by S&P or Xxxxx'x, maturing not more than 90 days from the
date of creation thereof.
1.18. "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or
department thereof).
1.19. "Post-Split Common Stock" means the Common Stock of the Company after
giving effect to the Reverse Stock Split.
1.20. "Pre-Split Common Stock" means the Common Stock of the Company before
giving effect to the Reverse Stock Split.
1.21. "Proposal 2" means that proposal to the Stockholders of the Company
set forth in the Prospectus/Proxy Statement whereby the Stockholders
approve two amendments to the Company's Certificate of Incorporation, which
approval is a condition precedent to the Rights Offering and the Reverse
Stock Split.
1.22. "Proposal 3" means that proposal to the Stockholders of the Company
set forth in the Prospectus/Proxy Statement whereby the Stockholders
authorize the Company to issue and sell additional shares of Post-Split
Common Stock in order to effect the Rights Offering and the Funding Debt
Conversion.
1.23. "Prospectus/Proxy Statement" means the combined Registration
Statement on Form S-1 and Proxy Statement filed pursuant to Rule 14a-6, of
the Company as filed with the Securities and Exchange Commission ("SEC") on
December 19, 1997 and amended on February 4, 1998.
1.24. "Restructuring Plan" means the plan of financial restructuring
devised by the Company in order to improve its financial condition, and
which contemplates the Rights Offering, the Silicon Valley Bank Repayment,
the WESAC Debt Conversion, the 1998 Credit Agreement, the Reverse Stock
Split, and the WESAC Liquidation.
1.25. "Reverse Stock Split" means the 1-for-10 reverse stock split which
the Company intends to effect with respect to its Common Stock after
completion of the Rights Offering.
1.26. "Rights" has the meaning assigned to such term in Section 2.1(a)
hereof.
1.27. "Rights Certificates" has the meaning assigned to such term in
Section 2.1(a) hereof.
1.28. "Rights Holders" means has the meaning assigned to such term in
Section 2.1 hereof.
1.29. "Rights Offering" means the offer to existing stockholders of the
Company (other than WESAC) of rights to purchase an aggregate of 27,112,000
shares of the Pre-Split Common Stock at an exercise price of $.10 per
share.
1.30. "Rights Record Date" means March 3, 1998.
1.31. "SEC Documents" means the Prospectus/Proxy Statement in final form
and all exhibits filed together therewith.
1.32. "Silicon Valley Bank Repayment" means the repayment by the Company
from the proceeds of the Rights Offering of all cash borrowings for loans
under the SVB Facility and the deposit of cash collateral for all
outstanding letters of credit issued by SVB pursuant to the SVB Facility.
1.33. "Special Meeting" means the special meeting of stockholders of the
Company to be held on March 2, 1998, or such later date to which such
special meeting may be adjourned.
1.34. "Stand-By Commitment" has the meaning assigned to such term in
Section 2.1(d) hereof.
1.35. "Stand-By Commitment Fee" means a fee of $100,000, payable in 549,752
shares of Pre-Split Common Stock. -----------------------
1.36. "Stand-By Purchasers" means Capital Partners and Overseas Partners,
in their capacity as purchasers of unsubscribed shares of Pre-Split Common
Stock in the Rights Offering.
1.37. "Subscription Agent" means ChaseMellon Shareholder Services LLC as
the Company's transfer agent and as subscription agent for the Rights
Offering.
1.38. "Subscription Price" means $.10 per share of Pre-Split Common Stock.
1.39. "SVB" means Silicon Valley Bank.
1.40. "SVB Facility" means the Amendment and Forbearance Agreement, dated
as of May 9, 1996, between SVB and the Company, as amended to date, and the
"Loan Agreements" (as defined therein) as modified thereby.
1.41. "Tranche A Line" means the commitment by the Lenders under the 1998
Credit Agreement to lend the Company an aggregate principal amount of up to
$3,000,000 from time to time prior to the Closing Date under this
Restructuring Agreement. To the extent not prepaid from proceeds of the
Rights Offering, the unpaid principal balance of the Tranche A Line shall
have a scheduled maturity date of December 31, 2000, shall bear interest
and shall be governed by the terms and conditions of the 1998 Credit
Agreement.
1.42. "Tranche B Line" means the commitment by the Lenders under the 1998
Credit Agreement to lend the Company an aggregate principal amount of up to
$2,500,000 from time to time after the Closing Date under this
Restructuring Agreement to fund the Company's working capital needs.
1.43. "Transaction Documents" means all of the agreements among the several
parties hereto, which are intended to effect and consummate the
transactions contemplated by this Restructuring Agreement.
1.44. "Unsubscribed Shares" means any shares of Pre-Split Common Stock
offered in the Rights Offering and not purchased through exercise of the
Basic Subscription Privilege or the Oversubscription Privilege.
1.45. "WESAC" means XXX Acquisition Corp., a Delaware corporation.
1.46. "WESAC Debt Liquidation" has the meaning assigned to such term in
Section 2.2 hereof.
1.47. "WESAC Lenders" means each of Capital Partners, Overseas Partners,
the Wexford 1996 Funds, C. Xxxxxxx Xxxx, Xxxxx Xxxx and Maarten Xxxxxxx, in
each case in such party's capacity as a lender to WESAC.
1.48. "WESAC Liquidation" means the liquidation of WESAC pursuant to the
Liquidation Plan, which will become effective on the Closing Date by the
execution, delivery and filing with the Secretary of State of Delaware of a
Certificate of Liquidation substantially in the form attached to the
Liquidation Plan as Annex 1.
1.49. "Wexford Funds" means the Wexford 1995 Funds and the Xxxxxxx 0000
Funds, collectively.
1.50. "Wexford Fee" shall have the meaning assigned to such term in Section
5.5(g) hereof.
1.51. "Wexford 1995 Funds" means Capital Partners and Overseas Partners,
collectively.
1.52. "Wexford 1996 Funds" means Wexford Special Situations, Wexford
Special Institutional, Wexford Special Limited and Wexford Euris,
collectively.
1.53. "Wexford Parties" means WESAC, the Xxxxxxx 0000 Funds, the Wexford
1996 Funds and Wexford Management, collectively.
2. THE RESTRUCTURING PLAN
2.1. Rights Offering. Set forth below are the principal terms and
conditions of the Rights Offering. In addition to the terms and conditions
set forth below, the Rights Offering will be conducted on the terms and
conditions contained in the Prospectus/Proxy Statement under the heading
"THE RIGHTS OFFERING," which additional terms and conditions are hereby
incorporated by reference as if set forth herein in full; provided,
however, that in the event of any inconsistency between the terms of this
Agreement and the provisions of the Prospectus/Proxy Statement, the terms
of this Agreement shall control.
