UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)
AIR & WATER TECHNOLOGIES CORPORATION
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(Name of Issuer)
CLASS A COMMON STOCK
$.001 PAR VALUE
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(Title of Class of Securities)
009058108
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(CUSIP Number)
COMPAGNIE GENERALE DES EAUX
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(Name of Persons Filing Statement)
JOHN A. BICK
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NY 10017
(212) 450-4000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
MARCH 30, 1994
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this statement because of Rule 13d-1(b)(3) or (4), check the
following: / /
Check the following box if a fee is being paid with this statement: / /.
SCHEDULE 13D
______________________________ ________________________________
| | | |
|CUSIP No.__009058 10 8_____ | | Page ____ of ____ Pages |
|____________________________| |______________________________|
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | |
| | Compagnie Generale des Eaux |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* |
| | _ |
| | (a) | | |
| | _ |
| | (b) |x| |
| | |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS* |
| | WC |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(E) |_| |
| | |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | France |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 6,203,475 |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | -- |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 6,203,475 |
| PERSON |____|_______________________________________________|
| WITH | 10 | SHARED DISPOSITIVE POWER |
| | | -- |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 6,203,475 |
|____|____________________________________________________________________|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES* |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 24.5% |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON* |
| | CO |
|____|____________________________________________________________________|
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SEC 1746 (9-88) 2 of 7
Compagnie Generale des Eaux ("Generale Des Eaux" or "CGE")
hereby further amends and supplements its Report on Schedule
13D, originally filed on May 23, 1990 (the "Schedule 13D"),
as amended, with respect to the purchase of shares of Class
A Common Stock, $.001 par value (the "Shares") of Air &
Water Technologies Corporation (the "Company" or "AWT").
Unless otherwise indicated, each capitalized terms
used but not defined herein shall have the meaning assigned
to such term in the Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or
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Relationships with Respect to Securities of the
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Company.
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On March 30, 1994, Generale des Eaux, its indirect
wholly-owned subsidiary, Anjou International Company
("Anjou") and the Company entered into an Investment
Agreement (the "Investment Agreement"). Accordingly, the
response set forth in Item 6 of the Schedule 13D is hereby
amended and supplemented by the following information:
As more fully described below, the Investment
Agreement, together with a Letter Agreement between the
Company and CGE, dated March 18, 1994 (the "Letter
Agreement"), provide for a closer relationship between the
Company and CGE which will strengthen AWT's competitive and
financial position and increase its working capital
availability.
Briefly summarized, subject to the terms and
conditions of the Letter Agreement and the Investment
Agreement:
(i) The Company will issue 1,200,000 shares of a
newly designated series of its authorized Preferred Stock,
designated as 51/2% Series A Convertible Exchangeable
Preferred Stock ("Series A Preferred Stock"), convertible
into 4,800,000 shares of Class A Common Stock, to CGE for
cash consideration of $60,000,000.
(ii) The Company will acquire from Anjou, by
merger and exchange of shares, respectively, PSC
Professional Services Group, Inc., a Minnesota corporation
("PSG"), and 2815869 Canada, Inc., a Canadian corporation
("PSG Canada"), each a wholly-owned subsidiary of Anjou
(such subsidiaries being collectively referred to herein as
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the "PSG Group"), for an aggregate purchase price of
6,500,000 shares of Class A Common Stock, subject to
adjustment. See "Acquisition of the PSG Group" below.
(iii) CGE has agreed to certain financial
undertakings, which include assistance and support to enable
the Company to obtain up to $125,000,000 of bank debt
financing on an unsecured basis (and assistance and support
in obtaining up to $125,000,000 of bridge financing if the
transactions contemplated by the Letter Agreement and the
Investment Agreement are not consummated by June 14, 1994),
as well as support to the Company in obtaining certain
letters of credit for the Company's water and waste water
management and air pollution projects.
(iv) CGE has agreed that, for so long as CGE
(with its affiliates) is the largest shareholder of the
Company, AWT will be CGE's exclusive vehicle in the United
States, its possessions and its territories for CGE's water
and waste water management and air pollution activities.
CGE will also assist the Company in developing its water and
waste water management and air pollution activities in both
Canada and Mexico, subject to certain limitations, and CGE
and the Company will establish a privileged commercial
relationship for the development of air pollution activities
in Europe. See "Certain Covenants of CGE and Anjou - Joint
Efforts" below.
(v) The Company has increased the size of its
Board of Directors from nine to eleven members and has
appointed two persons designated by CGE to serve on the
Board of Directors and the Executive Committee of the Board
until the Annual Meeting. In addition, the Company has
agreed that after the closing of the transactions
contemplated by the Investment Agreement, the Board of
Directors and senior management of the Company shall include
certain persons who are designated by CGE. See "Certain
Covenants of the Company - Representation on the Board of
Directors; Management."
(vi) The Company has granted certain demand and
"piggyback" registration rights to CGE and Anjou with
respect to all shares of Class A Common Stock and Series A
Preferred Stock owned from time to time by CGE, Anjou and
their affiliates. See "Certain Covenants of the Company -
Registration Rights" below.
In connection with the execution of the Letter
Agreement, the Company issued 500,000 shares of Class A
Common Stock to CGE for an aggregate purchase price of
$5,000,000. The transactions contemplated by the Investment
Agreement are referred to herein as the "Investment
Transactions."
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The Investment Agreement grants CGE a number of
other rights, including, among other things, access to the
books, records and employees of the Company for so long as
CGE owns at least 26% of the outstanding shares of Class A
Common Stock on a fully diluted basis at that time. See
"Certain Covenants of the Company." CGE and Anjou have also
agreed to a number of additional covenants, including, among
other things, limitations on the conduct of the PSG Group
prior to the closing of the Investment Transaction, the
voting of all of the shares of Class A Common Stock held by
CGE in favor of the Investment Transaction, and settlement
of certain intercompany accounts with the PSG Group. See
"Certain Covenants of CGE and Anjou." CGE has also agreed
on behalf of itself and its affiliates that certain
transactions between AWT and any of its affiliates and CGE
or any of its affiliates, as well as any claims by AWT
against CGE or any of its affiliates under the Investment
Agreement, will be subject to approval by a majority of the
Independent Directors (as defined in the Investment
Agreement). See "Certain Covenants of the Company, CGE and
Anjou - Affiliate Transactions."
Approval by the Company's shareholders of the
Investment Agreement is required under the rules of the
American Stock Exchange.
Certain aspects of the Investment Transaction are
subject to review by the Federal Trade Commission ("FTC")
and the Department of Justice pursuant to the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 ("HSR Act") and
the United States Government under the provisions of Section
5021 of the Omnibus Trade and Competitiveness Act of 1988,
as amended (the "Exon-Florio Amendment"), and other
authorities.
ACQUISITION OF THE PSG GROUP
General. In an effort to strengthen the Company's
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competitive and financial position, its possessions and its
territories for CGE's water and waste management and air
pollution activities, CGE and Anjou have agreed to transfer
to the Company, and the Company has agreed to acquire, PSG
and PSG Canada (collectively, the "PSG Group") for an
aggregate of 6,500,000 shares of Class A Common Stock. All
of the outstanding shares of capital stock of PSG and PSG
Canada are owned by Anjou. As more fully described below,
the PSG Group specializes in the area of water and waste
water management and for the twelve-month period ended
December 31, 1993 had total revenues of approximately $80
million. The PSG Group's principal executive offices are
located at 14950 Heathrow Forest Parkway, Suite 200,
Houston, Texas 77032, telephone (713) 449-1500.
-3-
Mechanics of the Acquisition. Subject to the
----------------------------
terms and conditions of the Investment Agreement and the
Plan of Merger attached as Exhibit B thereto, upon the
closing of the Investment Transaction (the "Closing"):
(i) a newly formed Minnesota subsidiary of the
Company (the "Merger Subsidiary") will be merged (the
"Merger") with and into PSG, whereupon the separate
existence of the Merger Subsidiary shall cease, PSG
will be the surviving corporation and a wholly-owned
subsidiary of the Company, and all outstanding capital
stock of PSG held by Anjou immediately prior to the
effective time of the Merger will be converted into the
right to receive 5,850,000 shares of Class A Common
Stock; and
(ii) Anjou will exchange all of the outstanding
capital stock of PSG Canada for 650,000 shares of Class
A Common Stock.
Adjustment of Acquisition Consideration. Anjou
---------------------------------------
and the Company have agreed that the purchase price for the
acquisition of the PSG Group will be adjusted upwards or
downwards, as the case may be, to the extent that Final
Stockholder's Equity (as defined) at the date of the Closing
(which excludes cash and cash equivalents and intangible
assets such as goodwill, patents, trademarks and unamortized
debt discount) of the PSG Group is greater or less than, as
the case may be, $12,741,000.
Other Provisions. In connection with the
----------------
acquisition of the PSG Group, CGE and Anjou have made pre-
closing representations and warranties in the Investment
Agreement with respect to the PSG Group which are customary
for transactions of this nature, including (subject to
standard materiality qualifications) representations as to
the absence of undisclosed material liabilities and material
adverse changes in the business, financial condition and
results of operations of the PSG Group, title to property
and assets, collectibility of receivables and absence of
liabilities under environmental laws. CGE and Anjou have
also agreed that the business of the PSG Group will continue
to be operated in the ordinary course consistent with past
practices. CGE and Anjou also agree to indemnify the
Company with respect to certain pre-closing tax liabilities
of the PSG Group.
Restrictions on Resale; Registration Rights. The
-------------------------------------------
Class A Common Stock to be issued to Anjou as consideration
for the acquisition of the PSG Group will be "restricted
securities" as that term is defined in Rule 144 under the
Securities Act. Consequently, resales of such shares by
Anjou, unless registered under the Securities Act, will be
-4-
subject to the timing, volume and other limitations of Rule
144, and the stock certificate or certificates issued by the
Company to Anjou representing the shares of Class A Common
Stock will bear a legend to that effect. Under the
Investment Agreement, Anjou has certain registration rights
with respect to such shares. See "Certain Covenants of the
Company - Registration Rights."
CERTAIN COVENANTS OF THE COMPANY
Representation on the Board of Directors;
-----------------------------------------
Management. The Company has agreed that CGE will have the
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right to cause the Company to include, as nominees for the
Company's Board of Directors recommended by the Board for
election by the shareholders, a number of directors (rounded
down to the next whole number if CGE owns in the aggregate
less than one-half of the outstanding shares, treating the
shares of Series A Preferred Stock owned by CGE as having
been converted into shares of Class A Common Stock, or, if
otherwise, rounded up to the next whole number) that is
equal to the product of the total number of directors on the
Board times a fraction the numerator of which is the
aggregate number of shares of Class A Common Stock owned by
CGE and its affiliates (assuming conversion of the Series A
Preferred Stock (or other securities convertible into or
exercisable or exchangeable for shares of Class A Common
Stock) held by CGE or its affiliates) and the denominator of
which is the total number of shares of Class A Common Stock
outstanding (assuming conversion of the Series A Preferred
Stock (or other securities convertible into or exercisable
or exchangeable for shares of Class A Common Stock) held by
CGE or its affiliates). The Company has further agreed that
CGE will have proportionate representation on all Committees
of the Board (other than any Special Committee of
Independent Directors) to the same extent as CGE is entitled
to representation on the Board of Directors. Upon execution
of the Letter Agreement, Messrs. Alain Brunais and Claudio
Elia were designated by CGE and appointed by the Company to
the Board of Directors and also to the Executive Committee
of the Board.
In accordance with the terms of the Investment
Agreement, the Company has agreed that the Board of
Directors will consist of 11 directors, with five directors
who are designated by CGE, one Independent Director (as
defined below), and five directors consisting of Messrs.
Beck, Costle, Dowd, Morris and Senior. "Independent
Director" is defined for purposes of the Investment
Agreement as any director who is not an employee, agent or
representative of the Company, CGE or any of their
respective Affiliates or Associates (as defined in the
Investment Agreement) and may include any person acting as
outside counsel or financial advisor for either the Company
-5-
or CGE or any of their respective Affiliates or Associates.
All Independent Directors shall be satisfactory to CGE, and
the Company has agreed that the Chairman of the Board shall
be a designee of CGE. CGE has agreed that, in the event the
Investment Transaction is not approved by the Company's
shareholders at the Annual Meeting, it will cause its
nominees for director to resign as directors of the Company
immediately following the Annual Meeting.
The Company and CGE have agreed that Mr. Beck will
continue as Chairman and Chief Executive Officer of the
Company until closing of the Investment Transaction,
whereupon CGE will have the right to designate the Chief
Executive Officer and Chief Financial Officer of the
Company. CGE has agreed that current management will
participate in such transition and has agreed to cause all
agreements of the Company with its employees to be honored.
No-Shop. Pursuant to the Investment Agreement,
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the Company may not nor may the Company permit any of its
subsidiaries or any of its or their respective officers,
directors, employees, agents or advisers to initiate,
solicit or encourage, or take any other action to facilitate
(including by way of furnishing nonpublic information,
except to the extent determined in good faith by the Board
of Directors of the Company (the "Board") based on the
advice of counsel to be legally required for the discharge
by the Board of its fiduciary duties), any inquiries or the
making of any proposal which constitutes, or may reasonably
by expected to lead to, any takeover proposal (as defined
below) or, except to the extent determined in good faith by
the Board based on the advice of counsel to be legally
required for the discharge by the Board of its fiduciary
duties, agree to or endorse any takeover proposal, or
participate in any discussion or negotiations, or provide
third-parties with any nonpublic information, relating to
any such inquiry or proposal. The Company shall promptly
inform CGE orally and in writing of any such inquiry or
proposal. "Takeover proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or
other business combination involving the Company or any of
its subsidiaries (other than that involving solely an
acquisition of a business or assets by the Company or any of
its subsidiaries) or any proposal or offer to acquire in any
manner a significant (i.e. more than 10% of the then
outstanding shares of the Company) equity interest in, or a
significant (i.e., more than 10% of the consolidated total
assets of the Company) portion of the assets of (including
the stock or assets of subsidiaries) the Company, but
excluding the Investment Transaction contemplated by the
Investment Agreement.
-6-
Registration Rights. Pursuant to the terms of the
-------------------
Investment Agreement, CGE and Anjou will have the right to
require on up to four occasions that the Company register
all shares of Class A Common Stock, Series A Preferred Stock
or Convertible Debt owned from time to time by CGE and its
Affiliates for sale to the public under the Securities Act
(a "demand registration"); provided that the Company is not
obligated (i) to effect more than one demand registration in
any six month period, (ii) to effect a demand registration
for less than five percent of the outstanding Class A Common
Stock or (iii) to effect a demand registration within six
months of CGE or Anjou selling any shares pursuant to a
piggyback registration (as defined below). In addition, CGE
and Anjou will have the right to participate in
registrations by the Company of its Class A Common Stock (a
"piggyback registration"). The Company will pay the
registration expenses on behalf of CGE and Anjou, including
certain related fees and expenses. See the form of
Registration Rights Agreement included as Exhibit C to the
Investment Agreement.
Access to Books and Records. The Company has
---------------------------
agreed that for so long as CGE beneficially owns directly or
indirectly as least 26% of the outstanding shares of Class A
Common Stock on a fully-diluted basis, CGE will have access
on reasonable terms to the books, records and employees of
the Company and its subsidiaries and to the provision by the
Company of all information reasonably requested by CGE,
subject to confidentiality obligations that may be owed at
the time by the Company to third parties and to appropriate
confidentiality arrangements and requirements of law.
Insurance; Bonding. The Company has agreed that
------------------
as of the closing of the Investment Transaction, it will
cause outstanding surety bonds issued for the benefit of the
PSG Group under any of Anjou's surety agreements to be
replaced by surety bonds issued under the Company's surety
agreements. The company also anticipates replacing the PSG
Group's existing insurance coverage, which is provided
through Anjou, with insurance coverage provided by the
Company.
Miscellaneous. The Company has also made certain
-------------
customary representations and warranties in the Investment
Agreement.
CERTAIN COVENANTS OF CGE AND ANJOU
Conduct of the PSG Group. CGE and Anjou have
------------------------
agreed that up until the closing of the Investment
Transaction (with the exception of certain payments by the
PSG Group to Anjou in respect of taxes of the PSG Group),
CGE and Anjou will cause the PSG Group to conduct its
-7-
business in the ordinary course of business consistent with
past practice and to use its best efforts to preserve intact
its business organizations and relationships with third
parties and to keep available the services of its present
officers and employees.
Voting of Shares; Acquisitions and Sales of
-------------------------------------------
Shares. CGE has agreed to vote at the Annual Meeting or any
- ------
adjournment thereof all of its shares of Class A Common
Stock to approve the issuance of the Series A Preferred
Stock and Class A Common Stock in the Investment
Transaction. CGE has also agreed to give the Company two
days' prior written notice of any acquisition of more than
1% of the outstanding shares of the Company's Class A Common
Stock prior to the Closing, and one day's prior written
notice of any sale of Company securities by CGE after the
Closing if, to the knowledge of CGE, such sale would result
in any person beneficially owning more than 15% of the
outstanding shares of Class A Common Stock.
Joint Efforts. CGE has agreed on behalf of itself
-------------
and its Affiliates (as defined in the Investment Agreement)
that, after closing of the Investment Transaction, the
Company will become CGE's exclusive vehicle in the United
States, its possessions and its territories for CGE's water
and waste water management and air pollution activities.
After the closing of the Investment Transaction, CGE will,
and will cause its affiliates to, assist the Company in
developing its water and waste water management and air
pollution activities in both Canada and Mexico, subject to
existing contractual arrangements and taking into account
the respective interests of the Company and CGE and its
affiliates. Pursuant to this arrangement, CGE will, and
will cause its affiliates to, offer the Company an active
participation in any new water management investments by CGE
or any of its affiliates in the United States which are too
capital-intensive for the Company to undertake on a stand-
alone basis. In addition, CGE and its affiliates and the
Company will establish a privileged commercial relationship
for the development of air pollution activities in Europe.