(a) Distribution of Rights. After upon approval of Proposal 2 and Proposal
3 at the Special Meeting, the Company shall distribute to the stockholders
of record (other than WESAC) on the Rights Record Date (such recipients or
their transferees being hereinafter referred to as the "Rights Holders"),
eight (8) rights, each exercisable to purchase, on the terms and conditions
hereinafter set forth, one share of Pre-Split Common Stock (the "Rights")
at a price of $.10 per share (the "Subscription Price") for each share of
Pre-Split Common Stock held by such Rights Holder on the Rights Record
Date. The Rights shall be (i) evidenced by transferable rights certificates
(the "Rights Certificates"), and (ii) distributed at no cost to the Rights
Holders.
(b) Expiration of Rights. The Rights will expire on the Expiration Date;
provided, however, that the Rights Offering may be extended for up to 30
additional days by the board of directors of the Company in its sole and
absolute discretion.
(c) Subscription Privileges. Each Rights Holder is entitled to subscribe
for all or any portion of the shares of Pre-Split Common Stock that may be
purchased upon exercise of the Rights (the "Basic Subscription Privilege").
Each Right also entitles the Rights Holder to oversubscribe for any shares
not sold to Rights Holders exercising the Basic Subscription Privilege, not
to exceed one additional share of Pre-Split Common Stock for each share of
Pre-Split Common Stock purchased under the Basic Subscription Privilege
(the "Oversubscription Privilege"). Only Rights Holders who exercise Rights
under the Basic Subscription Privilege will be entitled to exercise the
Oversubscription Privilege. If the shares of Pre-Split Common Stock not
subscribed for by Rights Holders through exercise of the Basic Subscription
Privilege are not sufficient to satisfy all oversubscriptions, available
shares will be allocated pro rata (subject to the elimination of fractional
shares) among oversubscribing Rights Holders in proportion to the number of
shares of Pre-Split Common Stock each oversubscribing Rights Holder has
subscribed for under the Basic Subscription Privilege.
(d) Stand-By Commitment. On the terms and conditions of this Restructuring
Agreement and this Section 2.1(d), the Stand-By Purchasers agree, severally
and not jointly, to purchase all of the Unsubscribed Shares on the Closing
Date, at the Exercise Price (the "Stand-By Commitment"). Pursuant to the
Stand-By Commitment, Capital Partners shall purchase 70% of the
Unsubscribed Shares and Overseas Partners shall purchase 30% of the
Unsubscribed Shares. At least five days prior to the Closing Date, the
Company shall notify each Stand-By Purchaser of the number of shares to be
purchased by it hereunder and shall identify the bank account into which
the purchase price shall be paid. On the Closing Date, against payment of
the applicable purchase price by wire transfer of immediately available
funds to the bank account designated by the Company, the Company shall
deliver to each Stand-By Purchaser one or more stock certificates
representing the number of shares of Pre-Split Common Stock purchased by
such Stand-By Purchaser hereunder. As compensation for providing the
Stand-By Commitment, on the Closing Date, the Company shall pay the
Stand-By Purchasers the Stand-By Commitment Fee.
2.2. WESAC Debt Conversion. On the Closing Date, WESAC agrees to convert
the Conversion Debt into approximately 11,606,000 shares of Post-Split
Common Stock (the "WESAC Debt Conversion"). On the Closing Date, WESAC will
deliver to the Company the notes and instruments evidencing the Conversion
Debt identified in the definition of such term in this Restructuring
Agreement, and upon issuance of the shares of Post-Split Common Stock to be
delivered to WESAC hereunder, each such note or instrument evidencing the
Conversion Debt shall be marked "canceled;" provided, however, that in the
event any note or instrument evidencing any obligation constituting
Conversion Debt shall be lost or unable to be located, WESAC shall execute
and deliver an affidavit of loss and agree to indemnify the Company against
such loss, in which event the Company shall issue such shares of Post-Split
Common Stock to WESAC as if it had delivered the lost or unlocated note or
instrument.
2.3. Reverse Stock Split. Pursuant to the Restructuring Plan, the Company
intends, on the Closing Date, following the completion of the Rights
Offering, but prior to the WESAC Debt Conversion and the WESAC Liquidation,
to effect a one-for-ten reverse stock split, subject to (a) stockholder
approval, and (b) the prior approval of the New York Stock Exchange, which
approvals the Company agrees to seek promptly following the execution and
delivery of this Restructuring Agreement. The Company will not issue any
fractional shares of Post-Split Common Stock after the consummation of the
Reverse Stock Split, but will, in lieu thereof, pay to each stockholder
otherwise entitled to receive a fractional share of Post-Split Common
Stock, cash on a fractional per share basis equal to such fraction
multiplied by the greater of the Subscription Price or the Average Closing
Price.
2.4. 1998 Credit Agreement. Concurrently with the execution and delivery of
this Restructuring Agreement, the Company, and Capital Partners, Overseas
Partners, and each of the Wexford 1996 Funds, as lenders, and Wexford
Management, as agent, shall enter into the 1998 Credit Agreement and shall
execute and deliver each of the 1998 Loan Documents required to be executed
and delivered pursuant to the 1998 Credit Agreement.
2.5. WESAC Liquidation.
(a) On the Closing Date, but after the consummation of the Rights Offering,
the Reverse Stock Split and the WESAC Debt Conversion, WESAC Liquidation
shall be effected pursuant to the Liquidation Plan.
(b) By his or its execution and delivery of this Agreement, each
stockholder and each WESAC Lender hereby ratifies, confirms, adopts and
approves the terms and conditions of the Liquidation Plan. Pursuant to such
Liquidation Plan, WESAC will cease the active conduct of its business and
wind up its affairs and, within the meaning of Section 332 of the Internal
Revenue Code of 1986, as amended, will liquidate and distribute all of its
assets, if any, in complete liquidation, less any assets retained to meet
claims. The Liquidation Plan shall be consummated promptly, but in any
event, within one calendar month following the Closing Date.
(c) Subject to Section 2.5(d) hereof, each party who, pursuant to the
Liquidation Plan, will receive shares of the Common Stock, agrees that he
or it will not sell more than 25,000 shares of Post-Split Common Stock
received by such party pursuant to the Liquidation Plan in any thirty-day
period through regular-way brokers' sales. The execution and delivery of
this Agreement shall constitute the irrevocable consent of each WESAC
Lender to the limitations set forth in this Section 2.5(c).