Intercompany Accounts. CGE and Anjou have agreed
---------------------
that all intercompany accounts between CGE, Anjou or their
affiliates, on the one hand, and the PSG Group, on the other
hand, will be settled as of the Closing of the Investment
Transaction. All amounts for money borrowed by the PSG
Group from, or owed by the PSG Group to, Anjou and its
affiliates as of December 31, 1993 ($8,513,000), the accrued
pension liability of the PSG Group owed to Anjou and its
affiliates as of December 31, 1993 ($2,200,000) and any
increase in intercompany balances owed by PSG Canada to
Anjou and its affiliates from December 31, 1993 through the
Closing will be contributed to the PSG Group's shareholders
-8-
equity. The increase in intercompany balances owed by the
PSG Group to Anjou and its affiliates from December 31, 1993
through the Closing will remain outstanding and will be
evidenced by a promissory note maturing one year from the
date of the Closing and bearing interest at the prime rate
announced from time to time by Citibank, N.A. At least five
business days prior to the closing of the Investment
Transaction, Anjou will prepare and deliver to the Company a
statement setting out in reasonable detail the calculation
of all such intercompany account balances based on the
latest available financial information, and will provide the
Company upon its request with supporting documentation to
verify the intercompany charges and transactions.
Financial Undertakings. In the Letter Agreement,
----------------------
CGE agreed that in the event the Investment Transaction is
not closed on or before June 14, 1994 and the Company has
not theretofore been able to obtain up to $125,000,000 of
debt financing to repay the Prudential Notes, CGE will
provide any assistance and support necessary for a bank or
other financial institution to provide bridge financing to
the Company for up to $125,000,000 on a senior basis at a
rate equal to the three-month LIBOR rate plus 325 basis
points, any such loan to be repaid as promptly as
practicable and in any event within six months. CGE also
agreed that, after closing of the Investment Transaction, it
will (i) provide any assistance and support necessary to
enable the Company to obtain up to $125,000,000 of permanent
bank debt financing on an unsecured basis to repay the
Prudential Notes at an interest rate not in excess of the
market rate for a seven year fixed rate swap against the
three-month LIBOR rate plus 125 basis points with a covenant
package that does not include a negative pledge restriction
on the Company's assets and permits normal working capital
borrowing by the Company, and (ii) co-sign on a case-by-case
basis with the Company applications for letters of credit of
the Company's water and waste water management and air
pollution projects, subject to approval by CGE, which CGE
acknowledges could reach or exceed the level of letters of
credit currently carried by the Company.
Other Agreements. In the event that CGE
----------------
materially breaches any of its obligations or
representations contained in the Letter Agreement or in the
Investment Agreement, CGE has agreed that certain standstill
provisions of the Stock Purchase Agreement dated May 13,
1990 (the "Stock Purchase Agreement") shall be reinstated
for an additional three year period from the date of the
Letter Agreement.
-9-
CERTAIN COVENANTS OF THE COMPANY, CGE AND ANJOU
Affiliate Transactions. CGE has agreed on behalf
----------------------
of itself and its affiliates that any transactions (or
series of related transactions) between the Company and any
of its affiliates and CGE or any of its affiliates will be
on an arm's length basis. Any such transaction (or series
of related transactions) having an aggregate value in excess
of $1,000,000 and any settlement of the existing litigation
between the Company and the Puerto Rico Aqueduct and Sewer
Authority must be approved by a majority of the Independent
Directors or a Special Committee thereof. The Company, CGE
and Anjou have further agreed that after Closing of the
Transaction, all claims by the Company against CGE or its
affiliates under the Investment Agreement (including but not
limited to any purchase price adjustment for the acquisition
of the PSG Group) shall be taken only by majority approval
of such Independent Directors or Special Committee.
Filings and Consents. Each of the Company, CGE
--------------------
and Anjou have agreed to cooperate with each other in good
faith and to use their reasonable best efforts in making all
required governmental filings and obtaining at the earliest
practicable date all necessary approvals and consents from
governmental entities and third parties.
CONDITIONS TO THE INVESTMENT TRANSACTION, TERMINATION AND
EXPENSES
Consummation of the Investment Transaction is
subject to the satisfaction of the following conditions,
which may not be unilaterally waived by any party: (i) any
applicable waiting period under the HSR Act relating to the
Investment Transaction shall have expired or been
terminated; (ii) no provision of any applicable law or
regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Investment
Transaction; (iii) all actions by or in respect of or
filings with any governmental body, agency, official or
authority required to permit the consummation of the
Investment Transaction under the provisions of the Exon-
Florio Amendment shall have been taken, made or obtained;
and (iv) the issuance of the Securities pursuant to the
Investment Agreement have been approved by the Company's
shareholders in accordance with applicable rules and
regulations of the American Stock Exchange.
Consummation by the Company of the Investment
Transaction is also subject, among other things, to the
receipt by the Company of a written opinion from Allen &
Company to the effect that the Investment Transaction is
fair, from a financial point of view, to the shareholders of
the Company (other than CGE). Any of these conditions may
be waived by the Company.
-10-
The Investment Agreement may be terminated at any
time prior to the closing of the Investment Transaction:
(i) by mutual written agreement of the
Company, CGE and Anjou;
(ii) by either CGE or the Company if the closing
of the Investment Transaction shall not have been
consummated on or before September 1, 1994.
(iii) by either CGE or the Company if there shall
be any law or regulation that makes consummation of the
Investment Transaction illegal or otherwise prohibited
or if consummation of the Investment Transaction would
violate any nonappealable final order, decree or
judgment of any court or governmental body having
competent jurisdiction; or
(iv) by CGE if the Company has caused to be duly
called and held a meeting of its shareholders as
required by the Investment Agreement and at such
meeting the requisite number of votes were not obtained
to approve the issuance of the Securities pursuant to
the Investment Agreement under applicable law.
THE DESCRIPTION OF THE INVESTMENT AGREEMENT AND
THE INVESTMENT TRANSACTION CONTAINED HEREIN IS QUALIFIED IN
IT ENTIRETY BY REFERENCE TO THE EXPRESS PROVISIONS OF THE
INVESTMENT AGREEMENT FILED AS AN EXHIBIT HERETO.
Pursuant to the Stock Purchase Agreement dated as
of May 13, 1990 and the Stock Purchase Agreement dated as of
June 22, 1990, Generale des Eaux has agreed, for the period
prior to May 13, 1995, that if it or any of its affiliates
(as such term is defined in the Securities Act of 1933, as
amended (the "Securities Act") (collectively, the "Purchaser
Group")) receives a bona fide offer from an unaffiliated
third party to purchase any Shares then owned by the
Purchaser Group and the Purchaser Group desires to accept
such offer, Generale des Eaux will promptly notify the
Company in writing specifying the amount of the Shares
proposed to be sold, the proposed purchase price therefor
and the other material terms and conditions of the offer,
including the proposed date of the closing for such sale.
The Company may agree to purchase the Shares referred to in
the notice upon notification to Generale des Eaux within ten
business days of receipt of the notice. Generale des Eaux
is not, however, obligated to notify the Company of third
party offers with respect to any sales proposed to be made
by it in accordance with the volume limitations specified in
Rule 144(e)(i) promulgated under the Securities Act.
-11-
Except as otherwise describe above, to the best
knowledge of Generale des Eaux, there are no contracts,
arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2, and any other
person, with respect to the securities of the Company,
including, but not limited to, transfer or voting of any of
the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of
proxies.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 99.1: Investment Agreement dated as of March
30, 1994 among the Company, Generale des
Eaux and Anjou.
-12-
SIGNATURES
----------
After reasonable inquiry and to the best knowledge
and belief of the undersigned, the undersigned certifies
that the information set forth in this statement is true,
complete and correct.
Date: April 1, 1994
COMPAGNIE GENERALE DES EAUX
By: /s/ Jacques-Henri David
-------------------------
Title: Director General
-13-
EXHIBIT INDEX
Exhibit 99.1: Investment Agreement dated as of March
30, 1994 among the Company, Generale des
Eaux and Anjou.
[CONFORMED COPY]
INVESTMENT AGREEMENT
dated as of
MARCH 30, 1994
among
AIR & WATER TECHNOLOGIES CORPORATION,
COMPAGNIE GENERALE DES EAUX
and
ANJOU INTERNATIONAL COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
PURCHASE AND SALE; MERGER
2.1 Purchase and Sale . . . . . . . . . . . . . . . 6
2.2 The Merger . . . . . . . . . . . . . . . . . . 6
2.3 Closing . . . . . . . . . . . . . . . . . . . . 7
2.4 Closing Balance Sheet . . . . . . . . . . . . . 7
2.5 Adjustment of Purchase Price . . . . . . . . . 9
2.6 Legending of Securities . . . . . . . . . . . . 10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ANJOU AND CGE
3.1 Corporate Existence and Power . . . . . . . . . 10
3.2 Corporate Authorization . . . . . . . . . . . . 10
3.3 Governmental Authorization . . . . . . . . . . 11
3.4 Non-Contravention . . . . . . . . . . . . . . . 11
3.5 Capitalization . . . . . . . . . . . . . . . . 11
3.6 Ownership of Shares . . . . . . . . . . . . . . 12
3.7 Subsidiaries . . . . . . . . . . . . . . . . . 12
3.8 Financial Statements . . . . . . . . . . . . . 12
3.9 AWT Proxy Materials . . . . . . . . . . . . . . 12
3.10 Absence of Certain Changes . . . . . . . . . . 13
3.11 No Undisclosed Material Liabilities . . . . . 14
3.12 Intercompany Accounts . . . . . . . . . . . . 14
3.13 Material Contracts . . . . . . . . . . . . . . 14
3.14 Litigation . . . . . . . . . . . . . . . . . . 15
3.15 Compliance with Laws and Court Orders; No
Defaults. . . . . . . . . . . . . . . . . . . 15
3.16 Insurance Coverage . . . . . . . . . . . . . . 16
3.17 Finders' Fees; Certain Payments . . . . . . . 16
3.18 Employee Benefit Plans . . . . . . . . . . . . 16
3.19 Taxes . . . . . . . . . . . . . . . . . . . . 18
i
Page
----
3.20 Environmental Matters. . . . . . . . . . . . . 19
3.21 Properties . . . . . . . . . . . . . . . . . . 19
3.22 Receivables . . . . . . . . . . . . . . . . . 19
3.23 Purchase for Investment . . . . . . . . . . . 19
3.24 Other Information . . . . . . . . . . . . . . 20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AWT
4.1 Corporate Existence and Power . . . . . . . . . 20
4.2 Corporate Authorization . . . . . . . . . . . . 20
4.3 Governmental Authorization . . . . . . . . . . 20
4.4 Non-Contravention . . . . . . . . . . . . . . . 21
4.5 Capitalization . . . . . . . . . . . . . . . . 21
4.6 SEC Filings . . . . . . . . . . . . . . . . . . 21
4.7 Financial Statements . . . . . . . . . . . . . 22
4.8 Absence of Certain Changes . . . . . . . . . . 22
4.9 No Undisclosed Material Liabilities . . . . . . 23
4.10 AWT Proxy Materials . . . . . . . . . . . . . 23
4.11 Compliance with Contracts . . . . . . . . . . 24
4.12 Litigation . . . . . . . . . . . . . . . . . . 24
4.13 Compliance with Laws and Court Orders; No
Defaults . . . . . . . . . . . . . . . . . . 24
4.14 Insurance Coverage . . . . . . . . . . . . . . 25
4.15 Finders' Fees . . . . . . . . . . . . . . . . 25
4.16 Employee Benefit Plans . . . . . . . . . . . . 25
4.17 Taxes . . . . . . . . . . . . . . . . . . . . 27
4.18 Purchase for Investment . . . . . . . . . . . 28
4.19 Other Information . . . . . . . . . . . . . . 28
ARTICLE 5
COVENANTS OF CGE AND ANJOU
5.1 Conduct of the PSG Group . . . . . . . . . . . 28
5.2 Access to Information . . . . . . . . . . . . . 29
5.3 Notices of Certain Events . . . . . . . . . . . 29
5.4 Resignations . . . . . . . . . . . . . . . . . 30
5.5 Voting of Shares; Acquisitions of Shares . . . 30
5.6 Joint Efforts . . . . . . . . . . . . . . . . . 30
5.7 Other Agreements . . . . . . . . . . . . . . . 30
ARTICLE 6
COVENANTS OF AWT
ii
Page
----
6.1 Conduct of Business . . . . . . . . . . . . . . 31
6.2 Access to Information . . . . . . . . . . . . . 32
6.3 Notices of Certain Events . . . . . . . . . . . 32
6.4 Stockholder Meeting; Proxy Materials . . . . . 32
6.5 No-Shop . . . . . . . . . . . . . . . . . . . . 33
6.6 Access to Books and Records . . . . . . . . . . 33
6.7 Registration Rights . . . . . . . . . . . . . . 34
ARTICLE 7
COVENANTS OF AWT, ANJOU AND CGE
7.1 Intercompany Accounts; Bonding and Insurance . 34
7.2 Board Representation; Management . . . . . . . 35
7.3 Affiliate Transactions . . . . . . . . . . . . 36
7.4 Filings; Consents; Best Efforts . . . . . . . . 36
ARTICLE 8
TAX MATTERS
8.1 Tax Covenants . . . . . . . . . . . . . . . . . 37
8.2 Transfer Taxes. . . . . . . . . . . . . . . . . 38
8.3 Termination of Existing Tax Sharing Arrangements. 39
8.4 Tax Sharing. . . . . . . . . . . . . . . . . . 39
8.5 Cooperation on Tax Matters. . . . . . . . . . . 39
8.6 Indemnification by Anjou. . . . . . . . . . . . 40
8.7 Refunds. . . . . . . . . . . . . . . . . . . . 42
8.8 Survival. . . . . . . . . . . . . . . . . . . . 42
ARTICLE 9
EMPLOYEE BENEFITS
9.1 Pension Plan. . . . . . . . . . . . . . . . . . 42
9.2 Other Employee Plans. . . . . . . . . . . . . . 43
9.3 Third Party Beneficiaries. . . . . . . . . . 44
ARTICLE 10
CONDITIONS TO CLOSING
10.1 Conditions to Obligations of AWT, CGE and Anjou 44
10.2 Conditions to Obligation of AWT . . . . . . . 44
iii
Page
----
10.3 Conditions to Obligation of CGE and Anjou . . 45
ARTICLE 11
TERMINATION
11.1 Grounds for Termination . . . . . . . . . . . 46
11.2 Effect of Termination . . . . . . . . . . . . 47
ARTICLE 12
MISCELLANEOUS
12.1 Notices . . . . . . . . . . . . . . . . . . . 47
12.2 Amendments and Waivers . . . . . . . . . . . . 48
12.3 Expenses . . . . . . . . . . . . . . . . . . . 48
12.4 Successors and Assigns . . . . . . . . . . . . 48
12.5 GOVERNING LAW . . . . . . . . . . . . . . . . 49
12.6 Counterparts; Third Party Beneficiaries . . . 49
12.7 No Survival . . . . . . . . . . . . . . . . . 49
12.8 Public Announcements . . . . . . . . . . . . . 49
12.9 Entire Agreement; Exhibits . . . . . . . . . . 49
12.10 Headings . . . . . . . . . . . . . . . . . . 50
12.11 Specific Performance . . . . . . . . . . . . 50
iv
INVESTMENT AGREEMENT
AGREEMENT dated as of March 30, 1994 among Air & Water
Technologies Corporation, a Delaware corporation ("AWT"),
Compagnie Generale des Eaux, a French corporation ("CGE")
and its indirectly wholly-owned subsidiary, Anjou
International Company, a Delaware corporation ("ANJOU").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) The following terms, as
-----------
used herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled
by, or under common control with such Person; provided that
--------
for purposes of this Agreement (i) PSG and PSG Canada shall
not be considered an Affiliate of CGE or Anjou, (ii) CGE and
AWT (and their respective Subsidiaries) shall not be
considered Affiliates of one another and (iii) any joint-
venture or partnership by any party hereto with any other
Person shall be deemed not to be an Affiliate of any party
hereto.
"ASSOCIATE" means, when used to indicate a
relationship with a Person, a corporation or other entity of
which such Person is, directly or indirectly, the beneficial
owner of 15% or more of its total voting power.
"AWT BENEFIT ARRANGEMENT" means any employment,
severance or similar contract or arrangement (whether or not
written) or any plan, policy, fund, program or contract or
arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other
stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical
benefits, disability benefits, worker's compensation,
supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or
other benefits) that (i) is not an AWT Employee Plan, (ii)
is entered into, maintained, administered or contributed to,
as the case may be, by AWT, any of its Affiliates or
1
Subsidiaries and (iii) covers any employee or former
employee of AWT or any Subsidiary of AWT employed in the
United States.
"AWT EMPLOYEE PLAN" means any "EMPLOYEE BENEFIT
PLAN", as defined in Section 3(3) of ERISA, that (i) is
subject to any provision of ERISA, (ii) is maintained,
administered or contributed to by AWT or any of its
Affiliates or Subsidiaries and (iii) covers any employee or
former employee of AWT or any Subsidiary of AWT.
"AWT INTERNATIONAL PLAN" means any employment,
severance or similar contract or arrangement (whether of not
written) or any plan, policy, fund, program or arrangement
or contract providing for compensation, bonus, profit-
sharing, stock option, or other stock related rights or
other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability
benefits, worker's compensation, supplemental unemployment
benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that
(i) is not an AWT Employee Plan or an AWT Benefit
Arrangement, (ii) is entered into, maintained, administered
or contributed to by AWT or any of its Affiliates and (iii)
covers any employee or former employee of AWT or any
Subsidiary of AWT.
"AWT PROXY MATERIALS" means each document filed by
AWT with the Commission in connection with the meeting of
the stockholders of AWT described in Section 6.4 including,
without limitation, the proxy statement of AWT and any
amendment or supplement thereto.
"BALANCE SHEET" means the balance sheet of the PSG
Group as of December 31, 1993.
"BASKET" means the amount at any time equal to (a)
$250,000 plus the reserves for Taxes, if any, provided for
on the books and records of PSG and PSG Canada, minus (b)
any reductions (in the aggregate) made pursuant to Section
8.6(d) hereof.
"CLASS A COMMON STOCK" means the Class A Common
Stock of AWT, par value $.001 per share.
"CLOSING DATE" means the date of the Closing.
"CODE" means the United States Internal Revenue
Code of 1986, as amended.
2
"COMMISSION" means the United States Securities
and Exchange Commission.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute
thereto, and the rules and regulations promulgated
thereunder.
"ERISA AFFILIATE" of any entity means any other
entity which, together with such entity, would be treated as
a single employer under Section 414 of the Code.
"HSR ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"LIEN" means, with respect to any property or
asset, any mortgage, lien, pledge, charge, security
interest, encumbrance or other adverse claim of any kind in
respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien
any property or asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention
agreement relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means a material adverse
effect on the condition (financial or otherwise), business,
assets or results of operations of AWT or the PSG Group, as
the case may be, and their respective Subsidiaries, taken as
a whole; provided that any continuation of any existing
--------
unfavorable business or financial trend without a material
worsening thereof shall be deemed not to give rise to any
Material Adverse Effect.
"MULTIEMPLOYER PLAN" means each PSG Group Employee
Plan or each AWT Employee Plan, as the case may be, that is
a multiemployer plan, as defined in Section 3(37) of ERISA.
"1934 ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
"PBGC" means the Pension Benefit Guaranty
Corporation.
"PENSION PLAN" means each "DEFINED BENEFIT PLAN"
within the meaning of Section 3(35) of ERISA other than any
such plan which is a Multiemployer Plan.
"PERSON" means an individual, corporation,
partnership, limited liability company, association, trust
or other entity or organization, including a government or
3
political subdivision or an agency or instrumentality
thereof.
"PSG COMMON STOCK" means the Common Stock, par
value $1.00 per share, of PSG.
"PSG" means PSC Professional Services Group, Inc.,
a Minnesota corporation and a wholly-owned subsidiary of
Anjou.
"PSG GROUP BENEFIT ARRANGEMENT" means any
employment, severance or similar contract or arrangement
(whether or not written) or any plan, policy, fund, program
or contract or arrangement (whether or not written)
providing for compensation, bonus, profit-sharing, stock
option, or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured
arrangements), health or medical benefits, disability
benefits, worker's compensation, supplemental unemployment
benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that
(i) is not a PSG Group Employee Plan, (ii) is entered into,
maintained, administered or contributed to, as the case may
be, by CGE, the PSG Group or any of their respective
Affiliates and (iii) covers any employee or former employee
of the PSG Group or any Subsidiary of the PSG Group employed
in the United States.
"PSG CANADA" means 2815869 Canada, Inc., a
corporation organized under the Canada Business Corporations
Act and a wholly-owned subsidiary of Anjou.
"PSG GROUP EMPLOYEE PLAN" means any "EMPLOYEE
BENEFIT PLAN", as defined in Section 3(3) of ERISA, that (i)
is subject to any provision of ERISA, (ii) is maintained,
administered or contributed to by CGE, the PSG Group or any
of its Affiliates and (iii) covers any employee or former
employee of the PSG Group or any Subsidiary of the PSG
Group.
"PSG GROUP" means, collectively, PSG and PSG
Canada.
"PSG GROUP INTERNATIONAL PLAN" means any
employment, severance or similar contract or arrangement
(whether of not written) or any plan, policy, fund, program
or arrangement or contract providing for compensation,
bonus, profit-sharing, stock option, or other stock related
rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-
4
insured arrangements), health or medical benefits,
disability benefits, worker's compensation, supplemental
unemployment benefits, severance benefits and post-
employment or retirement benefits (including compensation,
pension, health, medical or life insurance or other
benefits) that (i) is not a PSG Group Employee Plan or a PSG
Group Benefit Arrangement, (ii) is entered into, maintained,
administered or contributed to by Anjou, the PSG Group or
any of their respective Affiliates and (iii) covers any
employee or former employee of the PSG Group or any
Subsidiary of the PSG Group.
"PSG PENSION PLAN" means the Anjou Pension Plan.
"SERIES A PREFERRED" means the Series A
Convertible Exchangeable Preferred Stock of AWT, par value
$.01 per share, having the designations, rights and
preferences substantially in the form of Exhibit A hereto.
"SHARES" means shares of Class A Common Stock, par
value $.001, of AWT.
"SUBSIDIARY" means any entity of which securities
or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons
performing similar functions are at the time directly or
indirectly owned by PSG or AWT, as the case may be.
"TAX" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license,
withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by
any governmental authority (a "Taxing authority")
responsible for the imposition of any such tax (domestic or
foreign), (ii) liability of any Person for the payment of
any amounts of the type described in (i) as a result of
being a member of any affiliated, consolidated, combined or
unitary group or being a party to any agreement or
arrangement whereby liability of a Person for payments of
such amounts was determined or taken into account with
reference to the liability of any other Person for any
period, and (iii) liability of any Person for the payment of
any amounts of the type described in (i) as a result of any
express or implied obligation to indemnify any other Person.
"TAX ASSET" means any net operating loss, net
5
capital loss, investment tax credit, foreign tax credit,
charitable deduction or any other credit or tax attribute
which could reduce Taxes (including, without limitation,
deductions and credits related to alternative minimum
Taxes).
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
---- -------
AWT Securities 4.5
Base Stockholder's Equity 2.5
Board 6.5
Closing 2.3
Closing Balance Sheet 2.4
Closing Stockholder's Equity 2.4
Company 10-K 4.6
Company 10-Q 4.6
Exon-Florio 3.3
Final Stockholder's Equity 2.5
Independent Director 7.2
PSG Securities 3.5
Takeover proposal 6.5
Utilities 3.7
ARTICLE 2
PURCHASE AND SALE; MERGER
2.1 Purchase and Sale. Upon the terms and subject
-----------------
to the conditions of this Agreement:
(a) AWT agrees to sell and CGE agrees to purchase
for cash 1,200,000 shares of Series A Preferred for an
aggregate purchase price of $60,000,000; and
(b) Anjou agrees to exchange (the "EXCHANGE") all of
the outstanding capital stock of PSG Canada for, and AWT
agrees to issue, 650,000 shares of Class A Common Stock.
The foregoing consideration shall be paid or exchanged in
accordance with Section 2.3. The Exchange consideration
received by Anjou shall be adjusted as provided in
Section 2.5.
2.2 The Merger. (a) At Closing, AWT and Anjou
----------
shall cause a newly formed Minnesota subsidiary (the "MERGER
SUBSIDIARY") to be merged (the "MERGER") with and into PSG
in accordance with the terms and provisions of a Plan of
6
Merger, substantially in the form of Exhibit B hereto,
whereupon the separate existence of Merger Subsidiary shall
cease, and PSG shall be the surviving corporation.
(b) As provided for in the Plan of Merger, all PSG
Common Stock outstanding immediately prior to the effective
time of the Merger shall, except as otherwise provided
therein, be converted into the right to receive in the
aggregate 5,850,000 shares of Class A Common Stock.
(c) The merger consideration received by Anjou
shall be adjusted as provided in Section 2.5.
2.3 Closing. The closing (the "CLOSING") of the
-------
transactions contemplated hereby shall take place at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York as soon as practicable, but in no event later
than 10 business days, after satisfaction of the conditions
set forth in Article 10, or at such other time or place as
AWT and CGE may agree. At the Closing:
(a) AWT shall deliver to (i) Anjou one or more
certificates for the Class A Common Stock received in
connection with the Exchange and the Merger, registered
in the name of Anjou, and (ii) CGE one or more
certificates for the Series A Preferred, registered in
the name of CGE (or such other Person as CGE may
designate to AWT no later than two business days prior to
the Closing).
(b) CGE shall deliver to AWT $60,000,000 in
immediately available funds by wire transfer to an
account of AWT designated by AWT, by notice to CGE, no
later than two business days prior to the Closing).
(c) Anjou shall deliver to AWT all outstanding
capital stock of PSG Canada along with duly endorsed
stock powers in the name of AWT.
2.4 Closing Balance Sheet. (a) As promptly as
---------------------
practicable, but no later than 60 days, after the Closing
Date, Anjou will cause to be prepared and delivered to AWT,
at Anjou's expense, the Closing Balance Sheet, together with
an unqualified report of Arthur Andersen & Co., Houston,
Texas office, thereon, and a certificate based on such
Closing Balance Sheet setting forth Anjou's calculation of
Closing Stockholder's Equity. The Closing Balance Sheet
("CLOSING BALANCE SHEET") shall (x) fairly present the
financial position of the PSG Group as at the close of
business on the Closing Date in accordance with generally
accepted accounting principles applied on a basis consistent
with those used in the preparation of the Balance Sheet, (y)
7
include line items substantially consistent with those in
the Balance Sheet, and (z) be prepared in accordance with
accounting policies and practices consistent with those used
in the preparation of the Balance Sheet. "CLOSING
STOCKHOLDER'S EQUITY" means the stockholder's equity of the
PSG Group as shown on the Closing Balance Sheet (which shall
exclude all intercompany accounts, which shall be settled or
capitalized pursuant to Section 7.1), with the following
adjustments: less all cash and cash equivalents and all
assets that in accordance with generally accepted accounting
principles would be classified as intangible assets,
including but not limited to goodwill, patents, trademarks
and unamortized debt discount.
(b) If AWT disagrees with Anjou's calculation of
Closing Stockholder's Equity delivered pursuant to Section
2.4(a) and the amount of any such disagreement is in excess
of $250,000, AWT may, within 30 days after delivery of the
documents referred to in Section 2.4(a), deliver a notice to
Anjou disagreeing with such calculation and setting forth
AWT's calculation of such amount. Any such notice of
disagreement shall specify those items or amounts as to
which AWT disagrees, and AWT shall be deemed to have agreed
with all other items and amounts contained in the Closing
Balance Sheet and the calculation of Closing Stockholder's
Equity delivered pursuant to Section 2.4(a).
(c) If a notice of disagreement shall be delivered
pursuant to Section 2.4(b), Anjou and AWT shall, during the
10 days following such delivery, use their best efforts to
reach agreement on the disputed items or amounts in order to
determine, as may be required, the amount of Closing
Stockholder's Equity, which amount shall not be more than
the amount thereof shown in Anjou's calculations delivered
pursuant to Section 2.4(a) nor less than the amount thereof
shown in AWT's calculation delivered pursuant to Section
2.4(b). If, during such period, Anjou and AWT are unable to
reach such agreement, they shall promptly thereafter cause
independent accountants of nationally recognized standing
reasonably satisfactory to AWT and Anjou (who shall not have
any material relationship with AWT, Anjou or CGE), promptly
to review this Agreement and the disputed items or amounts
for the purpose of calculating Closing Stockholder's Equity.
In making such calculation, such independent accountants
shall consider only those items or amounts in the Closing
Balance Sheet or Anjou's calculation of Closing
Stockholder's Equity as to which AWT has disagreed. Such
independent accountants shall deliver to Anjou and AWT, as
promptly as practicable, a report setting forth such
calculation. Such report shall be final and binding upon
Anjou and AWT. The cost of such review and report shall be
borne equally by the parties.
8
(d) Anjou and AWT agree that they will, and agree
to cause their respective independent accountants and the
PSG Group to, cooperate and assist in the preparation of the
Closing Balance Sheet and the calculation of Closing
Stockholder's Equity and in the conduct of the audits and
reviews referred to in this Section, including without
limitation, the making available to the extent necessary of
books, records, work papers and personnel.
2.5 Adjustment of Purchase Price. (a) If Base
----------------------------
Stockholder's Equity exceeds Final Stockholder's Equity,
Anjou shall pay to AWT, as an adjustment to the
consideration received in the Exchange and the Merger, in
the manner and with interest as provided in Section 2.5(b),
the amount of such excess. If Final Stockholder's Equity
exceeds Base Stockholder's Equity, AWT shall pay to Anjou,
in the manner and with interest as provided in Section
2.5(b), the amount of such excess. "BASE STOCKHOLDER'S
EQUITY" calculated on the same basis as the Closing
Stockholder's Equity is $12,741,000. "FINAL STOCKHOLDER'S
EQUITY" means the Closing Stockholder's Equity (i) as shown
in Anjou's calculation delivered pursuant to Section 2.4(a),
if no notice of disagreement with respect thereto is duly
delivered pursuant to Section 2.4(b); or (ii) if such a
notice of disagreement is delivered, (A) as agreed by AWT
and CGE pursuant to Section 2.4(c) or (B) in the absence of
such agreement, as shown in the independent accountants'
calculation delivered pursuant to Section 2.4(c); provided
--------
that, in no event shall Final Stockholder's Equity be more
than Anjou's calculation of Closing Stockholder's Equity
delivered pursuant to Section 2.4(a) or less than AWT's
calculation of Closing Stockholder's Equity delivered
pursuant to Section 2.4(b).
(b) Any payment pursuant to Section 2.5(a) shall be
made at a mutually convenient time and place within 10 days
after the Final Stockholder's Equity has been determined by
delivery (i) in the case of AWT, of shares of Class A Common
Stock registered in the name of Anjou or (ii) in the case of
Anjou, of a certified or official bank check payable in
immediately available funds to AWT or by causing such
payments to be credited to such account of AWT as may be
designated by AWT. The amount of any payment of cash or
Class A Common Stock, as the case may be, to be made
pursuant to this Section shall bear interest from and
including the Closing Date to but excluding the date of
payment at a rate per annum equal to the Prime Rate in
effect from time to time during the period from the Closing
Date to the date of payment. The amount of such interest
shall be payable in cash or shares of Class A Common Stock,
as applicable, at the same time as the payment to which it
relates and shall be calculated daily on the basis of a year
9
of 365 days and the actual number of days elapsed. The
price per share of any Class A Common Stock delivered by AWT
pursuant to this Section 2.5 shall be $10. Notwithstanding
anything to the contrary in this Section 2.5, in no event
shall AWT be required to pay an adjustment with respect to
an increase in the stockholder's equity of PSG Canada to the
extent such adjustment exceeds 324,000 shares of Class A
Common Stock.
2.6 Legending of Securities. All securities to be
-----------------------
issued to Anjou or CGE by AWT hereunder shall bear the
following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OF THE UNITED STATES AND THE
SECURITIES REGULATORY AUTHORITIES OF APPLICABLE
STATES OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ANJOU AND CGE
CGE and Anjou jointly and severally represent and
warrant to AWT as of the date hereof and as of the Closing
Date that:
3.1 Corporate Existence and Power. Each of CGE,
-----------------------------
Anjou, PSG and PSG Canada is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to
carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals
the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect. Each of PSG and
PSG Canada is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse
Effect. Anjou has heretofore delivered to AWT true and
complete copies of the articles of incorporation and bylaws
of each of PSG and PSG Canada as currently in effect.
3.2 Corporate Authorization. The execution,
-----------------------
10
delivery and performance by Anjou and CGE of this Agreement
are within their respective corporate powers and have been
duly authorized by all necessary corporate action on the
part of each of Anjou and CGE. This Agreement constitutes a
valid and binding agreement of each of Anjou and CGE
enforceable against it in accordance with its terms.
3.3 Governmental Authorization. The execution,
--------------------------
delivery and performance by each of CGE and Anjou of this
Agreement require no action by or in respect of, or filing
with, any governmental body, agency, or official other than
(i) compliance with any applicable requirements of the HSR
Act; (ii) compliance with the provisions of the Omnibus
Trade and Competitiveness Act of 1988, as amended ("EXON-
FLORIO"); (iii) any filings to be made in Minnesota or
Delaware, as the case may be, in connection with the Merger
and the Certificate of Designations of the Series A
Preferred; and (iv) any such action or filing as to which
the failure to make or obtain would not, individually or in
the aggregate, have a Material Adverse Effect.
3.4 Non-Contravention. The execution, delivery and
-----------------
performance by CGE and Anjou of this Agreement do not and
will not (i) violate the charter or bylaws of Anjou, PSG or
PSG Canada or the constituent documents of CGE, (ii)
assuming compliance with the matters referred to in Section
3.3, violate any applicable law, rule, regulation, judgment,
injunction, order or decree or (iii) require any consent or
other action by any Person under, constitute a default
under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of
the PSG Group or to a loss of any benefit to which the PSG
Group is entitled under, any agreement or other instrument
binding upon the PSG Group or any license, franchise, permit
or other similar authorization held by the PSG Group, except
in the case of clauses (ii) and (iii) to the extent that any
such violation, failure to obtain any such consent or other
action, default, right, loss would not, individually or in
the aggregate, have a Material Adverse Effect.
3.5 Capitalization. (a) The authorized capital
--------------
stock of PSG consists of 2,000 shares of Common Stock, par
value $1.00 per share. As of the date hereof, there were
outstanding 1,250 shares of Common Stock of PSG. The
authorized capital stock of PSG Canada consists of unlimited
shares of Common Stock, par value Canadian $1.00 per share.
As of the date hereof, there were outstanding 190,000 shares
of Common Stock of PSG Canada.
(b) All outstanding shares of capital stock of the
PSG Group have been duly authorized and validly issued and
are fully paid and non-assessable. Except as set forth in
11
this Section 3.5, there are no outstanding (i) shares of
capital stock or voting securities of the PSG Group, (ii)
securities of the PSG Group convertible into or exchangeable
for shares of capital stock or voting securities of the PSG
Group or (iii) options or other rights to acquire from the
PSG Group, or other obligation of the PSG Group to issue,
any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting
securities of the PSG Group (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "PSG
SECURITIES"). There are no outstanding obligations of the
PSG Group to repurchase, redeem or otherwise acquire any PSG
Securities.
3.6 Ownership of Shares. Except as disclosed in
-------------------
Schedule 3.6, Anjou is the registered and beneficial owner
of all outstanding shares of capital stock of the PSG Group,
free and clear of any Lien and any other limitation or
restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock).
3.7 Subsidiaries. None of PSG and PSG Canada has
------------
any Subsidiaries, except for Utilities Services Group, Inc.,
a Texas corporation ("UTILITIES"), which has no assets and
is inactive.
3.8 Financial Statements. The audited balance
--------------------
sheets of the PSG Group as of December 31, 1992 and December
31, 1993 and the related statements of income and cash flows
for each of the years ended December 31, 1992 and December
31, 1993, present fairly, in all material respects, the
financial position of the PSG Group as of the dates thereof
and its results of operations and changes in cash flows for
the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto).
3.9 AWT Proxy Materials. The information with
-------------------
respect to CGE, Anjou or the PSG Group and their
subsidiaries that has been furnished to AWT in writing
specifically for use in any AWT Proxy Materials, each time
any AWT Proxy Materials are distributed to stockholders of
AWT or any other solicitation of stockholders of AWT is made
by or on behalf of AWT or any Affiliate of AWT, and at the
time the stockholders of AWT vote on the issuance of AWT
Securities pursuant to this Agreement will not include any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which such
statements were made, not misleading or necessary to correct
any statement in any earlier communication with respect to
the solicitation of a proxy for the same meeting or subject
12
matter which has become false or misleading.