(d) The shares of Common Stock of the Company distributed pursuant to the
Liquidation Plan shall not have been registered pursuant to the Securities
Act of 1933, as amended (the "Act"). Each stock certificate representing
shares of Common Stock of the Company distributed pursuant to the
Liquidation Plan shall bear a legend restricting its transferability under
the Act. The Company agrees for the benefit of each WESAC Lender who
consents to the limitations set forth in Section 2.5(c) hereof to use its
reasonable best efforts to register the resale of such shares of Common
Stock on Form S-3 within ninety (90) days following the Closing Date, and
to maintain the effectiveness of such registration statement for at least
90 days thereafter. Any WESAC Lender who fails to consent to the
limitations set forth in Section 2.5(c) hereof shall not be entitled to
have any shares of Common Stock owned by him or it registered for resale
hereunder.
2.6. Use of Proceeds. On the Closing Date, the Company shall use the net
proceeds of the Rights Offering as follows: (a) to pay the costs and
expenses of the Restructuring Plan, (b) to make the payments necessary to
effect the Silicon Valley Bank Repayment, (c) to the extent funds are
available therefor, to repay borrowings under the Chase Facility (as
defined in the 1998 Credit Agreement) or outstanding Tranche A Loans, and
(d) for working capital purposes. Pending the Closing Date, the Company
shall invest the proceeds of the Rights Offering in Permitted Investments.
3. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties and of the Company. The Company
represents and warrants to each other party hereto:
(a) Corporate Existence and Standing. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware. Each subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. The Company and each subsidiary has all requisite corporate
authority to own its property and to conduct its business in each
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such
qualification necessary or is subject to no material liability or
disability by reason of the failure to be so qualified.
(b) Capitalization.
(i) As of the date hereof, the total authorized capitalization of the
Company consists of 10,000,000 shares of preferred stock, none of which are
issued or outstanding, and 50,000,000 shares of common stock, of which
17,649,000 shares are issued and outstanding. All of the outstanding shares
of common stock have been duly and validly issued and are fully paid and
non-assessable.
(ii) Except as required to be disclosed in the SEC Documents, there are no
outstanding subscriptions, warrants, options, calls or commitments of any
character relating to or entitling any person to purchase or otherwise
acquire any of the Capital Stock of the Company or any subsidiary thereof
or any security that is convertible into or exchangeable for such Capital
Stock. Except as disclosed in the SEC Documents, there are no preemptive or
similar rights to subscribe for or to purchase any Capital Stock of the
Company, and, except as disclosed in the SEC Documents, the Company has not
entered into any presently outstanding agreement to register its Capital
Stock or debt securities under the Securities Act of 1933, as amended (the
"Securities Act").
(iii) The shares of Capital Stock to be issued pursuant to the
Restructuring Plan have been duly authorized and, when issued in accordance
with this Agreement and the Prospectus/Proxy Statement, will be validly
issued, fully paid and nonassessable, free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company,
except as set forth in this Restructuring Agreement or by operation of law.
Except as set forth in the SEC Documents, the holders of outstanding
Capital Stock of the Company are not and shall not be entitled to
preemptive or other rights afforded by the Company to subscribe for or to
purchase the Capital Stock or other securities of the Company as a result
of the transactions to be consummated pursuant to the Restructuring Plan.
(c) Authorization and Validity. The Company has the power and authority and
legal right to execute and deliver the Transaction Documents to which it is
a party and to perform its obligations thereunder. The execution and
delivery by the Company of the Transaction Documents and the performance of
its obligations thereunder have been duly authorized by all necessary
corporate action on behalf of the Company and no further consent or
authorization of its board of directors or stockholders is required (other
than such stockholder approval of Proposals 1-3 to the extent set forth in
the Prospectus/Proxy Statement). The Transaction Documents to which it is a
party have been duly and validly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms.
(d) No Violation. Neither the execution and delivery by the Company of the
Transaction Documents to which it is a party nor the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will (i) violate the Company's or any subsidiary's certificate of
incorporation or by-laws, (ii) violate any judgment, decree, order,
statute, law, regulation or rule of any court or governmental authority to
which the Company or any of its subsidiaries or any of their respective
properties may be subject or, (iii) (A) cause the acceleration of the
maturity of any debt or obligation of the Company or any of its
subsidiaries or (B) violate, or be in conflict with, or constitute a
default under, or permit the termination of, or result in the creation of,
any lien upon any property of the Company or any of its subsidiaries under
any agreement or instrument to which such Person is a party or by which
such Person (or its properties) may be bound. Neither the Company nor any
of its subsidiaries is (1) in violation of any term of its respective
certificates of incorporation or by-laws, or (2) in default of or
non-compliance with any material instrument, contract or agreement to which
it is a party or of any judgment, decree, order, statute, rule or
governmental regulation which is applicable to it or its business or
properties.
(e) No Consents. Neither the execution and delivery of the Transaction
Documents to which the Company is a party nor the consummation of the
transactions contemplated hereby, requires the consent, approval or
authorization of, or filing, registration or qualification with, any Person
or any governmental authority on the part of the Company or its
subsidiaries, except for (i) the approval of the Reverse Stock Split by the
New York Stock Exchange, and (ii) the approval of Proposals 1-3 by the
stockholders of the Company to the extent set forth in the Prospectus/Proxy
Statement.
(f) Litigation. There are no pending or, to the best of the Company's
knowledge, threatened actions or proceedings of any kind, including actions
or proceedings of or before any Governmental Authority, to which the
Company or any subsidiary is a party or is subject, or by which any of them
or any of their properties are bound seeking to challenge or restrain the
consummation of the Restructuring Plan, nor, to the best knowledge of the
Company, is there any basis for any such action or proceeding.
3.2. Representations and Warranties and of the Wexford Parties. The Wexford
Parties represent and warrant to each other party hereto:
(a) Existence and Standing. Each Wexford Party is duly formed, validly
existing and in good standing under the laws of its organization. Each
Wexford Party has all requisite authority to own its property and to
conduct its business in each jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary or is subject to no material
liability or disability by reason of the failure to be so qualified.
(b) Authorization and Validity. Each Wexford Party has the power and
authority and legal right to execute and deliver the Transaction Documents
and to perform its obligations hereunder and thereunder. The execution and
delivery by each Wexford Party of the Transaction Documents and the
performance of its obligations hereunder and thereunder have been duly
authorized by all necessary corporate, partnership or manager action on
behalf of such Wexford Party and no further consent or authorization of its
board of directors, general or limited partners or members is required. The
Transaction Documents to which each Wexford Party is a party have been duly
and validly executed and delivered by each Wexford Party and constitute the
legal, valid and binding obligations of such Wexford Party, enforceable
against such Wexford Party in accordance with their respective terms.