3.10 Absence of Certain Changes. Except as set
--------------------------
forth on Schedule 3.10, since December 31, 1993, the
business of the PSG Group has been conducted in the ordinary
course consistent with past practices and there has not
been:
(i) any event, occurrence, development or state
of circumstances or facts which has had or would
reasonably be expected to have a Material Adverse
Effect;
(ii) any declaration, setting aside or payment of
any dividend or other distribution with respect to any
shares of capital stock of the PSG Group, or any
repurchase, redemption or other acquisition by the PSG
Group of any outstanding shares of capital stock or
other securities of, or other ownership interests in,
the PSG Group;
(iii) any amendment of any material term of any
outstanding security of the PSG Group;
(iv) any incurrence, assumption or guarantee by
the PSG Group of any indebtedness for borrowed money,
except in the ordinary course of business consistent
with past practices;
(v) any sale, transfer or other disposition of a
material amount of the assets of the PSG Group;
(vi) any creation or assumption by the PSG Group
of any Lien on any material asset other than in the
ordinary course of business consistent with past
practices;
(vii) any damage, destruction or other casualty
loss (whether or not covered by insurance) affecting
the business or assets of PSG which, individually or in
the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect;
(viii) any change in any method of accounting or
application thereof by the PSG Group;
(ix) except as previously disclosed to AWT, any
(A) written employment, deferred compensation,
severance, retirement or other similar agreement
entered into with any director, officer or employee of
the PSG Group (or any amendment to any such existing
agreement), (B) grant of any severance or termination
13
pay to any director, officer or employee of the PSG
Group, or (C) change in compensation or other benefits
payable to any director, officer or employee of the PSG
Group pursuant to any severance or retirement plans or
policies thereof, other than in the ordinary course of
business consistent with past practices; or
(x) any labor dispute, other than routine
individual grievances, or any activity or proceeding by
a labor union or representative thereof to organize any
employees of the PSG Group, which employees were not
subject to a collective bargaining agreement at
December 31, 1993, or any lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to
any employees of the PSG Group.
3.11 No Undisclosed Material Liabilities. There
-----------------------------------
are no liabilities of the PSG Group of any kind whatsoever,
whether accrued, contingent, absolute or otherwise, and
there is no existing condition, situation or set of
circumstances which would result in such a liability, other
than:
(a) liabilities provided for in the Balance Sheet
or disclosed in the notes thereto;
(b) liabilities disclosed on Schedule 11; and
(c) other undisclosed liabilities which,
individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Effect.
3.12 Intercompany Accounts. Schedule 3.12 contains
---------------------
a complete list of all intercompany balances as of December
31, 1993 between CGE, Anjou and their Affiliates, on the one
hand, and the PSG Group, on the other hand. Since December
31, 1993 there has not been any accrual of liability by the
PSG Group to CGE or Anjou or any of their respective
Affiliates or other transaction between the PSG Group and
CGE or Anjou and any of their respective Affiliates, except
in the ordinary course of business of the PSG Group
consistent with past practices.
3.13 Material Contracts. (a) Except as disclosed
------------------
in Schedule 3.13, and except for any agreements that are
terminable on not more than 90 days notice and without the
payment of any penalty by, or any other material consequence
to, the PSG Group, the PSG Group is not a party to or bound
by:
(i) any sales, distribution or other similar
agreement providing for the sale by the PSG Group of
14
materials, supplies, goods, services, equipment or
other assets that provides for either (A) annual
payments to the PSG Group of $2,000,000 or more or (B)
aggregate payments to the PSG Group of $2,000,000 or
more;
(ii) any partnership, joint venture or other
similar agreement or arrangement;
(iii) any agreement relating to indebtedness for
borrowed money or the deferred purchase price of
property (in either case, whether incurred, assumed,
guaranteed or secured by any asset); or
(iv) any agreement that limits the freedom of the
PSG Group to compete in any line of business or with
any Person or in any geographic area or which would so
limit the freedom of the PSG Group after the Closing
Date.
(b) Each agreement, commitment, arrangement or plan
disclosed in any Schedule to this Agreement or required to
be disclosed pursuant to this Section is a valid and binding
agreement of the PSG Group and is in full force and effect,
and the PSG Group is not nor, to the knowledge of CGE or
Anjou, is any other party thereto in default or breach in
any material respect under the terms of any such agreement,
contract, plan, lease, arrangement or commitment.
3.14 Litigation. Except as set forth on Schedule
----------
3.14, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of CGE or Anjou
threatened against or affecting, CGE, Anjou or the PSG Group
or any of their respective properties before any court or
arbitrator or any governmental body, agency or official (i)
which would reasonably be expected to have a Material
Adverse Effect or (ii) which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
3.15 Compliance with Laws and Court Orders; No
-----------------------------------------
Defaults. (a) The PSG Group is not in violation of any
- --------
applicable law, rule, regulation, judgement, injunction,
order or decree except for violations that have not had and
would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(b) The PSG Group is not in default under, and no
condition exists that with notice or lapse of time or both
would constitute a default under, any agreement or other
instrument binding upon the PSG Group or any license,
franchise, permit or similar authorization held by the PSG
15
Group, which defaults or potential defaults, individually or
in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
3.16 Insurance Coverage. PSG has furnished to AWT
------------------
a list of, and true and complete copies of, all insurance
policies and fidelity bonds relating to the assets,
business, operations, employees, officers or directors of
the PSG Group. There is no claim by the PSG Group pending
under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of
such policies or bonds or in respect of which such
underwriters have reserved their rights, except for such
claims which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
All premiums payable under all such policies and bonds have
been paid timely and the PSG Group has otherwise complied
fully with the terms and conditions of all such policies and
bonds. Such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance
coverage) have been in effect since January 1, 1994 and
remain in full force and effect. Such policies and bonds
are of the type and in amounts customarily carried by
Persons conducting businesses similar to those of the PSG
Group. The PSG Group shall after the Closing continue to
have coverage under such policies and bonds with respect to
events occurring prior to the Closing.
3.17 Finders' Fees; Certain Payments. (a) Except
-------------------------------
for Lazard Freres & Co. whose fees will be paid by CGE,
there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to
act on behalf of CGE, Anjou or the PSG Group who might be
entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
(b) All payments by or for the benefit of the PSG
Group to agents, consultants and others have been in payment
of bona fide fees and commissions.
---------
3.18 Employee Benefit Plans. (a) Schedule 3.18
----------------------
identifies each PSG Group Employee Plan. Anjou has
furnished or made available to AWT copies of the PSG Group
Employee Plans (and, if applicable, related trust
agreements) and all amendments thereto and written
interpretations thereof together with (i) the most recent
annual report prepared in connection with any PSG Group
Employee Plan (Form 5500 including, if applicable, Schedule
B thereto) and (ii) if applicable, the most recent actuarial
valuation report prepared in connection with any PSG Group
Employee Plan.
16
(b) Neither Anjou nor any of its ERISA Affiliates
has incurred, or reasonably expects to incur prior to the
Closing Date, any liability under Title IV of ERISA arising
in connection with the termination of, or complete or
partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA that could become a liability
of AWT or any of its ERISA Affiliates after the Closing
Date. To the best knowledge of Anjou, no condition exists
that (i) could constitute grounds for termination by the
PBGC of any PSG Group Employee Plan that is subject to Title
IV of ERISA that is maintained solely by Anjou or any of its
ERISA Affiliates or (ii) presents a material risk of
complete or partial withdrawal from any Multiemployer Plan
under Title IV of ERISA other than a complete or partial
withdrawal that would not have a Material Adverse Effect.
(c) Each PSG Group Employee Plan (other than a
Multiemployer Plan) that is intended to be qualified under
Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified or can become so
qualified within the remedial amendment period of Section
401(b) of the Code and to the best knowledge of Anjou, no
event has occurred since the date of such determination that
would adversely affect such qualification or affect the
ability to become so qualified within the remedial amendment
period of Section 401(b) of the Code; each trust created
under any such Plan has been determined by the Internal
Revenue Service to be exempt from tax under Section 501(a)
of the Code or can be so determined within the aforesaid
remedial amendment period and, to the best knowledge of
Anjou, no event has occurred since the date of such
determination that would adversely affect such exemption or
affect the ability to be determined to be exempt within the
aforesaid remedial amendment period. Anjou has furnished or
made available to AWT the most recent determination letter
of the Internal Revenue Service relating to each such PSG
Group Employee Plan. To the best knowledge of Anjou, each
PSG Group Employee Plan (other than a Multiemployer Plan)
has been maintained in substantial compliance with its terms
and substantially with the requirements prescribed by any
and all applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, except for
any instance of non-compliance that would not have a
Material Adverse Effect.
(d) Schedule 3.18 identifies each PSG Group Benefit
Arrangement. Anjou has furnished or made available to AWT
copies or descriptions of each PSG Group Benefit
Arrangement. To the best knowledge of Anjou, each PSG Group
Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules
17
and regulations, execept for any instance of non-compliance
that would not have a Material Adverse Effect.
(e) Schedule 3.18 identifies each PSG Group
International Plan. Anjou has furnished to AWT copies of
each PSG Group International Plan. To the best knowledge of
Anjou, each PSG Group International Plan has been maintained
in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special
provisions relating to qualified plans where such Plan was
intended to so qualify) and has been maintained in good
standing with applicable regulatory authorities, except for
any instance of non-compliance or failure to be so
maintained that would not, in either case, have a Material
Adverse Effect.
(f) All representations and warranties contained in
the foregoing subsections of this Section 3.18 are subject
to such limitations and exceptions as are specifically noted
in Schedule 3.18.
3.19 Taxes. Except as set forth on the Balance
-----
Sheet (including the notes thereto) and except for Taxes,
the liability for which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, (i) all material Tax returns, statements, reports
and forms required to be filed with any Taxing authority by
or on behalf of PSG (collectively, the "Returns"), have been
or will be filed when due in accordance with all applicable
laws except where failure to so file would not subject PSG
to liabilities or penalties; (ii) as of the time of filing,
the Returns correctly reflected in all material respects
(and, as to any Returns not filed as of the date hereof,
will correctly reflect) the facts regarding the income,
business, assets, operations, activities and status of PSG;
(iii) PSG has timely paid, withheld or made provision for
all Taxes shown as due and payable on the Returns that have
been filed; (iv) the charges, accruals and reserves for
Taxes with respect to PSG for any Tax period (or portion
thereof) ending on or before the Closing Date (excluding any
provision for deferred income taxes) reflected on the books
of PSG are adequate to cover such Taxes; (v) PSG is not
delinquent in the payment of any material Tax and has not
requested any extension of time within which to file or send
any Return, which Return has not since been filed or sent;
(vi) neither PSG (nor any member of any affiliated or
combined group of which PSG is or has been a member) has
granted any extension or waiver of the limitation period
applicable to any Returns; (vii) there is no claim, audit,
action, suit, proceeding or investigation now pending or
threatened against or with respect to PSG of which PSG or
18
Anjou is aware in respect of any material Tax or assessment;
and (viii) there are no material liens for Taxes upon the
assets of PSG except liens for current Taxes not yet due.
3.20 Environmental Matters. To the best of CGE's
---------------------
and Anjou's knowledge there are no liabilities of the PSG
Group which (a) arise under or relate to matters covered by
Environmental Laws, (b) are attributable to actions
occurring or conditions existing on or prior to the Closing
Date and (c) would reasonably be expected to have a Material
Adverse Effect.
"ENVIRONMENTAL LAWS" means any and all federal,
state and local statutes, laws, regulations, rules,
judgments and orders relating to the environment, to
emissions, discharges or releases of pollutants,
contaminants, hazardous substances or hazardous or toxic
wastes into the environment or to the handling, use,
storage, transportation or disposal thereof.
3.21 Properties. (a) The PSG Group has good title
----------
to, or in the case of leased property has valid leasehold
interests in, all property and assets (whether real or
personal, tangible or intangible) reflected on the Balance
Sheet or acquired after December 31, 1993, except for
property and assets sold since December 31, 1993 in the
ordinary course of business consistent with past practices.
(b) The plants, buildings, structures and equipment
owned or leased by the PSG Group (i) have no material
defects, are in good operating condition and repair and have
been reasonably maintained consistent with standards
generally followed in the industry (giving due account to
the age and length of use of same, ordinary wear and tear
excepted) and (ii) comply in all material respects with
applicable zoning and other applicable land-use regulations.
3.22 Receivables. All accounts receivable of the
-----------
PSG Group are fully collectible in the aggregate amount
thereof, subject to normal and customary trade discounts,
less any reserves for doubtful accounts recorded on the
Balance Sheet and subsequent to December 31, 1993 in the
ordinary course of business consistent with past practices.
3.23 Purchase for Investment. Each of CGE and
-----------------------
Anjou is acquiring the Series A Preferred and the Shares,
respectively, for investment for its own account and not
with a view to, or for sale in connection with, any
distribution any such shares. Each of CGE and Anjou (either
alone or together with its advisors) has sufficient
knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of
19
its investments in AWT and is capable of bearing the
economic risks of such investment.
3.24 Other Information. None of the documents or
-----------------
information delivered to AWT by any of CGE, Anjou or PSG in
connection with its due diligence investigation of the PSG
Group contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make
the statements contained therein, in the light of the
circumstances under which such statements were made, not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AWT
AWT represents and warrants to each of CGE and Anjou
as of the date hereof and as of the Closing Date that:
4.1 Corporate Existence and Power. AWT is a
-----------------------------
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to
carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals
the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect.
4.2 Corporate Authorization. (a) The execution,
-----------------------
delivery and performance by AWT of this Agreement are within
the corporate powers of AWT and, except for any required
approval by AWT's stockholders, have been duly authorized by
all necessary corporate action on the part of AWT. This
Agreement constitutes a valid and binding agreement of AWT
enforceable against it in accordance with its terms.
(b) The Shares and the Series A Preferred, when
issued and delivered to and paid for by Anjou and CGE, as
the case may be, pursuant to this Agreement, will be validly
issued, fully paid and non-assessable, and such Shares and
Series A Preferred will be free of pre-emptive or similar
rights. The Shares reserved for issuance upon conversion of
the Series A Preferred have been duly authorized by AWT and
reserved for issuance upon such conversion and, when issued
upon such conversion in accordance with the terms of the
Certificate of Designations for the Series A Preferred, will
have been validly issued, fully paid and non-assessable, and
such Shares will be free of pre-emptive or similar rights.
4.3 Governmental Authorization. The execution,
--------------------------
20
delivery and performance by AWT of this Agreement require no
action by or in respect of, or filing with, any governmental
body, agency or official other than (i) compliance with any
applicable requirements of the HSR Act; (ii) compliance
with any applicable requirements of the 1934 Act; (iii)
compliance with the rules and regulations of the American
Stock Exchange; (iv) any filings to be made in Minnesota or
Delaware, as the case may be, in connection with the Merger
and the Certificate of Designations of the Series A
Preferred; and (v) any such action or filing as to which the
failure to make or obtain would not, individually or in the
aggregate, have a Material Adverse Effect.
4.4 Non-Contravention. The execution, delivery and
-----------------
performance by AWT of this Agreement do not and will not (i)
violate the certificate of incorporation or bylaws of AWT or
(ii) assuming compliance with the matters referred to in
Section 4.3, violate any applicable law, rule, regulation,
judgment, injunction, order or decree except, in the case of
clause (ii), to the extent that any such violation would
not, individually or in the aggregate, have a Material
Adverse Effect.
4.5 Capitalization. (a) The authorized capital
--------------
stock of AWT consists of 100,000,000 shares of Common Stock,
par value $0.001 per share and 2,500,000 shares of preferred
stock, par value $0.01 per share. As of the date hereof,
there were outstanding (i) 25,313,281 shares of Common
Stock, (ii) no shares of preferred stock, (iii) $115,000,000
aggregate principal amount of 8% Convertible Subordinated
Debentures, convertible into shares of Class A Common Stock
at a conversion price of $30.00 per share and (iv) employee
stock options to purchase an aggregate of 2,197,025 Shares
(of which options to purchase an aggregate of 891,580 Shares
were exercisable).
(b) All outstanding Shares have been duly
authorized and validly issued and are fully paid and
non-assessable. Except as set forth in this Section 4.5,
there are no outstanding (i) shares of capital stock or
voting securities of AWT, (ii) securities of AWT convertible
into or exchangeable for shares of capital stock or voting
securities of AWT or (iii) options or other rights to
acquire from AWT, or other obligation of AWT to issue, any
capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities
of AWT (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "AWT SECURITIES"). There
are no outstanding obligations of PSG to repurchase, redeem
or otherwise acquire any AWT Securities.
4.6 SEC Filings. (a) AWT has delivered to CGE the
-----------
21
annual report on Form 10-K for its fiscal year ended October
31, 1993 (the "COMPANY 10-K") and the quarterly report on
Form 10-Q for its quarter ended January 31, 1994 (the
"COMPANY 10-Q").
(b) As of its respective filing date, the Company
10-K and the Company 10-Q did not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were
made, not misleading.
4.7 Financial Statements. (a) The audited
--------------------
consolidated financial statements for the fiscal years ended
October 31, 1992 and October 31, 1993 of AWT included in the
Company 10-K and (b) the unaudited consolidated financial
statements for the quarter ended January 31, 1994 of AWT
included in the Company 10-Q as filed with the Commission
fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto and except for
normal year-end adjustments), the consolidated financial
position of the Company and its consolidated subsidiaries as
of the dates thereof and their consolidated results of
operations and statement of cash flows for the periods then
ended.
4.8 Absence of Certain Changes. Except as set
--------------------------
forth on Schedule 4.8, since January 31, 1994, the business
of AWT has been conducted in the ordinary course consistent
with past practices and there has not been:
(i) any event, occurrence, development or state
of circumstances or facts which has had or would
reasonably be expected to have a Material Adverse
Effect;
(ii) any declaration, setting aside or payment of
any dividend or other distribution with respect to any
shares of capital stock of AWT, or any repurchase,
redemption or other acquisition by AWT of any
outstanding shares of capital stock or other securities
of, or other ownership interests in, AWT;
(iii) any amendment of any material term of any
outstanding security of AWT;
(iv) any incurrence, assumption or guarantee by
AWT of any indebtedness for borrowed money, except in
the ordinary course of business consistent with past
practices;
22
(v) any creation or assumption by AWT of any Lien
on any material asset other than in the ordinary course
of business consistent with past practices;
(vi) any damage, destruction or other casualty
loss (whether or not covered by insurance) affecting
the business or assets of AWT which, individually or in
the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect;
(vii) any change in any method of accounting or
accounting practice by AWT;
(viii) any (A) employment, deferred compensation,
severance, retirement or other similar agreement
entered into with any director, officer or employee of
AWT (or any amendment to any such existing agreement),
(B) grant of any severance or termination pay to any
director, officer or employee of AWT, or (C) change in
compensation or other benefits payable to any director,
officer or employee of AWT pursuant to any severance or
retirement plans or policies thereof, other than in the
ordinary course of business consistent with past
practices; or
(ix) any labor dispute, other than routine
individual grievances, or any activity or proceeding by
a labor union or representative thereof to organize any
employees of AWT, which employees were not subject to a
collective bargaining agreement at January 31, 1994, or
any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to any employees of
AWT.