(c) No Violation. Neither the execution and delivery by any Wexford Party
of the Transaction Documents to which it is a party nor the consummation of
the transactions herein or therein contemplated, nor compliance with the
provisions hereof or thereof will (i) violate the Governing Documents of
any Wexford Party, (ii) violate any judgment, decree, order, statute, law,
regulation or rule of any court or governmental authority to which any
Wexford Party or any of their respective properties may be subject, or
(iii) violate, or be in conflict with, or constitute a default under, or
permit the termination of, or result in the creation of, any lien upon any
property of any of the Wexford Parties under any agreement or instrument to
which such Wexford Party is a party or by which such Wexford Party (or its
properties) may be bound. None of the Wexford Parties is (1) in violation
of any term of its Governing Documents, or (2) in default of or
non-compliance with any material instrument, contract or agreement to which
it is a party or of any judgment, decree, order, statute, rule or
governmental regulation which is applicable to it or its business or
properties.
(d) No Consents. Neither the execution and delivery of the Transaction
Documents to which any Wexford Party is a party nor the consummation of the
transactions contemplated thereby requires the consent, approval or
authorization of, or filing, registration or qualification with, any Person
or any Governmental Authority on the part of any of the Wexford Parties.
(e) Litigation. There are no pending or, to the best of knowledge of any
Wexford Party, threatened actions or proceedings of any kind, including
actions or proceedings of or before any Governmental Authority, to which
any Wexford Party is a party or is subject, or by which any of them or any
of their properties are bound seeking to challenge the validity of or
restrain the consummation of the transactions contemplated by, the
Restructuring Plan, nor to the knowledge of such Wexford Party, is there
any basis for any such action or proceeding.
3.3. Representations and Warranties of the Individual Parties. Each
Individual Party, severally and not jointly, represents and warrants to
each other party hereto as to only himself or herself:
(a) Authorization and Validity. Each Individual Party has the power and
authority and legal right to execute and deliver the Transaction Documents
to which such Individual Party is a party and to perform his or her
obligations hereunder and thereunder. The Transaction Documents to which
such Individual Party is a party have been duly and validly executed and
delivered by such Individual Party and constitute legal, valid and binding
obligations of such Individual Party, enforceable against such Individual
Party in accordance with their respective terms.
(b) No Violation. Neither the execution and delivery by each Individual
Party of the Transaction Documents to which such Individual Party is a
party nor the consummation of the transactions therein contemplated, nor
compliance with the provisions hereof or thereof will (i) violate any
judgment, decree, order, statute, law, regulation or rule of any court or
governmental authority to which such Individual Party or any of their
respective properties may be subject, or (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or
result in the creation of, any lien upon any property of such Individual
Party under any agreement or instrument to which such Individual Party is a
party or by which such Individual Party (or its properties) may be bound.
(c) No Consents. Neither the execution and delivery of the Transaction
Documents to which each Individual Party or a party, nor the consummation
of the transactions contemplated thereby requires the consent, approval or
authorization of, or filing, registration or qualification with, any Person
or any Governmental Authority on the part of any of the Individual Parties.
(d) Litigation. There are no pending or, to the best knowledge of any
Individual Party, threatened actions or proceedings of any kind, including
actions or proceedings of or before any Governmental Authority, to which
any Individual Party is a party or is subject, or by which any of them or
any of their properties are bound seeking to challenge the validity of or
restrain the consummation of the transactions contemplated by the
Restructuring Plan, nor, to the best knowledge of any Individual Party, is
there any basis for any such action or proceeding.
4. COVENANTS OF THE COMPANY.
4.1. The Company hereby covenants to each of the other parties hereto that
between the date hereof and the Closing Date, it shall employ its
reasonable best efforts to perform all of the following:
(a) SEC Documents. The Company shall cause a final draft of all of the SEC
Documents, including but not limited to, the Prospectus/Proxy Statement to
be prepared, properly filed with the SEC, and if declared effective,
thereafter mailed to all stockholders deemed to be stockholders of records
as of February 2, 1998 (the "Record Date").
(b) Special Meeting. The Company shall notify all stockholders of record of
the Special Meeting, and shall hold the Special Meeting at the time and
place as set forth in such notice.
(c) Approvals. The Company shall obtain all necessary approvals for each
constituent transaction of the Restructuring Plan as may be necessary,
including without limitation (i) the approval of a majority of stockholders
for Proposals 2 and 3 as set forth in the Prospectus/Proxy Statement; and
(ii) the approval of the New York Stock Exchange for the Reverse Stock
Split.
(d) Rights Offering. Upon approval of Proposals 2 and 3 at the Special
meeting, the Company shall proceed with the distribution of Rights, in
accordance with the terms of the Rights Offering, pursuant to Section 2.1
hereof.
(e) Reverse Stock Split. Following completion of the Rights Offering, but
prior to the WESAC Debt Conversion and the WESAC Liquidation, the Company
shall effect the Reverse Stock Split pursuant to Section 2.4 hereof.
(f) Actions Before Closing Date. Between the date hereof and the Closing
Date, the Company shall not take any action which shall cause it to be in
breach of any of its representations, warranties, covenants or agreements
contained in this Restructuring Agreement or any other Loan Document. The
Company shall use, at its sole cost and expense, all reasonable best
efforts to perform its obligations and satisfy all conditions to closing as
are hereinafter set forth as soon as practicable, but in no event later
than the Closing Date.
5. CONDITIONS PRECEDENT.
The obligations of each of the parties hereto to consummate the
transactions contemplated by this Restructuring Agreement are subject to
the fulfillment, at or before the Closing Date, of the following
conditions, any one or more of which may be waived by all of the other
parties hereto in their sole discretion.
5.1. Representations and Warranties. The representations and warranties of
each party as set forth in this Restructuring Agreement shall be true and
correct in all material respects on and as of the Closing Date as though
made on and as of the Closing Date, and each party shall have received from
every other party a certificate dated the Closing Date and signed by an
authorized representative of such party to that effect.
5.2. Performance of Obligations. Each party shall have performed in all
material respects all obligations required under this Restructuring
Agreement to be performed by such party on or before the Closing Date, and
each party shall have received from every other party a certificate dated
the Closing Date and signed by an authorized representative of such party
to that effect.
5.3. Consents and Approvals. All consents, waivers, authorizations and
approvals (including but not limited to, the consent, authorization and
approval of the stockholders of record of the Company to Proposals 2 and 3
as set forth in the Prospectus/Proxy Statement and the New York Stock
Exchange to the Reverse Stock Split) required or desired in connection with
the execution, delivery and performance of this Restructuring Agreement
shall have been duly obtained and shall be in full force and effect on the
Closing Date.
5.4. No Violation of Orders. No preliminary or permanent injunction or
other order issued by any court or other governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree
or executive order promulgated or enacted by any governmental or regulatory
authority, domestic or foreign, that declares this Restructuring Agreement
invalid or unenforceable in any respect or which prevents the consummation
of the transactions contemplated hereby shall be in effect, and no action
or proceeding before any court or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any government or
governmental or regulatory authority, domestic or foreign, which seeks to
prevent or delay the consummation of the transactions contemplated by this
Restructuring Agreement or which challenges the validity or enforceability
of this Restructuring Agreement, and which in any such case has a
reasonable likelihood of success in the opinion of counsel to the Company
or to the Wexford Parties.