4.9 No Undisclosed Material Liabilities. Other
-----------------------------------
than liabilities disclosed, or provided for, in the Company
10-Q or otherwise disclosed to CGE in writing, (i) there
exist no liabilities of AWT or its consolidated Subsidiaries
of any kind whatsoever, whether accrued, contingent,
absolute or otherwise and (ii) there is no existing
condition, situation or set of circumstances which would
result in such a liability, except in the case of each of
clauses (i) and (ii) for liabilities that, individually or
in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect.
4.10 AWT Proxy Materials. (a) The AWT Proxy
-------------------
Materials will, when filed, comply as to form in all
material respects with the applicable requirements of the
1934 Act.
(b) Each time any AWT Proxy Materials are
23
distributed to stockholders of AWT or any other solicitation
of stockholders of AWT is made by or on behalf of AWT or any
Affiliate of AWT, and at the time the stockholders of AWT
vote on the issuance of AWT Securities pursuant to this
Agreement, the AWT Proxy Materials (as supplemented and
amended, if applicable) will not include an untrue statement
of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in
the light of the circumstances under which the statements
were made, not misleading, or necessary to correct any
statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject
matter which has become false or misleading. The
representations and warranties contained in this Section
4.10 will not apply to statements or omissions included in
the AWT Proxy Materials based upon information furnished to
AWT in writing by CGE, Anjou or PSG specifically for use
therein.
4.11 Compliance with Contracts. Neither AWT nor
-------------------------
any of its Subsidiaries is in default under, and no
condition exists that with notice or lapse of time or both
would constitute a default under, (i) any mortgage, loan
agreement, indenture or evidence of indebtedness for
borrowed money to which AWT or any of its Subsidiaries is a
party or by which AWT or any of its Subsidiaries or any
material amount of their assets is bound or (ii) any
judgment, order or injunction of any court, arbitrator or
governmental body, agency, official or authority which
defaults or potential defaults under either clauses (i) or
(ii), individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
4.12 Litigation. Except as disclosed in Schedule
----------
4.12, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of AWT threatened
against or affecting, AWT before any court or arbitrator or
any governmental body, agency or official (i) which would
reasonably be expected to have a Material Adverse Effect or
(ii) which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions
contemplated by this Agreement.
4.13 Compliance with Laws and Court Orders; No
-----------------------------------------
Defaults. (a) AWT is not in violation of any applicable
- --------
law, rule, regulation, judgement, injunction, order or
decree except for violations that have not had and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) AWT is not in default under, and no condition
exists that with notice or lapse of time or both would
24
constitute a default under, any agreement or other
instrument binding upon AWT or any license, franchise,
permit or similar authorization held by AWT, which defaults
or potential defaults, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect.
4.14 Insurance Coverage. AWT has furnished to
------------------
Anjou a list of, and true and complete copies of, all
insurance policies and fidelity bonds relating to the
assets, business, operations, employees, officers or
directors of AWT. There is no claim by AWT pending under
any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such
policies or bonds or in respect of which such underwriters
have reserved their rights, except for such claims which,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. All premiums
payable under all such policies and bonds have been paid
timely and AWT has otherwise complied fully with the terms
and conditions of all such policies and bonds. Such
policies of insurance and bonds (or other policies and bonds
providing substantially similar insurance coverage) have
been in effect since November 1, 1993 and remain in full
force and effect. Such policies and bonds are of the type
and in amounts customarily carried by Persons conducting
businesses similar to those of AWT. Except as disclosed in
Schedule 4.14, AWT shall after the Closing continue to have
coverage under such policies and bonds with respect to
events occurring prior to the Closing.
4.15 Finders' Fees. Except for Allen & Company
-------------
Incorporated, whose fees will be paid by AWT, there is no
investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf
of AWT who might be entitled to any fee or commission from
either CGE or Anjou or any of its Affiliates upon
consummation of the transactions contemplated by this
Agreement.
4.16 Employee Benefit Plans. (a) Schedule 4.16
----------------------
identifies each AWT Employee Plan. AWT has furnished or
made available to CGE copies of the AWT Employee Plans (and,
if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with
(i) the most recent annual report prepared in connection
with any AWT Employee Plan (Form 5500 including, if
applicable, Schedule B thereto) and (ii) if applicable, the
most recent actuarial valuation report prepared in
connection with any AWT Employee Plan.
(b) Neither AWT nor any of its ERISA Affiliates has
25
incurred, or reasonably expects to incur prior to the
Closing Date, any liability under Title IV of ERISA arising
in connection with the termination of, or complete or
partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA that could become a liability
of CGE or any of its ERISA Affiliates after the Closing
Date. To the best knowledge of AWT, no condition exists
that (i) could constitute grounds for termination by the
PBGC of any AWT Employee Plan that is subject to Title IV of
ERISA that is maintained solely by AWT or any of its ERISA
Affiliates (ii) or presents a material risk of complete or
partial withdrawal from any Multiemployer Plan under Title
IV of ERISA other than a complete or partial withdrawal that
would not have a Material Adverse Effect.
(c) Each AWT Employee Plan (other than a
Multiemployer Plan) that is intended to be qualified under
Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified or can become so
qualified within the remedial amendment period of Section
401(b) of the Code and, to the best knowledge of AWT, no
event has occurred since the date of such determination that
would adversely affect such qualification or affect the
ability to become so qualified within the remedial amendment
period of Section 401(b) of the Code; each trust created
under any such Plan has been determined by the Internal
Revenue Service to be exempt from tax under Section 501(a)
of the Code or can be so determined within the aforesaid
remedial amendment period and, to the best knowledge of AWT,
no event has occurred since the date of such determination
that would adversely affect such exemption or affect the
ability to be determined to be exempt within the aforesaid
remedial amendment period. AWT has furnished or made
available to CGE the most recent determination letter of the
Internal Revenue Service relating to each such AWT Employee
Plan. To the best knowledge of AWT, each AWT Employee Plan
(other than a Multiemployer Plan) has been maintained in
substantial compliance with its terms and substantially with
the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, except for any instance of
non-compliance that would not have a Material Adverse
Effect.
(d) Schedule 4.16 identifies each AWT Benefit
Arrangement. AWT has furnished or made available to CGE
copies or descriptions of each AWT Benefit Arrangement. To
the best knowledge of AWT, each AWT Benefit Arrangement has
been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, except for any
instance of non-compliance that would not have a Material
26
Adverse Effect.
(e) Schedule 4.16 identifies each AWT International
Plan. AWT has furnished to CGE copies of each AWT
International Plan. To the best knowledge of AWT, each AWT
International Plan has been maintained in substantial
compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules
and regulations (including any special provisions relating
to qualified plans where such Plan was intended to so
qualify) and has been maintained in good standing with
applicable regulatory authorities, except for any instance
of non-compliance or failure to be so maintained that would
not, in either case, have a Material Adverse Effect.
(f) All representations and warranties contained in
the foregoing subsections of this Section 4.16 are subject
to such limitations and exceptions as are specificallly
noted in Schedule 4.16.
4.17 Taxes. Except as disclosed in the financial
-----
statements included in the Company 10-K or the Company 10-Q
(including the notes thereto) or on Schedule 4.17 and except
for Taxes, the liability for which would not, individually
or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (i) all material Tax returns,
statements, reports and forms required to be filed with any
Taxing authority by or on behalf of AWT or any of its
Subsidiaries (collectively, the "Returns"), have been or
will be filed when due in accordance with all applicable
laws except where failure to so file would not subject AWT
or any AWT Subsidiary to liabilities or penalties; (ii) as
of the time of filing, the Returns correctly reflected in
all material respects (and, as to any Returns not filed as
of the date hereof, will correctly reflect) the facts
regarding the income, business, assets, operations,
activities and status of AWT and each AWT Subsidiary; (iii)
AWT and each of its Subsidiaries has timely paid, withheld
or made provision for all Taxes shown as due and payable on
the Returns that have been filed; (iv) the charges, accruals
and reserves for Taxes with respect to AWT and its
Subsidiaries for any Tax period (or portion thereof) ending
on or before the Closing Date (excluding any provision for
deferred income taxes) reflected on the books of AWT and its
Subsidiaries are adequate to cover such Taxes; (v) neither
AWT nor any of its Subsidiaries is delinquent in the payment
of any material Tax and has not requested any extension of
time within which to file or send any Return, which Return
has not since been filed or sent; (vi) neither AWT nor any
of its Subsidiaries (or any member of any affiliated or
combined group of which AWT or any AWT Subsidiary is or has
been a member) has granted any extension or waiver of the
27
limitation period applicable to any Returns; (vii) there is
no claim, audit, action, suit, proceeding or investigation
now pending or threatened against or with respect to AWT or
any of its Subsidiaries of which AWT is aware in respect of
any material Tax or assessment; and (viii) there are no
material liens for Taxes upon the assets of AWT or its
Subsidiaries except liens for current Taxes not yet due.
4.18 Purchase for Investment. AWT is acquiring all
-----------------------
of the outstanding shares of capital stock of the PSG Group
for investment for its own account and not with a view to,
or for sale in connection with, any distribution any shares
of capital stock of PSG. AWT (either alone or together with
its advisors) has sufficient knowledge and experience in
financial and business matters so as to be capable of
evaluating the merits and risks of its investments in PSG
and is capable of bearing the economic risks of such
investment.
4.19 Other Information. None of the documents or
-----------------
information delivered to CGE or Anjou by AWT in connection
with their due diligence investigation of AWT contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained therein, in the light of the circumstances under
which such statements were made, not misleading.
ARTICLE 5
COVENANTS OF CGE AND ANJOU
CGE and Anjou agree that:
5.1 Conduct of the PSG Group. From the date hereof
------------------------
until the Closing Date, except as provided in Section 8.4
with respect to payments to Anjou in respect of Taxes of the
PSG Group, CGE and Anjou shall cause the PSG Group to
conduct its business in the ordinary course consistent with
past practice and to use its best efforts to preserve intact
its business organizations and relationships with third
parties and to keep available the services of its present
officers and employees. Without limiting the generality of
the foregoing, from the date hereof until the Closing Date,
CGE and Anjou will not permit the PSG Group to:
(i) adopt or propose any change in its articles
of incorporation or bylaws;
(ii) merge or consolidate with any other Person
or acquire a material amount of assets of any other
Person;
28
(iii) except as previously disclosed to AWT,
modify or enter into any employee benefit arrangements
or any agreements with employees or grant any severance
or termination compensation rights to employees;
(iv) sell, lease, license or otherwise dispose of
any material assets or property except (A) pursuant to
existing contracts or commitments and (B) in the
ordinary course consistent with past practice; or
(v) agree or commit to do any of the foregoing.
CGE and Anjou will not, and will not permit PSG to (A) take
or agree or commit to take any action that would make any
representation and warranty of CGE and Anjou hereunder
inaccurate in any material respect at, or as of any time
prior to, the Closing Date or (B) omit or agree or commit to
omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any
material respect at any such time.
5.2 Access to Information. From the date hereof
---------------------
until the Closing Date, CGE and Anjou will (i) give, and
will cause PSG to give, AWT, its counsel, financial
advisors, auditors and other authorized representatives full
access to the offices, properties, books and records of the
PSG Group and to the books and records of Anjou relating to
the PSG Group, (ii) furnish, and will cause the PSG Group to
furnish, to AWT, its counsel, financial advisors, auditors
and other authorized representatives such financial and
operating data and other information relating to the PSG
Group as such Persons may reasonably request and (iii)
instruct the employees, counsel and financial advisors of
CGE, Anjou or the PSG Group to cooperate with AWT in its
investigation of the PSG Group.
5.3 Notices of Certain Events. CGE and Anjou shall
-------------------------
promptly notify AWT of:
(i) any notice or other communication from any
Person alleging that the consent of such Person is or
may be required in connection with the transactions
contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in
connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations
or proceedings commenced or, to its knowledge
threatened against, relating to or involving or
29
otherwise affecting CGE, Anjou or PSG that, if pending
on the date of this Agreement, would have been required
to have been disclosed pursuant to Section 3.14 or that
relate to the consummation of the transactions
contemplated by this Agreement.
5.4 Resignations. Anjou will deliver to AWT the
------------
resignations of all directors of PSG who will not be
officers, directors or employees of AWT or any of its
Affiliates after the Closing Date from their positions with
PSG at or prior to the Closing Date.
5.5 Voting of Shares; Acquisitions of Shares. (a)
----------------------------------------
CGE will vote, or cause to be voted, all Shares of AWT that
CGE beneficially owns to approve the issuance of AWT
Securities pursuant to this Agreement at any meeting of the
stockholders of AWT, and at any adjournment thereof, at
which the issuance of AWT Securities pursuant to this
Agreement is submitted for the consideration and vote of the
stockholders of AWT.
(b) Prior to Closing, CGE will give AWT two days'
prior written notice of any acquisition of more than 1% of
the outstanding Shares. After Closing, CGE will give AWT
one days' prior written notice of any sale of Shares or
Series A Preferred held by CGE or its Affiliates if to the
knowledge of CGE such sale would result in any Person
beneficially owning more than 15% of the outstanding Shares.
5.6 Joint Efforts. CGE agrees on behalf of itself
-------------
and its Affiliates that, after Closing, for so long as CGE
and its Affiliates are the largest stockholder of AWT, AWT
shall be CGE's exclusive vehicle in the United States, its
possessions and its territories for its water and waste
water management and air pollution activities. After
Closing, CGE shall, and shall cause its Affiliates to,
assist AWT in developing its water and waste water
management and air pollution activities in both Canada and
Mexico, subject to existing contractual agreements and
taking into account the respective interests of AWT on the
one hand and CGE and its Affiliates, on the other. CGE
shall, and shall cause its Affiliates to, offer AWT an
active participation in any new water management investments
by CGE or any of its Affiliates in the United States which
are too capital intensive for AWT to undertake on a stand-
alone basis. In addition, CGE and its Affiliates, on the
one hand, and AWT on the other, will establish a privileged
commercial relationship for the development of air pollution
activities in Europe.
5.7 Other Agreements. In the event that CGE
----------------
materially breaches any of its obligations or
30
representations contained herein (including, but not limited
to, its obligation under the last sentence of Section 6.1)
or with respect to its financial undertakings contained in
the certain letter dated March 18, 1994 to AWT, CGE agrees
that the provisions of Article VI of the Stock Purchase
Agreement dated May 13, 1990 been CGE and AWT shall be
reinstated for an additional three-year period from the date
hereof.
ARTICLE 6
COVENANTS OF AWT
AWT agrees that:
6.1 Conduct of Business. From the date hereof
-------------------
until the Closing Date, AWT and its Subsidiaries shall
conduct their businesses in the ordinary course consistent
with past practice and shall use their best efforts to
preserve intact their business organizations and
relationships with third parties and to keep available the
services of its present officers and employees. Without
limiting the generality of the foregoing, from the date
hereof until the Closing Date, AWT will not:
(i) adopt or propose any change in its
certificate of incorporation or bylaws, except as
contemplated hereby;
(ii) adopt any stockholders rights plan (or any
arrangement which is designed to disadvantage CGE on the
basis of the size of its shareholdings);
(iii) make any material change in its capital
structure or issue any capital stock except pursuant to
any outstanding securities or options;
(iv) merge or consolidate with any other Person
or acquire a material amount of assets of any other
Person, except as contemplated hereby;
(v) sell, lease, license or otherwise dispose of
any material assets or property except (A) pursuant to
existing contracts or commitments and (B) in the
ordinary course consistent with past practice; or
(vi) agree or commit to do any of the foregoing.
AWT will not, and will not permit any of its Subsidiaries to
(a) take or agree or commit to take any action that would
make any representation and warranty of AWT hereunder
31
inaccurate in any material respect at, or as of any time
prior to, the Closing Date or (b) omit or agree or commit to
omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any
material respect at any such time. The foregoing
restrictions shall terminate in the event that (i) CGE
materially breaches any of its obligations or
representations contained herein or in its financial
undertakings to AWT as set forth in that certain letter
dated March 18, 1994 or (ii) CGE commences a tender offer
for or acquires more than 1% of the outstanding shares of
Class A Common Stock (except as contemplated hereby) or
commences any solicitation of proxies from AWT's
stockholders not approved by AWT's Board of Directors.
6.2 Access to Information. From the date hereof
---------------------
until the Closing Date, AWT will (i) give CGE, its counsel,
financial advisors, auditors and other authorized
representatives full access to the offices, properties,
books and records of AWT, (ii) furnish to CGE, its counsel,
financial advisors, auditors and other authorized
representatives such financial and operating data and other
information relating to AWT as such Persons may reasonably
request and (iii) instruct the employees, counsel and
financial advisors of AWT to cooperate with CGE in its
investigation of AWT.
6.3 Notices of Certain Events. AWT shall promptly
-------------------------
notify CGE of:
(i) any notice or other communication from any
Person alleging that the consent of such Person is or
may be required in connection with the transactions
contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in
connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations
or proceedings commenced or, to its knowledge
threatened against, relating to or involving or
otherwise affecting AWT that, if pending on the date of
this Agreement, would have been required to have been
disclosed pursuant to Section 3.14 or that relate to
the consummation of the transactions contemplated by
this Agreement.