5.5. Restructuring Conditions. The following conditions (the "Restructuring
Conditions") shall be conditions precedent to the obligations of the
parties hereunder, and all of such Restructuring Conditions will be
effected as simultaneously as practical.
(a) Tranche A and Tranche B Loans. All conditions precedent to the funding
of the first Tranche A Loan shall have been satisfied, all conditions
precedent to the funding of the first Tranche B Loan shall have been duly
satisfied, and no Event of Default shall exist or be continuing under the
1998 Credit Agreement.
(b) SEC Documents. The final SEC Documents, in a form satisfactory to
WESAC, shall (i) have been filed by the Company with the SEC under the Act
and the Securities Exchange Act of 1934, as amended, and with all necessary
or appropriate state securities commissions, agencies and bureaus, and (ii)
such final SEC Documents shall have been declared effective by the SEC and
shall have been approved or authorized by all requisite state securities
commissions, agencies and bureaus.
(c) Rights Offering. The Rights Offering shall have been duly approved,
authorized and conducted, and all the Rights shall have been subscribed (by
non-Wexford Parties or under the Stand-by Commitment). The Rights, and the
shares of Pre-Split Common Stock deliverable upon subscription under the
Rights, shall have been accepted for listing, upon official notice of
issuance, on the New York Stock Exchange.
(d) Reverse Stock Split. The Reverse Stock Split shall have taken place:
(i) The Company's Certificate of Incorporation shall have been duly
amended, after all necessary or appropriate approvals or other actions by
the Company's stockholders and its board of directors.
(ii) The New York Stock Exchange, and all other appropriate self-regulatory
organizations, shall have duly approved the Reverse Stock Split as
described in the SEC Documents.
(e) SVB Repayment. All loans made under the SVB Facility shall have been
repaid in full using proceeds of the Rights Offering, and all letter of
credit obligations under the SVB Facility shall have been collateralized
with cash proceeds of the Rights Offering. SVB shall have transferred in
immediately available funds, to the Agent, or to the Agent's order, all
cash collateral previously posted by WESAC or any other Wexford Party under
the SVB Facility. SVB shall have released WESAC and all other Wexford
Parties from their guarantees, and released to the Agent all collateral
security owned by the Company or its subsidiaries posted in SVB's favor
securing the SVB Facility.
(f) WESAC Liquidation. The Liquidation Plan shall have been approved by the
holders of a majority of the outstanding shares of common stock of WESAC.
(g) Certain Fees. The Company shall have (i) paid $100,000 to Wexford
Management, in cash (the "Wexford Fee"), in consideration of its advice and
cooperation in arranging the Restructuring Plan, in immediately available
funds or by its good check to the order of Wexford Management, and (ii)
delivered $100,000 to the order of the Stand-by Purchasers (in the form of
certificates for 549,752 fully paid and non-assessable shares of Pre-Split
Common Stock).
When the Company believes that the conditions precedent to the
Restructuring Plan have been duly satisfied in all particulars, a duly
authorized officer of the Company shall execute and deliver to the Agent
the Company's certificate portion of the cross-receipt. When the Agent is
satisfied that all elements of the Agent's Certificate portion of the
cross-receipt are true, the Agent's duly authorized officer shall
countersign the cross-receipt and deliver a copy to the Company, all on
behalf of (and binding upon) all of the Wexford Parties party hereto.
5.6. Opinion of Counsel to the Company. The Wexford Parties shall have
received an opinion, dated as of the Closing Date, from Xxxxx Xxxxxx, Esq.,
counsel to the Company, substantially in form and substance satisfactory to
the Wexford Parties and their counsel.
6. Agency Provisions.
6.1. Appointment. Each undersigned Wexford Party hereby appoints Wexford
Management as its lawful agent and attorney-in-fact, with full power of
substitution, for all purposes under this Restructuring Agreement, the New
Credit Line and all of the other Loan Documents. This appointment is
coupled with an interest, and the Company as well as the Wexford Parties
will rely upon the irrevocable nature of such appointment.
6.2. Acceptance of Appointment. The Agent hereby accepts such appointment,
and agrees to exercise the powers granted hereunder and pursuant to the
Loan Documents with the same degree of care it would use if the entire
risks and rewards were for its own account.
6.3. Application of Funds. In the event any monies received from the
Company directly or pursuant to any Loan Document is in an amount
insufficient to pay all sums due to every Wexford Party, the Agent shall
first apply the sum received to its own out-of-pocket costs reasonably
reimbursable under the terms of the Loan Documents, and shall pay the
balance to the Wexford Parties pro rata in accordance with the amounts then
due and owing to each of them.
6.4. Agent's Liability. The Agent shall not be liable, except for its own
negligence or misconduct, and except with respect to claims based upon such
negligence or misconduct, that are successfully asserted against the Agent,
the Company and the Wexford Parties shall severally indemnify and hold
harmless the Agent, and any Person acting as the successor to the Agent,
from and against any and all losses, liabilities, claims, actions, damages
and expenses, including reasonable attorneys' fees and disbursements,
arising out of or in connection with the Agent's good faith acceptance of
or performance of its duties and obligations under this Restructuring
Agreement and/or the Loan Documents. The Agent shall be under no duty to
institute any suit, or to take any remedial procedures or to enter any
appearance or in any way defend any suit in which it may be made a
defendant hereunder until it shall be indemnified as provided herein. The
Agent may act pursuant to the advice of counsel with respect to any matter
relating to this Restructuring Agreement and/or the Loan Documents, and
shall not be liable for any action taken or omitted in accordance with such
advice.
6.5. Resignation of Agent. The Agent (or any successor Agent) may at any
time resign as such by delivering to the Company and the Wexford Parties at
least fifteen days' written notice of such resignation. Within fifteen days
after the giving of such notice, the Agent shall effect a transfer of all
funds still held in such Agent's possession to any successor Agent jointly
designated by the Company and the Wexford Parties in writing, or in the
event no such successor has been designated within such fifteen day period,
to any court of competent jurisdiction, whereupon the Agent shall be
discharged of and from any and all further obligations arising in
connection with this Restructuring Agreement and/or the Loan Documents. The
Agent's sole responsibility following the delivery of a notice of
resignation and prior to the delivery of the funds still under the Agent's
control to a successor Agent or to a court of competent jurisdiction shall
be to safeguard such funds until delivery thereof as aforesaid or pursuant
to a joint written disposition instruction by all the other parties hereto
or a final order of a court of competent jurisdiction.