6.4 Stockholder Meeting; Proxy Materials. AWT
------------------------------------
shall cause a meeting of its stockholders to be duly called
and held as soon as reasonably practicable for the purpose
32
of approving the issuance of AWT Securities pursuant to this
Agreement. The board of directors of AWT shall, subject to
their fiduciary duties under applicable law as advised by
counsel, recommend to AWT's stockholders approval of the
issuance of AWT Securities pursuant to this Agreement. In
connection with such meeting, AWT (i) will promptly prepare
and file with the SEC, will use its best efforts to have
cleared by the SEC and will thereafter mail to its
stockholders as promptly as practicable a proxy statement
and all other AWT Proxy Materials for such meeting as may be
required under applicable law, (ii) will use its best
efforts to obtain the necessary approval by its stockholders
of the issuance of AWT Securities pursuant to this Agreement
and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
6.5 No-Shop. AWT shall not nor shall AWT permit
-------
any of its Subsidiaries or any of its or their respective
officers, directors, employees, agents or advisers to
initiate, solicit or encourage, or take any other action to
facilitate (including by way of furnishing nonpublic
information, except to the extent determined in good faith
by the Board of Directors of AWT (the "BOARD") based on the
advice of counsel to be legally required for the discharge
by the Board of its fiduciary duties), any inquiries or the
making of any proposal which constitutes, or may reasonably
be expected to lead to, any takeover proposal (as defined
below) or, except to the extent determined in good faith by
the Board based on the advice of counsel to be legally
required for the discharge by the Board of its fiduciary
duties, agree to or endorse any takeover proposal, or
participate in any discussions or negotiations, or provide
third-parties with any nonpublic information, relating to
any such inquiry or proposal. AWT shall promptly inform CGE
orally and in writing of any such inquiry or proposal. As
used herein, "TAKEOVER PROPOSAL" shall mean any tender or
exchange offer, proposal for a merger, consolidation or
other business combination involving AWT or any of its
subsidiaries (other than that involving solely an
acquisition of a business or assets by AWT or any of its
subsidiaries) or any proposal or offer to acquire in any
manner a significant (i.e., more than 10% of the then
outstanding shares of AWT) equity interest in, or a
significant (i.e., more than 10% of the consolidated total
assets of AWT) portion of the assets of (including the stock
or assets of subsidiaries), AWT, but excluding the
transactions contemplated hereby.
6.6 Access to Books and Records. AWT agrees that,
---------------------------
after Closing and for so long as CGE beneficially owns
directly or indirectly at least 26% of the outstanding
Shares on a fully diluted basis, it will have access on
33
reasonable terms to the books, records and employees of AWT
and its subsidiaries and to the provision by AWT of all
information reasonably requested by such party, subject to
confidentiality obligations that at the time may be owed by
AWT to third parties, to appropriate confidentiality
arrangements and requirements of law.
6.7 Registration Rights. AWT agrees that CGE and
-------------------
Anjou shall have the registration rights set forth in
Exhibit C.
ARTICLE 7
COVENANTS OF AWT, ANJOU AND CGE
AWT, CGE and Anjou agree that:
7.1 Intercompany Accounts; Bonding and Insurance.
--------------------------------------------
(a) All intercompany accounts between the CGE, Anjou or
their Affiliates, on the one hand, and PSG, on the other
hand, as of the Closing shall be settled (irrespective of
the terms of payment of such intercompany accounts) in the
manner provided in this Section. At least five business
days prior to the Closing, Anjou shall prepare and deliver
to AWT a statement setting out in reasonable detail the
calculation of all such intercompany account balances based
upon the latest available financial information as of such
date and, to the extent requested by AWT, provide AWT with
supporting documentation to verify the underlying
intercompany charges and transactions. All such
intercompany account balances shall be paid in full in cash
prior to the Closing; provided (i) that all amounts for
--------
money borrowed or owed by the PSG Group to Anjou and its
Affiliates as of December 31, 1993 ($8,513,000) shall be
capitalized; (ii) the accrued pension liability of the PSG
Group owed to Anjou and its Affiliates as of December 31,
1993 ($2,200,000) shall be capitalized; (iii) all accrued
liabilities owed by the PSG Group to Anjou and its
Affiliates in respect of projected self-insurance claims
arising or accruing prior to Closing shall remain
outstanding and Anjou shall invoice the PSG Group from time
to time after Closing in respect of any losses or changes
incurred by the PSG Group in respect of such self-insurance.
(b) The increase in intercompany balances owed by
PSG to Anjou and its Affiliates from December 31, 1993
through Closing shall remain outstanding as of Closing.
Such amount shall remain outstanding as indebtedness owing
to Anjou and its Affiliates and shall be evidenced by a
promissory note of PSG which shall provide for interest at a
rate per annum equal to the Prime Rate announced from time
34
to time by Citibank, N.A. Interest and principal shall be
repaid one year after the Closing Date. Prepayment without
premium of principal (plus interest accrued through the date
of prepayment) may be made at any time by PSG. Any increase
in intercompany balances owed by PSG Canada to Anjou and its
Affiliates from December 31, 1993 through Closing shall be
capitalized on the Closing Balance Sheet.
(c) As of Closing, the PSG Group shall no longer be
provided insurance and self-insurance coverage under any
insurance policies or self-insurance programs of Anjou and
its Affiliates. Effective as of Closing, AWT will cause
outstanding surety bonds issued for the benefit of the PSG
Group under any of Anjou's surety agreements to be replaced
by surety bonds issued under AWT's surety agreements.
7.2 Board Representation; Management. (a) AWT
--------------------------------
agrees that CGE shall have the right to cause AWT to
include, as nominees for AWT's Board of Directors
recommended by the Board, a number of Directors (rounded
down to the next whole number if the fraction referred to
below is less than one-half or, if otherwise, rounded up to
the next whole number) that is equal to the product of the
total number of Directors on the Board times a fraction the
numerator of which is the aggregate number of Shares owned
by CGE and its affiliates (assuming conversion of the Series
A Preferred (or other securities convertible into or
exercisable or exchangeable for Shares) held by CGE or its
Affiliates) and the denominator of which is the total number
of Shares outstanding (assuming conversion of the Series A
Preferred (or other securities convertible into or
exercisable or exchangeable for Shares) held by CGE and its
affiliates. AWT further agrees that CGE shall have the
right to the same proportionate representation on all
Committees of the Board (other than any Special Committee of
independent directors formed to consider or approve any
matters referred to in Section 7.3) as CGE is entitled to
the Board hereunder.
(b) Immediately after Closing, AWT shall cause the
Board of Directors to consist of 11 Directors, with five
directors designated by CGE (who may be Independent
Directors (as defined below)), five Directors consisting of
Messrs. Beck, Costle, Dowd, Morris and Senior and an
additional Independent Director satisfactory to CGE. AWT
and CGE agree that the Board shall have at least three
Independent Directors at any time. For purposes of this
Agreement, an "INDEPENDENT DIRECTOR" means any Director who
is not an employee, agent or representative of AWT, CGE or
any of their respective Affiliates or Associates and may
include any person acting as outside counsel or financial
advisor for either AWT or CGE or any of their respective
35
Affiliates or Associates. All Independent Directors shall
be satisfactory to CGE. AWT further agrees that the
Chairman of the Board of AWT shall be designated by CGE.
(c) AWT agrees that immediately after Closing, CGE
shall have the right to designate the Chief Executive
Officer and the Chief Financial Officer of AWT (and the
Bylaws of AWT shall be amended to so reflect). CGE agrees
that current AWT management will participate in the
transition as mutually agreed by AWT and CGE. It is CGE's
current intention to work with as many members of current
management as possible. Mr. Beck shall continue as Chairman
and Chief Executive Officer until Closing. CGE agrees to
cause all agreements of AWT with its employees to be
honored.
7.3 Affiliate Transactions. CGE agrees on behalf
----------------------
of itself and its Affiliates that any transactions (or
series of related transactions in a chain) between AWT and
any of its Affiliates and CGE or any of its Affiliates or
Associates shall be on an arms length basis. Any such
transaction (or such series of transactions) having an
aggregate value in excess of $1,000,000 and any settlement
of the existing litigation between AWT and PRASA must be
approved by a majority of the Independent Directors or a
Special Committee thereof, acting in a separate meeting or
by unanimous written consent. CGE, Anjou and AWT further
agree that after Closing, all actions by AWT with respect to
any claims by AWT against CGE or its Affiliates under this
Agreement (including, without limitation, any adjustment of
the purchase price pursuant to Section 2.4) shall be taken
only by majority approval of such Independent Directors or
Special Committee, so acting in a meeting or by written
consent.
7.4 Filings; Consents; Best Efforts. (a) Each of
-------------------------------
CGE, Anjou and AWT agrees to cooperate with each other in
good faith and to use its reasonable best efforts in making
all required governmental filings and obtaining at the
earliest practicable date all necessary approvals and
consents from governmental entities and third parties.
(b) Each of the parties hereto agrees to use its
reasonable best efforts to consummate the transactions
contemplated hereby and to fulfill the conditions set forth
herein.
ARTICLE 8
TAX MATTERS
36
8.1 Tax Covenants. (a) Anjou and CGE jointly and
-------------
severally covenant that Anjou will not cause or permit PSG,
Utilities or PSG Canada (i) to take any action with respect
to Taxes on the Closing Date other than as provided herein
or in the ordinary course of business, (ii) to make any
election or deemed election under Section 338 of the Code,
or (iii) to make or change any Tax election, amend any Tax
Return or take any tax position on any Tax Return, take any
action, omit to take any action or enter into any
transaction that results in any increased Tax liability or
reduction of any Tax Asset of PSG, Utilities or PSG Canada.
Anjou agrees that AWT and its Affiliates are to have no
liability for any Tax resulting from any action referred to
in the preceding sentence of Anjou or CGE, and agrees to
indemnify and hold harmless AWT and its Affiliates against
any such Tax; provided, however that the indemnity in this
-------- -------
Section 8.1(a) shall not apply to Taxes of PSG, Utilities or
PSG Canada that relate to a pre-Closing Tax period.
(b) AWT covenants that it will not cause or permit
PSG, Utilities or PSG Canada or any Affiliate of AWT (i) to
take any action on the Closing Date other than in the
ordinary course of business, including but not limited to
the distribution of any dividend or the effectuation of any
redemption that could give rise to any tax liability of
Anjou or any Affiliate thereof, (ii) to make any election or
deemed election under Section 338 of the Code, or (iii) to
make or change any tax election, amend any tax Return or
take any tax position on any tax Return, take any action,
omit to take any action or enter into any transaction that
results in any increased tax liability or reduction of any
Tax Asset of Anjou in respect of any pre-Closing Tax period.
AWT represents that it has no present plan or intention and
covenants that during the two year period following the
Closing Date it will not cause or permit (i) the issuance of
any stock of PSG, Utilities or PSG Canada, (ii) the
liquidation, merger or consolidation with any other person,
distribution or disposition of assets (other than in the
ordinary course of business) of PSG, Utilities or PSG
Canada, (iii) the sale, distribution, transfer, exchange or
other disposition of the stock of PSG, Utilities or PSG
Canada, (iv) the discontinuance of the active conduct of the
trade or business of PSG or PSG Canada or (v) to the best of
its knowledge, pay any consideration to Anjou or CGE with
respect to this transaction except as provided for in this
Agreement. AWT further covenants that it will not take,
cause or permit any action that jeopardizes the tax-free
status of the Merger or the Exchange. AWT agrees that Anjou
and its Affiliates are to have no liability for any Tax
resulting from any action or breach of representation,
referred to in the preceding three sentences, of PSG,
37
Utilities or PSG Canada, AWT or any Affiliate of AWT, and
agrees to indemnify and hold harmless Anjou and its
Affiliates against any such Tax. Notwithstanding the
foregoing, AWT may take action inconsistent with the
covenants contained in the second sentence of this Section
8.1(b) if, on the basis of valid representations, it obtains
an opinion (reasonably satisfactory to Anjou) from
nationally recognized tax counsel to the effect that the
likelihood that such action will cause Anjou to recognize
taxable income by virtue of the Exchange or Merger is
remote, provided, however, that any action taken pursuant to
-------- -------
the procedures provided in this sentence shall not relieve
AWT of its indemnity obligations under this Section 8.1(b).
(c) For any Taxable period of PSG, Utilities or PSG
Canada that includes (but does not end on) the Closing Date,
AWT shall prepare, or cause to be prepared, all Returns
required to be filed by the PSG, Utilities or PSG Canada.
Any such Return shall be prepared in a manner consistent
with past practice and without a change of any election or
any accounting method and shall be submitted by AWT to Anjou
(together with schedules, statements and, to the extent
requested by Anjou, supporting documentation) at least 60
days prior to the due date (including extensions) of such
Return. Anjou shall have the right at its own expense to
review all work papers and procedures used to prepare any
such Return. If Anjou, within 30 business days after
delivery of any such Return, notifies AWT in writing that it
objects to any items in such Return, the disputed items
shall be resolved (within a reasonable time, taking into
account the deadline for filing such Return) by a nationally
recognized independent accounting firm chosen and mutually
acceptable to both AWT and Anjou. Upon resolution of all
such items, the relevant Return shall be adjusted to reflect
such resolution and shall be binding upon the parties
without further adjustment. The costs, fees and expenses of
such accounting firm shall be borne equally by AWT and
Anjou. If AWT fails to agree to the selection of an
accounting firm within 10 days, Anjou shall have the right
to adjust the relevant Return in the manner it deems
appropriate and the Return as so adjusted shall be binding
upon the parties without further adjustment.
8.2 Transfer Taxes. All transfer, documentary,
--------------
sales, use, stamp, registration and other such Taxes and
fees (including any penalties and interest) incurred in
connection with this Investment Agreement (including any New
York State Gains Tax, New York City Transfer Tax and any
similar tax imposed in other states or subdivisions) shall
be borne and paid by the party on which imposed, provided,
--------
however, that such Taxes and fees that are joint obligations
- -------
shall be borne and paid equally by Anjou and AWT. AWT will
38
file all necessary Tax returns and other documentation with
respect to all such Taxes and fees, and, if required by
applicable law, CGE, Anjou, PSG, Utilities and PSG Canada
will, and will cause their respective Affiliates to, join in
the execution of any such Tax Returns and other
documentation.
8.3 Termination of Existing Tax Sharing
-----------------------------------
Arrangements. Any and all existing Tax sharing arrangements
- ------------
between PSG, Utilities or PSG Canada and Anjou and any
Affiliate of Anjou shall be terminated as of the Closing
Date. After such date neither PSG, Utilities, PSG Canada,
Anjou nor any Affiliate of Anjou shall have any further
rights or liabilities thereunder (with respect to PSG,
Utilities and PSG Canada). This Agreement shall be the sole
Tax sharing agreement relating to PSG, Utilities and PSG
Canada for all pre-Closing Tax periods.
8.4 Tax Sharing. Immediately preceding the
-----------
Closing, PSG and Utilities shall pay Anjou an amount equal
to the Taxes of PSG and Utilities, as applicable (calculated
in good faith in accordance with prior practice) with
respect to all pre-Closing Tax periods for which no Return
has yet been filed, except to the extent such amount is
accounted for under Section 7.1 hereof.
8.5 Cooperation on Tax Matters. (a) Anjou and AWT
--------------------------
agree to furnish or cause to be furnished to each other,
upon request, as promptly as practicable, such information
(including access to books and records) and assistance
relating to PSG, Utilities and PSG Canada as is reasonably
necessary for the filing of any Return, for the preparation
for any audit, and for the prosecution or defense of any
claim, suit or proceeding relating to any proposed
adjustment. Anjou and AWT agree to retain or cause to be
retained all books and records pertinent to PSG's Taxes,
Utilities' Taxes or PSG Canada's Taxes and until the
applicable period for assessment under applicable law
(giving effect to any and all extensions or waivers) has
expired, and to abide by or cause the abidance with all
record retention agreements entered into with any Taxing
authority. AWT and Anjou agree to give each other
reasonable notice prior to transferring, discarding or
destroying any such books and records relating to Tax
matters and, if such other party so requests, it shall be
allowed to take possession of such books and records. Anjou
and AWT shall cooperate with each other in the conduct of
any audit or other proceedings involving PSG, Utilities and
PSG Canada for any Tax purposes and each shall execute and
deliver such powers of attorney and other documents as are
necessary to carry out the intent of this subsection.
39
8.6 Indemnification by Anjou. (a) Anjou hereby
------------------------
indemnifies AWT against and agrees to hold it harmless from
any (i) Tax of PSG, Utilities or PSG Canada and (ii)
liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees and
expenses), arising out of or incident to the imposition,
assessment or assertion of any Tax (including Taxes
reflected on PSG, Utilities or PSG Canada Tax Returns filed
after the Closing), including those incurred in the contest
in good faith in appropriate proceedings relating to the
imposition, assessment or assertion of any Tax, in each case
with respect to any pre-Closing Tax period and in each case
incurred or suffered by AWT, any of its Affiliates or,
effective upon the Closing, PSG, Utilities or PSG Canada
(the sum of (i) and (ii) being referred to as a "Loss");
provided, however, that Anjou shall have no liability for
- -------- -------
the payment of any loss attributable to or resulting from
any action described in Section 8.1(b) hereof, provided,
--------
further, that Anjou shall have no obligation to make any
- -------
payment pursuant to this Section 8.6(a) if at the time the
Loss is incurred or suffered by PSG, Utilities or PSG
Canada, as the case may be, AWT no longer owns directly or
indirectly PSG, Utilities or PSG Canada (or its successor),
as the case may be; and provided, further, that Anjou shall
-------- -------
have no obligation to make any payment to AWT pursuant to
this Section 8.6(a) until the amount of all claims arising
pursuant hereto in the aggregate (minus any Tax Benefit (as
defined in Section 8.6(b) below) attributable thereto)
exceeds the Basket, in which case AWT shall be entitled to
indemnity for the full amount of all claims in excess of the
Basket.
(b) If Anjou's indemnification obligation under
this Section 8.6 arises in respect of an adjustment which
makes allowable to AWT, any of its Affiliates or, effective
upon the Closing, PSG, Utilities or PSG Canada any
deduction, amortization, exclusion from income or other
allowance (a "Tax Benefit") which would not, but for such
adjustment, be allowable, then any payment by Anjou to AWT
shall be an amount equal to (x) the amount otherwise due but
for this subsection (b), minus (y) the present value of the
Tax Benefit (using a discount rate equal to 5 percent per
annum) from the earliest time such Tax Benefit could be
allowable multiplied (i) by the maximum federal or state, as
the case may be, corporate tax rate in effect at the time
Anjou's indemnification obligation arises or (ii) in the
case of a credit, by 100 percent. The reduction provided
for in clause (y) of this Section shall in no event reduce
below zero Anjou's indemnification obligation under this
Section 8.6.
(c) If as a result of an adjustment Anjou makes a
40
payment to any Taxing authority in respect of a Tax of PSG
or Utilities with respect to any pre-Closing Tax period,
then AWT shall promptly pay to Anjou an amount equal to such
payment made by Anjou, provided, however, that any such
-------- -------
payment by AWT shall not exceed an amount equal to (x) the
positive balance, if any, in the Basket plus (y) the Tax
Benefit, if any, attributable to the adjustment giving rise
to such payment.