7. INDEMNIFICATION
7.1. Indemnification by the Company. Notwithstanding the closing of the
transactions contemplated hereunder and regardless of any investigation at
any time made by or on behalf of the Wexford Parties or of any knowledge or
information that the Wexford Parties may have, the Company shall indemnify
and fully defend, save and hold the Wexford Parties and their respective
directors, general and limited partners, officers, employees, agents and
attorneys (the "Wexford Indemnitees"), harmless if any Wexford Indemnitee
shall at any time or from time to time suffer any damage, liability, loss,
cost, expense (including all reasonable attorneys', experts' and
consultants' fees), deficiency, interest, penalty, impositions, assessments
or fines (collectively, "Losses") arising out of or resulting from, or
shall pay or become obliged to pay any sum on account of, any Company Event
of Breach. As used herein, "Company Event of Breach" shall be and mean any
one or more of the following:
(a) any untruth or inaccuracy in any representation of the Company or the
breach of any warranty of the Company, including without limitation (i) any
misrepresentation in, or omission from, any statement, certificate,
schedule, exhibit, annex or other document furnished pursuant to the
Transaction Documents by the Company (or any of its representatives) to the
Wexford Parties (or any representative of the Wexford Parties) and any
misrepresentation in or omission from any document furnished to the Wexford
Parties in connection with the transactions contemplated by this
Restructuring Agreement;
(b) any failure of the Company duly to perform or observe any term,
provision, covenant, agreement or condition contained in the Transaction
Documents on the part of the Company to be performed or observed.
7.2. Indemnification by the Wexford Parties. Notwithstanding the closing of
the transactions contemplated hereunder, the Wexford Parties shall
indemnify and fully defend, save and hold the Company, and its respective
directors, officers, partners, employees, agents and attorneys (the
"Company Indemnitees"), harmless if any Company Indemnitee shall at any
time or from time to time suffer any Losses arising out of or resulting
from, or shall pay or become obligated to pay any sum on account of, any
Wexford Event of Breach. As used herein, "Wexford Event of Breach" shall be
and mean any one or more of the following: (a) any untruth or inaccuracy in
any representation of the Wexford Parties or the breach of any warranty of
the Wexford Parties contained in the Transaction Documents, (b) any failure
of the Wexford Parties duly to perform or observe any term, provision,
covenant, agreement or condition contained in the Transaction Documents on
the part of the Wexford Parties to be performed or observed.
7.3. Procedures for Indemnification. If a Company Event of Breach or a
Wexford Event of Breach (a "Party's Event of Breach") occurs or is alleged
and either the Company or the Wexford Indemnitees (a "Party Indemnitee")
asserts that the other party has become obligated to it pursuant to Section
7.1 or 7.2, or if any claim is begun, made or instituted as a result of
which the other party may become obligated to a Party Indemnitee hereunder,
such Party Indemnitee shall give prompt notice to the other party. The
Party Indemnitee shall permit the other party (at its expense) to assume
the defense of any claim; provided, however, that (a) the counsel for the
other party who shall conduct the defense shall be reasonably satisfactory
to the Party Indemnitee, (b) the Party Indemnitee may participate in such
defense at its expense, and (c) the omission by the Party Indemnitee to
give notice as provided herein shall not relieve the other party of its
indemnification obligation except to the extent that such omission results
in a failure of actual notice to the other party and the other party is
materially damaged as a result of such failure to give notice. Except with
the prior written consent of the Party Indemnitee, the other party shall
not, in the defense of any such claim, consent to entry of any judgment or
enter into any settlement that provides for injunctive or other nonmonetary
relief affecting the Party Indemnitee or that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Party Indemnitee of a release from all liability with respect to such claim
or litigation. In the event that the Party Indemnitee shall in good faith
determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by
the other party might be expected to affect adversely the ability of the
Party Indemnitee to conduct its business, or that the Party Indemnitee may
have available to it one or more defenses or counterclaims that are
inconsistent with one or more of those that may be available to the other
party in respect of such claim relating thereto, the Party Indemnitee shall
have the right at all times to take over and assume control over the
defense, settlement, negotiations or litigation relating to any such claim
at the sole cost of the other party (including without limitation
reasonable attorneys' fees and disbursements and other amounts paid as the
result of such claim); provided, however, that if the Party Indemnitee does
so take over and assume control, the Party Indemnitee shall not settle such
claim without the prior written consent of every other party, such consent
not to be unreasonably withheld. In the event that every other party does
not accept and continue the defense of any matter as provided above, the
Party Indemnitee shall have the full right to defend against any such claim
and shall be entitled to settle or agree to pay in full such claim.
8. TERMINATION
8.1. Conditions of Termination. Notwithstanding anything to the contrary
contained herein, this Restructuring Agreement may be terminated at any
time before the Closing Date: (a) by mutual consent of the parties hereto,
(b) by either the Company or the Wexford Parties if the other party or
parties shall have breached this Restructuring Agreement in any material
respect and such breach continues for a period of ten (10) days after the
receipt of a written notice of the breach from the non-breaching party, (c)
by the Company if, at June 30, 1998, any of the conditions set forth in
Section 5 shall not have been met, unless the Company's breach of this
Restructuring Agreement is the reason for the failure of such conditions to
be satisfied, or (d) by the Wexford Parties if, at June 30, 1998, any of
the conditions set forth in Section 5 shall not have been met, unless the
Wexford Parties' breach of this Restructuring Agreement is the reason for
the failure of such conditions to be satisfied.
8.2. Effect of Termination. In the event of termination pursuant to Section
8.1 this Restructuring Agreement shall become null and void and have no
effect, with no liability on the part of the parties, or their directors,
officers, agents or stockholders, with respect to this Restructuring
Agreement, except for the liability for breach of this Restructuring
Agreement, with respect to which, claims may be made pursuant to Sections
7.1 and 7.2 hereinabove.
9. MISCELLANEOUS
9.1. Survival of Provisions. The respective representations, warranties,
covenants and agreements of each of the parties to this Restructuring
Agreement made herein or in any certificate or other instrument delivered
by one of the parties to this Restructuring Agreement (except covenants and
agreements which are expressly required to be performed and are performed
in full on or before the Closing Date), shall be considered to have been
relied upon by the other party to this Restructuring Agreement, as the case
may be, and shall survive the Closing Date and the consummation of the
transactions contemplated by this Restructuring Agreement.
9.2. Successors and Assigns. Except as otherwise provided in this
Restructuring Agreement, no party hereto shall assign this Restructuring
Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment
without such prior written consent shall be void and of no force and
effect; provided, however, that a Wexford Party may assign its rights
hereunder, whether before or after the Closing Date, to one or more of its
affiliates and to any party providing financing in connection with the
transactions contemplated hereby; provided further, that no such assignment
shall reduce or otherwise vitiate any of the obligations of the Wexford
Parties hereunder. This Restructuring Agreement shall inure to the benefit
of and shall be binding upon the successors and permitted assigns of the
parties hereto.