(d) The Basket shall be reduced by (i) the amount
of any claim of AWT under Section 8.6(a) hereof that is not
paid in whole or part by Anjou solely by reason of there
being a positive balance in the Basket, minus any Tax
Benefit attributable thereto and (ii) the amount of any
payment of AWT to Anjou under Section 8.6(c) hereof, minus
any Tax Benefit attributable thereto.
(e) Any payment by Anjou pursuant to this Section
8.6 shall be made not later than 30 days after receipt by
Anjou of written notice from AWT stating that any Loss has
been paid by AWT, any of its Affiliates or, effective upon
the Closing, PSG, Utilities or PSG Canada and the amount
thereof and of the indemnity payment requested.
(f) If any claim or demand for Taxes in respect of
which indemnity may be sought pursuant to this Section 8.6
is asserted in writing against AWT, any of its Affiliates
or, effective upon the Closing, PSG, Utilities or PSG
Canada, AWT shall notify Anjou of such claim or demand
within 30 days of receipt thereof, or such earlier time that
would allow Anjou to timely respond to such claim or demand,
and shall give Anjou such information with respect thereto
as Anjou may reasonably request. The failure of AWT to
promptly notify Anjou pursuant to the preceding sentence
shall not relieve Anjou of its obligation to indemnify AWT
under this Section 8.6, unless such failure prejudices
Anjou's contest rights with respect to the indemnified item.
Anjou may discharge, at any time, its indemnification
obligation under this Section 8.6 by paying to AWT the
amount of the applicable Loss, calculated on the date of
such payment. Anjou may, at its own expense, participate in
and, upon notice to AWT, assume the defense of any such
claim, suit, action, litigation or proceeding (including any
Tax audit). If Anjou assumes such defense, AWT shall have
the right (but not the duty) to participate in the defense
thereof and to employ counsel, at its own expense, separate
from the counsel employed by Anjou. Whether or not Anjou
chooses to defend or prosecute any claim, all of the parties
hereto shall cooperate in the defense or prosecution
thereof.
(g) Anjou shall not be liable under this Section
41
8.6 for (i) any Tax the payment of which was made without
its prior written consent (other than pursuant to a final
determination of a contest conducted in accordance with the
provisions of this Section 8) or (ii) any settlements
effected without the consent of Anjou, or resulting from any
claim, suit, action, litigation or proceeding in which Anjou
was not permitted an opportunity to participate.
8.7 Refunds. AWT shall promptly pay or shall cause
-------
prompt payment to be made to Anjou of all refunds of Taxes
and interest thereon received by AWT, any Affiliate of AWT,
PSG, Utilities, or PSG Canada attributable to Taxes paid by
Anjou, PSG, Utilities or PSG Canada (or any predecessor or
Affiliate of Anjou) with respect to any pre-Closing Tax
period. Anjou represents that there are currently no
material refunds reflected on the December 31, 1993 balance
sheet of the PSG Group either as receivables or as a
reduction or adjustment to the reserves account.
8.8 Survival. Notwithstanding anything in this
--------
Agreement to the contrary, the provisions of this Section 8
shall survive for the full period of all statutes of
limitations (giving effect to any waiver, mitigation or
extension thereof plus 30 days).
ARTICLE 9
EMPLOYEE BENEFITS
9.1 Pension Plan. (a) On the Closing Date or as
------------
soon as practicable thereafter, Anjou shall cause the
Trustee of the PSG Pension Plan to segregate, in accordance
with the spin-off provisions set forth under Section 414(l)
of the Code and in accordance with the provisions set forth
below, the assets allocable to accrued benefits of active,
retired and former employees of PSG or any of its
Subsidiaries as of the Closing Date (the "Transferred
Employees") and shall make any and all filings and
submissions to the appropriate governmental agencies arising
in connection with such segregation of assets and all
necessary amendments to the PSG Pension Plan and related
trust agreement to provide for the segregation of assets and
the transfer of assets as described below.
(b) The amount of such assets (the "Transfer
Amount") shall be equal to the aggregate present value of
accrued benefits of Transferred Employees under the PSG
Pension Plan (including special early retirement benefits
and death benefit coverage both before and after expected
42
retirement ages) determined as of the Closing Date using the
actuarial assumptions used in funding such Plan contained in
the Foster Higgins Anjou Pension Plan Actuarial Funding
Report, Plan Year Beginning January 1, 1993, dated February,
1994. At AWT's request, Anjou shall provide to an actuary
designated by AWT all information necessary to verify and
agree with the calculation of the Transfer Amount.
(c) As soon as practicable after the Closing
Date, AWT shall establish or designate one or more defined
benefit pension plans for the benefit of the Transferred
Employees (the "Successor Pension Plan"), shall take all
necessary action to qualify the Successor Pension Plan under
the applicable provisions of the Code and shall make any and
all filings and submissions to the appropriate governmental
agencies required to be made by it in connection with the
transfer of assets described below. As soon as practicable
following the earlier of the receipt of a favorable
determination letter from the Internal Revenue Service
regarding the qualified status of the Successor Pension Plan
(as amended to the date of transfer) or the issuance of
indemnities satisfactory to Anjou and AWT, Anjou shall cause
the trustee of the PSG Pension Plan to transfer the Transfer
Amount for such Plan, increased or decreased by the earnings
or losses attributable to the investment of such assets at
the rate earned on thirty-day Treasury Notes determined as
of the first business day of each month during the period
from the Closing Date to the date of transfer described
herein and reduced by any required benefit payments made to
or in respect of any Transferred Employee covered by the PSG
Pension Plan who retired or otherwise terminated service
after the Closing Date and prior to the date of transfer
described herein, to the appropriate trustee designated by
AWT under the trust agreement forming a part of the
Successor Pension Plan for the PSG Pension Plan.
(d) In consideration for the transfer of assets
described herein, the applicable Successor Pension Plan
shall, effective as of the date of transfer described
herein, assume all of the obligations of the PSG Pension
Plan in respect of benefits accrued by Transferred Employees
under the PSG Pension Plan (exclusive of benefits paid prior
to the date of transfer described herein) on or prior to the
Closing Date. Neither AWT nor PSG nor any of its
Subsidiaries (nor any Pension Plan maintained by any of
them) shall assume any other obligations or liabilities
arising under or attributable to the PSG Pension Plan.
9.2 Other Employee Plans. Anjou shall retain all
--------------------
obligations and liabilities under the PSG Group Employee
Plans, PSG Group Benefit Arrangements and PSG Group
International Plans in respect of any employee or former
43
employee or any independent contractor (including any
beneficiary or dependent thereof) who is not a Transferred
Employee.
9.3 Third Party Beneficiaries. No provision of
-------------------------
this Article 9 shall create any third party beneficiary
rights in any employee or former employee of the PSG Group
(including any beneficiary or dependent thereof) in respect
of continued employment or resumed employment and no
provision of this Article 9 shall create any rights in any
such persons in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit
plan or arrangement.
ARTICLE 10
CONDITIONS TO CLOSING
10.1 Conditions to Obligations of AWT, CGE and
-----------------------------------------
Anjou. The obligations of AWT, CGE and Anjou to consummate
- -----
the Closing are subject to the satisfaction of the following
conditions:
(i) Any applicable waiting period under the
HSR Act relating to the transactions contemplated
hereby shall have expired or been terminated.
(ii) No provision of any applicable law or
regulation and no judgment, injunction, order or
decree shall prohibit the consummation of the
Closing.
(iii) All actions by or in respect of or
filings with any governmental body, agency,
official or authority required to permit the
consummation of the Closing under the provisions
of Exon-Florio shall have been taken, made or
obtained.
(iv) The issuance of AWT Securities pursuant
to this Agreement shall have been approved by the
stockholders of AWT in accordance with applicable
rules and regulations of the American Stock
Exchange.
10.2 Conditions to Obligation of AWT. The
-------------------------------
obligation of AWT to consummate the Closing is subject to
the satisfaction of the following further conditions:
(i) (A) Each of CGE and Anjou shall have
performed in all material respects all of its
44
obligations hereunder required to be performed by
it on or prior to the Closing Date, (B) the
representations and warranties of CGE and Anjou
contained in this Agreement and in any certificate
or other writing delivered by CGE or Anjou
pursuant hereto shall be true in all material
respects at and as of the Closing Date, as if made
at and as of such date, and (C) AWT shall have
received a certificate signed by the President or
Vice President, or the equivalent, of each of CGE
and Anjou to the foregoing effect.
(ii) AWT shall have received an opinion of
Davis Polk & Wardwell, special counsel to CGE and
Anjou, dated the Closing Date, in form and
substance reasonably satisfactory to AWT. In
rendering such opinion, such counsel may rely upon
certificates of public officers and, as to matters
of fact, upon certificates of officers of CGE or
Anjou, copies of which certificates shall be
contemporaneously delivered to AWT.
(iii) AWT shall have received an opinion of
Bernard Portnoi, Conseil Juridique of CGE, dated
the Closing Date, in form and substance reasonably
satisfactory to AWT. In rendering such opinion,
such counsel may rely upon certificates of public
officers and, and as to matters of fact, upon
certificates of officers of CGE, copies of which
certificates shall be contemporaneously delivered
to AWT.
(iv) AWT shall have received a written
opinion of Allen & Company Incorporated, AWT's
financial advisors, to the effect that the
transactions contemplated by this Agreement are
fair, from a financial point of view, to the
stockholders of AWT (other than CGE).
(v) AWT shall have received all documents it
may reasonably request relating to the existence
of each of CGE, Anjou or PSG and their respective
authority for this Agreement, all in form and
substance reasonably satisfactory to AWT.
10.3 Conditions to Obligation of CGE and Anjou.
-----------------------------------------
The obligation of CGE and Anjou to consummate the Closing is
subject to the satisfaction of the following further
conditions:
(i) (A) AWT shall have performed in all
material respects all of its obligations hereunder
45
required to be performed by it at or prior to the
Closing Date, (B) the representations and
warranties of AWT contained in this Agreement and
in any certificate or other writing delivered by
AWT pursuant hereto shall be true in all material
respects at and as of the Closing Date, as if made
at and as of such date, and (C) CGE and Anjou
shall have received a certificate signed by the
Chief Executive Officer, President or any Senior
Vice President of AWT to the foregoing effect.
(ii) Anjou and CGE shall have received an
opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, special counsel to AWT, in form and
substance reasonably satisfactory to CGE. In
rendering such opinion, such counsel may rely upon
certificates of public officers and, as to matters
of fact, upon certificates of officers of AWT,
copies of which certificates shall be
contemporaneously delivered to CGE and Anjou.
(iii) CGE and Anjou shall have received all
documents it may reasonably request relating to
the existence of AWT and the authority of AWT for
this Agreement, all in form and substance
reasonably satisfactory to CGE and Anjou.
ARTICLE 11
TERMINATION
11.1 Grounds for Termination. This Agreement may
-----------------------
be terminated at any time prior to the Closing:
(i) by mutual written agreement of CGE,
Anjou and AWT;
(ii) by either CGE or AWT if the Closing
shall not have been consummated on or before
September 1, 1994;
(iii) by either CGE or AWT if there shall be
any law or regulation that makes consummation of
the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of
any court or governmental body having competent
jurisdiction; or
(iv) by CGE if AWT has caused to be duly
46
called and held a meeting of its stockholders as
required by Section 6.4 and at such meeting the
requisite number of votes were not obtained to
approve the issuance of AWT Securities pursuant to
this Agreement under applicable law.
The party desiring to terminate this Agreement
shall give notice of such termination to each other party.
11.2 Effect of Termination. If this Agreement is
---------------------
terminated as permitted by Section 11.1, termination shall
be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or
representative of such party) to the other parties to this
Agreement; provided that if such termination shall result
--------
from the willful failure of any party to fulfill a condition
to the performance of the obligations of any other party or
to perform a covenant of this Agreement or from a willful
breach by any party to this Agreement, such party shall be
fully liable for any and all damage, loss or expense
incurred or suffered by the other party or parties as a
result of such failure or breach. The provisions of
Sections 5.7, 12.3 and 12.9 shall survive any termination
hereof pursuant to Section 11.1.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to AWT, to:
Air & Water Technologies Corporation
US Highway 22 West and Station Road
Branchburg, New Jersey 08876
Attention: General Counsel
Fax: (908) 685-4029
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo
One Financial Center
Boston, Massachusetts 02111
Attention: Richard R. Kelly, Esq.
Fax: (617) 542-2241
if to CGE or Anjou, to:
47
Compagnie Generale des Eaux
52, rue d'Anjou
75384 Paris Cedex 08
France
Attention: Directeur General
Fax: 011-331-4924-6666
Anjou International Management Services, Inc.
800 Third Avenue, 38th Floor
New York, New York 10022
Attention: President
Fax: (212) 753-9301
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John A. Bick, Esq.
Fax: (212) 450-4800
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient
thereof if received prior to 5 p.m. in the place of receipt
and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next
succeeding business day in the place of receipt.
12.2 Amendments and Waivers. (a) Any provision
----------------------
of this Agreement may be amended or waived prior to the
Closing Date if, but only if, such amendment or waiver is in
writing and is signed, in the case of an amendment, by each
party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
12.3 Expenses. All costs and expenses incurred
--------
in connection with this Agreement shall be paid by the party
incurring such cost or expense.
12.4 Successors and Assigns. The provisions of
----------------------
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
48
successors and assigns; provided that no party may assign,
--------
delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each
other party hereto, except that CGE may assign its right to
purchase the Series A Preferred to Anjou or any of its
Subsidiaries
12.5 GOVERNING LAW. THIS AGREEMENT SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAW
RULES OF SUCH STATE.
12.6 Counterparts; Third Party Beneficiaries.
---------------------------------------
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same
instrument. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any
rights or remedies hereunder.
12.7 No Survival. Except for Sections 3.6 and
-----------
4.2 which shall survive for a period of one year after
closing, the representations and warranties of the parties
hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection
herewith shall not survive the Closing.
12.8 Public Announcements. AWT and CGE shall
--------------------
agree on the form and content of any public announcements
which shall be made concerning this Agreement or the
transactions contemplated hereby and neither AWT nor CGE
shall make any such public announcement without the consent
of the other, except with respect to any public announcement
or other public disclosure, to the extent either party
determines, in good faith and with the advice of counsel,
such announcement or disclosure is required by law or the
rules or regulations of any exchange on which such party's
securities are listed or to avoid undue risk that the
transactions contemplated hereby will be enjoined or that
such party, its officers, directors or representatives will
be liable for damages as a result thereof.
12.9 Entire Agreement; Exhibits. This Agreement
--------------------------
constitutes the entire agreement among the parties with
respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both
oral and written, among the parties with respect to the
subject matter of this Agreement, except for the letter
dated March 18, 1994 from CGE to AWT with respect to certain
financial undertakings and the Confidentiality Agreement
dated October 22, 1992 between CGE and AWT, to which Anjou
hereby subscribes and agrees to be bound. No
49
representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or
relied upon by any party hereto. Neither this Agreement nor
any provision hereof is intended to confer upon any Person
other than the parties hereto any rights or remedies
hereunder. All exhibits hereto constitute part of this
Agreement and are expressly incorporated herein.
12.10 Headings. The headings and the table of
--------
contents appearing in this Agreement are inserted only as a
matter of convenience and for reference and in no way
define, limit or describe the scope and intent of this
Agreement or any of the provisions hereof.
12.11 Specific Performance. Each of the parties
--------------------
hereto agrees that any breach by it of any provision of this
Agreement would irreparably injure the other parties and
that money damages would be an inadequate remedy therefor.
Accordingly, each of the parties hereto agrees that the
other parties shall be entitled to one or more injunctions
enjoining any such breach or requiring specific performance
of this Agreement and consents to the entry thereof, this
being in addition to any other remedy to which the
non-breaching party is entitled at law or in equity.
50
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
AIR & WATER TECHNOLOGIES CORPORATION
By: /s/ Eckardt C. Beck
----------------------------
Eckardt C. Beck
Chairman and Chief Executive
Officer
COMPAGNIE GENERALE DES EAUX
By: /s/ Jacques-Henri David
---------------------------
Jacques-Henri David
Directeur General
ANJOU INTERNATIONAL COMPANY
By: /s/ Claudio Elia
---------------------------
Claudio Elia
President
51
EXHIBIT A
AIR & WATER TECHNOLOGIES CORPORATION
CERTIFICATE OF DESIGNATION
51/2% SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
($0.01 par value)
We, the undersigned, __________ and ___________ of
Air & Water Technologies Corporation, a Delaware corporation
(hereinafter called the "Corporation"), pursuant to the
-----------
provisions of Sections 103 and 151 of the General
Corporation Law of the State of Delaware do hereby make this
Certificate of Designation under the corporate seal of the
Corporation and do hereby state and certify that pursuant to
the authority expressly vested in the Board of Directors of
the Corporation by the Certificate of Incorporation, the
Board of Directors duly adopted the following resolutions:
RESOLVED, that, pursuant to Article Fourth of the
Certificate of Incorporation (which authorizes 2,500,000
shares of Preferred Stock, $0.01 par value, none of which
are presently issued and outstanding), the Board of
Directors hereby fixes the voting powers, designation and
preferences and relative participating, optional and other
special rights, and qualifications, limitations and
restrictions of a class of Preferred Stock.
RESOLVED, that each share of the Convertible
Exchangeable Preferred Stock shall rank equally in all
respects and shall be subject to the following provisions:
(1) Number and Designation. 1,200,000 shares of
----------------------
the Preferred Stock of the Corporation shall be designated
as 51/2% Series A Convertible Exchangeable Preferred Stock
(the "Series A Preferred Stock").
------------------------
(2) Rank. The Series A Preferred Stock shall,
----
with respect to dividend rights and rights on liquidation,
winding up and dissolution, rank prior to all classes or
series of equity securities of the Corporation, including
the Common Stock (as defined below).
(3) Dividends. (a) Except as otherwise provided
---------
in paragraph (8) below, the holders of the shares of Series
A Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally
available for the payment of dividends, cumulative
dividends, at the annual rate of $2.75 per share, payable in
cash quarterly in arrears in equal amounts on March 31, June
30, September 30 and December 31 of each year, commencing
June 30, 1994, unless such day is not a business day, in
which event on the next succeeding business day (each of
such dates being a "Dividend Payment Date"), in preference
---------------------
to dividends on the Common Stock. Such dividends shall be
paid to the holders of record at the opening of business on
the record date for on such Dividend Payment Date.