9.3. Governing Law; Jurisdiction. This Restructuring Agreement shall be
construed, performed and enforced in accordance with, and governed by, the
laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof. The parties hereto irrevocably elect as the sole
judicial forum for the adjudication of any matters arising under or in
connection with this Restructuring Agreement, and consent to the
jurisdiction of, the courts of the Southern District of New York.
9.4. Broker's and Finder's Fees. Other than the Stand-by Commitment Fee and
the Wexford Fee to be paid hereunder, each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any
of the transactions contemplated by this Restructuring Agreement and
insofar as it knows, no other broker or other person is entitled to any
commission or finder's fee in connection with any of the transactions
contemplated hereby.
9.5. Severability. In the event that any part of this Restructuring
Agreement is declared by any court or other judicial or administrative body
to be null, void or unenforceable, said provision shall survive to the
extent it is not so declared, and all of the other provisions of this
Restructuring Agreement shall remain in full force and effect.
9.6. Notices. All notices, requests, demands and other communications under
this Restructuring Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if
sent via facsimile transmission to the facsimile number given below, (iii)
on the day after delivery to an overnight courier service, or (iv) on the
fifth day after mailing, if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to C. Xxxxxxx Xxxx of the Company:
Wahlco Environmental Systems, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Attn.: C. Xxxxxxx Xxxx, President and Chief
Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Wexford Parties:
Wexford Management LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Huta:
Xxxxx X. Xxxx
00 Xxxxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to any of Maarten Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx-Xxxxxxx
and Xxxxxxx Xxxxxxx, to:
Maarten Xxxxxxx
Bryanston Management, Ltd.
00 Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any party may change its address for the purpose of this Section
by giving the other party written notice of its new address in the manner
set forth above.
9.7. Amendments; Waivers. This Restructuring Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by
the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of
any provision, term, covenant, representation or warranty contained in this
Restructuring Agreement, in any one or more instances, shall not be deemed
to be nor construed as a further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Restructuring Agreement.
9.8. Entire Agreement. This Restructuring Agreement and the other
Transaction Documents contain the entire understanding between the parties
hereto with respect to the transactions contemplated hereby and supersedes
and replaces all prior and contemporaneous agreements and understandings,
oral or written, with regard to such transactions.
9.9. Section and Paragraph Headings. The section and paragraph headings in
this Restructuring Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Restructuring Agreement.
9.10. No Third Party Beneficiaries. This Restructuring Agreement does not
create and shall not be construed as creating any rights enforceable by any
Person who or which is not a party to this Restructuring Agreement.
9.11. Gender; Number. As used in this Restructuring Agreement, the
masculine shall include the feminine and the neuter, the singular shall
include the plural and the plural shall include the singular as the context
may require.
9.12. Counterparts. This Restructuring Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Restructuring Agreement has been duly
executed and delivered as of the date first above written.
WAHLCO ENVIRONMENTAL
SYSTEMS, INC.
By:_____________________________
Name:
Title:
XXX ACQUISITION CORP.
By:_____________________________
Name:
Title:
WEXFORD SPECIAL SITUATIONS
1996, L.P.
By:_____________________________
Its General Partner
WEXFORD SPECIAL SITUATIONS
1996 LIMITED
By:_____________________________
WEXFORD-EURIS SPECIAL
SITUATIONS 1996, L.P.
By:_____________________________
Its General Partner
WEXFORD MANAGEMENT LLC,
individually and as Agent
By:_____________________________
Name:
Title:
WEXFORD CAPITAL
PARTNERS II, L.P.
By: Wexford Capital Partners, L.P.,
It's General Partner
By: Wexford Capital Corporation,
Its General Partner
By:_____________________________
Name:
Title:
WEXFORD OVERSEAS
PARTNERS I L.P.
By: Wexford Capital Overseas, L.P.
Its General Partner
By: Wexford Capital Limited
Its General Partner
By:_____________________________
Name:
Title:
-----------------------------
C. Xxxxxxx Xxxx
-----------------------------
Xxxxx X. Xxxx
----------------------------
Maarten X. Xxxxxxx
----------------------------
Xxxxxxx Xxxxxxx
----------------------------
Xxxxxxx Xxxxxx Xxxxxxx-Xxxxxxx
XXX ACQUISITION CORP.
PLAN OF LIQUIDATION
-------------------
1. Restructuring Agreement. This plan of liquidation (the
"Liquidation Plan") of XXX Acquisition Corp., a Delaware corporation ("WESAC"),
is being adopted pursuant to Section 2.5 of that certain Restructuring Agreement
dated as of January 30, 1998 (the "Restructuring Agreement"), by and among the
Company, WESAC, Wexford Management, as Agent, Capital Partners, Overseas
Partners, the Wexford 1996 Funds and the Individual Parties. Capitalized terms
used herein, if not separately defined, shall have the meanings assigned to such
terms in the Restructuring Agreement.
2. Approval and Ratification. This Liquidation Plan shall be
deemed adopted by the WESAC Lenders and the stockholders of WESAC upon the
execution and delivery of the Restructuring Agreement by (a) stockholders of
WESAC (the "WESAC Stockholders") holding at least two thirds of the issued and
outstanding shares of common stock of WESAC, and (b) WESAC Lenders holding
two-thirds in amount and at least 50% in number of the outstanding claims
against WESAC.
3. Plan of Liquidation. WESAC will cease the active conduct of
its business and wind up its affairs and, within the meaning of Section 332 of
the Internal Revenue Code of 1986, as amended, will liquidate and distribute all
of its assets, if any, in complete liquidation, less any assets retained to meet
claims. The liquidation of WESAC will occur promptly, but in any event within
one calendar month following the Closing Date.
4. Assets and Liabilities. On the Closing Date, after
consummation of the Rights Offering, the Reverse Stock Split and the WESAC Debt
Conversion, the assets of WESAC will consist principally of shares of Company
Common Stock. The liabilities of WESAC will consist of the amounts owed to the
WESAC Lenders listed on Schedule I attached hereto, which carry the contractual
rights of seniority listed thereon, and miscellaneous tax liabilities.
5. Distribution of Assets.
5.1. WESAC Lenders. Promptly following the Closing
under the Restructuring Agreement, WESAC shall distribute to the WESAC Lenders,
in order of contractual seniority in accordance with Schedule I attached hereto,
all of the shares of Company Common Stock owned by WESAC on the Closing Date.
For purposes of such distribution, shares of Company Common Stock shall be
valued at $1.00 per share. To the extent that any class of WESAC Lenders are not
paid in full, payments by WESAC shall be applied first to principal and then to
interest.
5.2. WESAC Stockholders. If, as of the Closing Date,
the liabilities of WESAC exceed its liabilities, the WESAC Stockholders agree
that they shall receive no distribution in respect of their common stock of
WESAC, and that on the Closing Date, such stock shall be canceled.
6. Cancellation of Stock Certificates and Notes. The
distributions in complete liquidation provided for in Section 5 hereof shall be
in exchange and solely for the complete satisfaction of the rights of the WESAC
Lenders and the WESAC Stockholders. On the Closing Date, each WESAC Creditor and
each WESAC Stockholder shall surrender any notes or evidences of indebtedness
(in the case of the WESAC Lenders) or stock certificates (in the case of the
WESAC Stockholders) representing common stock of WESAC.
7. Effective Date; Cessation of Business. The effective date
of this Liquidation Plan shall be the Closing Date under the Restructuring
Agreement. WESAC shall cease doing business immediately upon such Closing Date,
except to the extent required to wind up its affairs. As soon thereafter as
practicable, but within one calendar month following the Closing Date, WESAC
shall make one or more substantial distributions of its assets and liabilities,
so that all of such assets and liabilities are distributed to or for the account
of the WESAC Lenders and the WESAC Stockholders, as the case may be, within such
calendar month. Notwithstanding the foregoing, if the Closing Date under the
Restructuring Agreement does not occur on or before June 30, 1998, this
Liquidation Plan shall be deemed rescinded nunc pro tunc without necessity of
any act or deed on the part of WESAC or any officer, director or WESAC
Stockholder.
8. Dissolution. The officers and directors of WESAC shall
proceed with the voluntary dissolution of WESAC under the laws of the State of
Delaware at such time as they may deem appropriate, and may withdraw WESAC from
qualification in any other state where it may have qualified to do business as a
foreign corporation.
9. Authorization to Execute and File Documents. The officers
and directors of WESAC are authorized, empowered, and directed to execute and
file all documents which they deem necessary or advisable to carry out the
purposes and intentions of this Liquidation Plan, including a certificate of
dissolution under the laws of the State of Delaware, and information returns on
the appropriate Treasury Department forms, together with income tax returns and
the information required by applicable income tax regulations.
10. Further Assurances; Indemnity. The officers and directors
of WESAC are authorized, directed and empowered to do any and all other things
in its name and behalf which they may deem necessary or advisable in order to
carry out the purposes and intentions of this Plan. Such officers and directors
shall be held harmless by WESAC for any action under this Liquidation Plan taken
in good faith.
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IN WITNESS WHEREOF, WESAC has caused this Liquidation Plan to be
adopted as of this 30th day of January 1998.
XXX Acquisition Corp.
By:
-------------------------
SCHEDULE I
1. Definitions. As used herein, the following definitions shall apply:
"Administrative Reserve" means an amount of cash sufficient to pay all
reasonably estimated expenses of the WESAC Liquidation.
"Class I Claims" means (i) loans from the Wexford 1995 Funds to WESAC
in the aggregate principal amount of $2,000,000, the proceeds of which were
pledged by the Company to secure the Company's borrowings under the SVB
Facility, plus interest on the loans to the Wexford 1995 Funds at the rate of
fifteen (15%) percent per annum from the date of such loans to the Closing Date,
and (ii) the principal amount of $150,000 evidenced by a note dated May 13,
1996, together with interest at the rate provided therein through the Closing
Date. The Class I Claims are held 70% by Wexford Capital Partners II, L.P. and
30% by Wexford Overseas Partners I, L.P.
"Class II Claims" means (i) the principal amount of $1,500,000 funded
by the Wexford 1996 Funds to enable WESAC to loan funds to the Company pursuant
to the 1996 Line of Credit, together with interest from the date of each such
advance at the rate provided therein to the Closing Date, (ii) $32,000 as a
commitment fee for providing the 1996 Line of Credit and (iii) $2,080 to be
reimbursed for expenses advanced on behalf of WESAC. As of April 15, 1998, the
Class II Claims will be as follows:
Wexford Special Situations 1996, L.P. $1,252,528.19
Wexford Special Situations Institutional, L.P. $ 232,684.58
Wexford Special Situations 1996 Limited $ 63,459.63
Wexford-Euris-Special Situations 1996, L.P. $ 323,287.43
"Class III Claims" means (i) the aggregate principal amount of
$4,900,000, together with interest from the date of such advances at rate of
thirteen percent (13%) per annum, together with interest through the Closing
Date, (ii) the aggregate principal amount of $2,000,000, together with interest
at the rate of thirteen percent (13%) through the Closing Date. As of April 15,
1998, the Class III Claims will be as follows:
C. Xxxxxxx Xxxx $ 240,121.94
Maarten Xxxxxxx $ 58,617.55
Xxxxx Xxxx $ 240,121.94
Wexford Capital Partners II, L.P. $6,344,136.19
Wexford Overseas Partners I, L.P. $2,719,871.09
"1996 Line of Credit" means that certain Agreement dated August 28,
1996 between WESAC and the Company.
2. Payments. The payments to be made by or on behalf of WESAC to the WESAC
Lenders and the WESAC Lenders shall be distributed in the following order of
priority:
2.1 Administrative Reserve. On the Closing Date, the Administrative
Reserve shall be funded.
2.2 Class I Claims. In respect of the Class I Claims, the Wexford 1995
Funds shall be paid an amount of cash equal to the amount of cash repaid to
WESAC by SVB in connection with the Silicon Valley Bank Repayment, less the
amount of cash deposited into the Administrative Reserve (the "Cash Payment").
To the extent that the Cash Payment is insufficient to repay the Class I Claims
in full, the holders of Class I Claims shall receive a number of shares of
Company Common Stock, valued at $1.00 per share, equal to the difference between
the amount of Class I Claims on the Closing Date and the Cash Payment. Any
payments in respect of Class I Claims shall be applied first to principal
amounts due and then to accrued but unpaid interest.
2.3 Class II Claims. After the holders of Class I Claims have been paid
in full, the holders of Class II Claims shall receive a number of shares of
Company Common Stock, valued as $1.00 per share, equal to the amount of the
Class II Claims on the Closing Date. Any payment in respect of Claim II Claims
shall be applied first to principal amounts due and then to accrued but unpaid
interest.
2.4 Class III Claims. After the holders of Class II Claims have been
paid in full, the holders of Class III Claims shall receive all remaining shares
of Company Common Stock owned by WESAC, valued as $1.00 per share, pro rata in
accordance with their interests. Any payments in respect of Class III Claims
shall be applied first to principal amounts due and then accrued but unpaid
interest.
2.5 WESAC Stockholders. The WESAC Stockholders agree that on the
Closing Date, their shares of common stock of WESAC shall be canceled, and such
WESAC Stockholders shall receive no consideration in exchange therefor.
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