(b) Dividends shall accrue from the date of
original issue of the Series A Preferred Stock (the "Series
------
A Initial Issuance Date"). Dividends, other than for a full
- -----------------------
quarterly period, shall accrue on the basis of a year of 365
days and the actual number of days elapsed (including the
first day but excluding the last day of such period).
Quarterly dividends which are not paid in full in cash will
cumulate without interest until such accumulated quarterly
dividends shall have been declared and paid in cash by the
Board of Directors of the Corporation. Any such declaration
may be for a portion, or all, of the then accumulated
dividends. Any accumulated dividends which are not paid
will continue to cumulate in the manner described above.
(c)(i) The holders of the shares of the Series A
Preferred Stock shall be entitled to receive in preference
to and in priority over dividends upon any of the Common
Stock all accrued dividends provided for in this paragraph
(3).
(ii) The Corporation shall not declare, pay or
set apart for payment any dividend on any of the Common
Stock or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or
shares of the Corporation or other property (all such
dividends and distributions hereinafter referred to as a
"Common Stock Distribution"), unless the holders of the
------------------------- ------
shares of Series A Preferred Stock shall have received all
accrued dividends which such holders are entitled to receive
pursuant to paragraph (3) through and including the
immediately preceding Dividend Payment Date or, if such
Common Stock Distribution is made on a Dividend Payment
Date, through and including such Dividend Payment Date. In
no event may the Corporation retire, redeem, purchase or
otherwise acquire for value (including acquiring, directly
or indirectly, any equity interest in any Person which owns,
2
legally or beneficially, any Common Stock) any of the Common
Stock or make any payment on account of or set apart for
payment money for a sinking or other similar fund for the
purchase, redemption or other retirement of, any of the
Common Stock, or permit any corporation or other entity
directly or indirectly controlled by the Corporation to
purchase or redeem any of the Common Stock unless, prior to
------
or contemporaneously with such retirement, redemption,
purchase or acquisition, the holders of the shares of Series
A Preferred Stock shall have received all accrued dividends
which such holders are entitled to receive pursuant to
paragraph (3) through and including the immediately
preceding Dividend Payment Date or, if such retirement,
redemption, purchase or acquisition is made on a Dividend
Payment Date, through and including such Dividend Payment
Date.
(d) Subject to the foregoing provisions of this
paragraph (3), paragraph (8) and applicable law, the Board
of Directors may declare and the Corporation may pay or set
apart for payment dividends on any of the Common Stock, may
make any payment on account of or set apart for payment
money for a sinking fund or other similar fund for the
purchase, redemption or other retirement of, any of the
Common Stock, and may make any distribution in respect
thereof, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property,
and may purchase or otherwise redeem any of the Common Stock
and the holders of the shares of the Series A Preferred
Stock shall not be entitled to share therein.
(e) All dividends paid with respect to shares of
the Series A Preferred Stock pursuant to the foregoing
provisions of this paragraph (3) shall be paid pro rata on
each outstanding share of Series A Preferred Stock.
(f) Each fractional share of Series A Preferred
Stock outstanding shall be entitled to a ratably
proportionate amount of all dividends accruing with respect
to each outstanding share of Series A Preferred Stock
pursuant to this paragraph (3), and all such dividends with
respect to such outstanding fractional shares shall be fully
cumulative and shall accrue (whether or not declared)
without interest, and shall be payable in the same manner
and at such times as provided for in the foregoing
provisions of this paragraph (3) with respect to dividends
on each outstanding share of Series A Preferred Stock.
(4) Liquidation Preference. (a) In the event of
----------------------
any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the holders of
the shares of Series A Preferred Stock then outstanding
3
shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders
an amount in cash equal to $50 for each share outstanding,
plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation,
dissolution or winding up (including pro rata dividends for
the period from the last Dividend Payment Date to the date
fixed for liquidation, dissolution or winding up), whether
or not declared to the date of such payment, before any
payment shall be made or any assets distributed to the
holders of any of the Common Stock. If the assets of the
Corporation, or the proceeds thereof, are not sufficient to
pay in full the liquidation payments payable on each
outstanding share of Series A Preferred Stock, then each
such share shall share ratably in such distribution of
assets, or the proceeds thereof, in accordance with the
amount which would be payable on such distribution if the
amount to which each outstanding share of Series A Preferred
Stock is entitled was paid in full. Except as provided in
the preceding sentences, the holders of the shares of Series
A Preferred Stock shall not be entitled to any distribution
in the event of liquidation, dissolution or winding up of
the affairs of the Corporation.
(b) For the purposes of this paragraph (4),
neither the voluntary sale, lease, or other transfer of all
or substantially all the property or assets of the
Corporation nor the consolidation or merger of the
Corporation with or into one or more other Persons shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation.
(c) The liquidation payment with respect to each
outstanding fractional share of Series A Preferred Stock
shall be equal to a ratably proportionate amount of the
liquidation payment with respect to each outstanding share
of Series A Preferred Stock.
(5) Redemption. Shares of Series A Preferred
----------
Stock shall be redeemable by the Corporation as provided
below (with all references in this paragraph (5) to a
redemption price per share to be adjusted proportionally in
respect of fractional shares).
(a) The shares of Series A Preferred Stock shall
not be redeemable prior to the Initial Redemption Date. The
"Initial Redemption Date" shall be June 30, 1997.
-----------------------
(b) At the option of the Corporation, shares of
Series A Preferred Stock may be redeemed at any time or from
time to time (subject to the provisions set forth below and
4
paragraph (8)) on or after the Initial Redemption Date, in
whole or in part, at the price (the "Redemption Price"),
----------------
payable in cash, equal to the percentage set forth below of
the liquidation preference per share for redemptions during
the 12-month periods beginning on the Initial Redemption
Date or the annual anniversaries thereof indicated below,
plus, in each case, an amount equal to accrued and unpaid
dividends thereon (whether or not declared and whether or
not there are funds of the Corporation legally available for
the payment of dividends), to the date fixed for redemption:
12-month period beginning on Percentage
---------------------------- ----------
Initial Redemption Date 103.85%
First Anniversary thereof 103.30%
Second Anniversary thereof 102.75%
Third Anniversary thereof 102.20%
Fourth Anniversary thereof 101.65%
Fifth Anniversary thereof 101.10%
Sixth Anniversary thereof 100.55%
Seventh Anniversary thereof
and thereafter 100.00%
Notwithstanding the foregoing, the Corporation may elect to
redeem shares of Series A Preferred Stock at any time on or
after the Initial Redemption Date and prior to the fourth
anniversary of the Initial Redemption Date only if for at
least 20 Trading Days during the period consisting of the 30
consecutive Trading Days ending on the date notice of such
redemption is given, including the last Trading Day of such
period, the Closing Price per share of Common Stock exceeds
$18.75, as adjusted pursuant to paragraph (8)(h) (the
"Redemption Threshold").
--------------------
(c) In the event that fewer than all of the
shares of Series A Preferred Stock are to be redeemed
pursuant to this paragraph (5), the Corporation shall call
for redemption shares of Series A Preferred Stock pro rata
among the holders, based on the number of shares of Series A
Preferred Stock held by each holder, except that the
Corporation may redeem all of the shares of Series A
Preferred Stock held by any holders of fewer than 100 shares
of Series A Preferred Stock (or all the shares of Series A
Preferred Stock held by holders who would hold less than 100
shares of Series A Preferred Stock as a result of such
redemption). Any redemption for which shares are called for
redemption on a pro rata basis (whether or not some of the
shares so called are subsequently converted pursuant to
paragraph (8)) shall comply with this paragraph (5)(c).
5
(d) In accordance with paragraph (7) hereof, the
Corporation shall mail to the record holders of Series A
Preferred Stock written notice of its intention to redeem
shares of Series A Preferred Stock held by such holders.
(6) Exchange. Subject to paragraph (8) below,
--------
commencing June 30, 1997, the Series A Preferred Stock shall
be exchangeable, in whole and not in part, at the sole
option of the Corporation, at any time, for the
Corporation's 51/2% Convertible Subordinated Notes, a form of
which is attached hereto as Attachment A (the "Exchange
--------
Notes"). The holders of the outstanding shares or
- -----
fractional shares of Series A Preferred Stock will be
entitled to receive in exchange for each share of Series A
Preferred Stock to be exchanged by it Exchange Notes in a
principal amount of $50 plus, with respect to each
outstanding fractional share, a ratably proportionate amount
thereof. An amount equal to all accrued but unpaid
dividends on each such share to the date which coincides
with the date of exchange shall be paid on such date
(including pro rata dividends for the period from the last
Dividend Payment Date to the date of exchange). At the time
of any exchange hereunder, the rights of the holders of the
shares of Series A Preferred Stock as stockholders of the
Corporation shall cease, and the persons entitled to receive
the Exchange Notes issuable upon exchange shall be treated
for all purposes as the registered holders of such Exchange
Notes as of the date which coincides with the date of
exchange. In accordance with paragraph (7) hereof, the
Corporation shall mail to the record holders of Series A
Preferred Stock written notice of its intention to exchange
shares of Series A Preferred Stock held by such holders.
The Corporation will cause the Exchange Notes to be dated
the date which coincides with the date of exchange thereof.
(7) Procedure for Redemption or Exchange. (a)
------------------------------------
In the event the Corporation shall redeem or exchange shares
of Series A Preferred Stock, notice of such redemption or
exchange shall be given by first class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days
prior to the redemption or exchange date, to the holders of
record of the shares to be redeemed or exchanged at such
holder's address as the same appears on the stock register
of the Corporation. Each such notice shall state: (i) the
redemption or exchange date; (ii) the redemption price or
exchange rate; (iii) the place or places where certificates
for such shares are to be surrendered for payment of the
redemption price or exchange for the Exchange Notes; (iv)
that dividends on the shares to be redeemed or exchanged
will cease to accrue on such redemption date or the date of
6
exchange; and (v) the number of shares to be redeemed or
exchanged.
(b) Notice having been mailed as aforesaid, from
and after the redemption date or as of the exchange date
(unless, in the case of a redemption, default shall be made
by the Corporation in providing money for the payment of the
redemption price or a Notice of Intention to Convert or
Notice of Election to Convert has been delivered to the
Corporation pursuant to paragraph (8)), dividends on the
shares of Series A Preferred Stock shall cease to accrue,
and such shares shall no longer be deemed to be outstanding
and shall be cancelled and shall not be available for
reissue or redesignation, and all rights of the holders
thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price or the
Exchange Notes and any other amounts payable pursuant to
paragraph (5) or paragraph (6)) shall cease. Upon surrender
in accordance with said notice of the certificates for any
shares so redeemed or exchanged (properly endorsed or
assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state),
such shares shall be redeemed or exchanged by the
Corporation at the redemption price or exchange rate
aforesaid.
(c) The Corporation shall pay any and all
issuance and delivery taxes that may be payable in respect
of the issuance or delivery of Exchange Notes in exchange
for shares of Series A Preferred Stock. The Corporation
shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance
and delivery of Exchange Notes in a name other than that in
which the shares of Series A Preferred Stock so exchanged
were registered, and no such issuance or delivery shall be
made unless and until the person requesting such issuance
has paid to the Corporation the amount of any such tax or
has established to the satisfaction of the Corporation that
such tax has been paid.
(8) Conversion. (a) Subject to the provisions
----------
of this paragraph (8), the holders of the shares of Series A
Preferred Stock shall have the right, at any time, from time
to time, at such holder's option, to convert any or all
outstanding shares (and fractional shares) of Series A
Preferred Stock, in whole or in part, into fully paid and
non-assessable shares of Common Stock. The number of shares
of Common Stock deliverable upon conversion of a share of
Series A Preferred Stock, adjusted as hereinafter provided,
is referred to herein as the "Conversion Ratio." The
----------------
Conversion Ratio as of the Series A Initial Issuance Date
7
shall be 4.0, subject to adjustment from time to time
pursuant to paragraph (8)(g) hereof. Notwithstanding any
call for redemption pursuant to paragraph (5) or exchange
pursuant to paragraph (6), the right to convert shares so
called for redemption or exchange shall terminate at the
close of business on the date immediately preceding the date
fixed for such redemption or exchange, as the case may be,
unless the Corporation shall default in making payment of
the amount payable upon such redemption or in making the
exchange and payment of any amount payable upon such
exchange.
(b)(i) In order to exercise the conversion
privilege, the holder of the shares of Series A Preferred
Stock to be converted shall surrender the certificate
representing such shares at the office of the Corporation,
with the Notice of Election to Convert completed and signed.
Unless the shares issuable on conversion are to be issued in
the same name as the name in which such shares of Series A
Preferred Stock are registered, each share surrendered for
conversion shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by
the holder or the holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the
surrender by the holder of the certificates for shares of
Series A Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, a certificate or
certificates for the whole number of shares of Common Stock
issuable upon the conversion of such shares in accordance
with the provisions of this paragraph (8).
(iii) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the
date on which the certificates for shares of Series A
Preferred Stock shall have been surrendered and such notice
received by the Corporation as aforesaid, and the person in
whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder of
record of the shares of Common Stock represented thereby at
such time on such date and such conversion shall be into a
number of shares of Common Stock equal to the product of the
number of shares of Series A Preferred Stock surrendered
times the Conversion Ratio in effect at such time on such
date. All shares of Common Stock delivered upon conversion
of the Series A Preferred Stock will upon delivery be duly
and validly issued and fully paid and non-assessable, free
of all liens and charges and not subject to any preemptive
8
rights. Upon the surrender of certificates representing
shares of Series A Preferred Stock, such shares shall no
longer be deemed to be outstanding and all rights of a
holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to
receive the Common Stock and other amounts payable pursuant
to this paragraph (8).
(c)(i) Upon delivery to the Corporation by a
holder of shares of Series A Preferred Stock of a Notice of
Election to Convert or a Notice of Intention to Convert, the
right of the Corporation to redeem such shares of Series A
Preferred Stock shall terminate, regardless of whether a
notice of redemption has been mailed as aforesaid.
(ii) From the date of delivery by a holder of
shares of Series A Preferred Stock of such Notice of
Election to Convert or such Notice of Intention to Convert,
in lieu of dividends on such Series A Preferred Stock
pursuant to paragraph (3), such Series A Preferred Stock
shall participate equally and ratably with the holders of
shares of Common Stock in all dividends paid on the Common
Stock as if such shares of Series A Preferred Stock had been
converted to shares of Common Stock at the time of such
delivery.
(iii) If a Notice of Intention to Convert or a
Notice of Election to Convert is delivered by a holder of
shares of Series A Preferred Stock to the Corporation before
the delivery by the Corporation to such holder of a notice
of redemption, such holder shall be entitled to receive all
accrued dividends which such holder is entitled to receive
pursuant to paragraph (3). In addition, such holder at the
opening of business on a Dividend Payment Date shall be
entitled to receive the dividend payable on such shares on
such Dividend Payment Date notwithstanding the Corporation's
default in payment of the dividend due on such Dividend
Payment Date. Such dividends shall be in preference to and
in priority over any dividends on the Common Stock.
(iv) If, after receipt by a holder of shares of
Series A Preferred Stock of a notice of redemption pursuant
to paragraph (5), such holder delivers to the Corporation a
Notice of Intention to Convert or a Notice of Election to
Convert, such Series A Preferred Stock shall cease to accrue
dividends pursuant to paragraph (3) but such shares shall
continue to be entitled to receive all accrued dividends
which such holder is entitled to receive pursuant to
paragraph (3) through the date of delivery of such Notice of
Intention to Convert or such Notice of Election to Convert
(including pro rata dividends for the period from the last
9
Dividend Payment Date to the date of delivery of the Notice
of Intention to Convert or the Notice of Election to
Convert, as the case may be) in preference to and in
priority over any dividends on the Common Stock. Such
accrued dividends shall be payable to such holder when, as
and if declared by the Board of Directors, out of funds
legally available for the payment of dividends, as provided
in paragraph (3) above.
(v) Except as provided above and in paragraph
(8)(g), the Corporation shall make no payment or adjustment
for accrued and unpaid dividends on shares of Series A
Preferred Stock, whether or not in arrears, on conversion of
such shares or for dividends in cash on the shares of Common
Stock issued upon such conversion.
(d)(i) The Corporation covenants that it will at
all times reserve and keep available, free from preemptive
rights, such number of its authorized but unissued shares of
Common Stock as shall be required for the purpose of
effecting conversions of the Series A Preferred Stock and
Exchange Notes.
(ii) Prior to the delivery of any securities
which the Corporation shall be obligated to deliver upon
conversion of the Series A Preferred Stock, the Corporation
shall comply with all applicable federal and state laws and
regulations which require action to be taken by the
Corporation.
(e) The Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable
in respect of the issue or delivery of shares of Common
Stock on conversion of the Series A Preferred Stock pursuant
hereto; provided, that the Corporation shall not be required
--------
to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the holder of the
Series A Preferred Stock to be converted and no such issue
or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has
been paid.
(f) In connection with the conversion of any
shares of Series A Preferred Stock, no fractions of shares
of Common Stock shall be issued, but in lieu thereof the
Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional
interest multiplied by the Daily Price per share of Common
10
Stock on the Trading Day on which such shares of Series A
Preferred Stock are deemed to have been converted. If more
than one share of Series A Preferred Stock shall be
surrendered for conversion by the same holder (or Affiliate
of such holder) at the same time, the number of full shares
of Common Stock issuable on conversion thereof shall be
computed on the basis of the total number of shares of
Series A Preferred Stock so surrendered.
(g)(i) In case the Corporation shall at any time
after the Series A Initial Issuance Date (I) declare a
dividend or make a distribution on Common Stock payable in
Common Stock, (II) subdivide or split the outstanding Common
Stock, (III) combine or reclassify the outstanding Common
Stock into a smaller number of shares, (IV) issue any shares
of its capital stock in a reclassification of Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Corporation is the
continuing corporation), or (V) consolidate with, or merge
with or into, any other Person, the Conversion Ratio in
effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision,
split, combination, consolidation, merger or
reclassification shall be proportionately adjusted so that
the conversion of the Series A Preferred Stock after such
time shall entitle the holder to receive the aggregate
number of shares of Common Stock or other securities of the
Corporation (or shares of any security into which such
shares of Common Stock have been combined, consolidated,
merged or reclassified pursuant to clause (III), (IV) or (V)
above) which, if this Series A Preferred Stock had been
converted immediately prior to such time, such holder would
have owned upon such conversion and been entitled to receive
by virtue of such dividend, distribution, subdivision,
split, combination, consolidation, merger or
reclassification, assuming such holder of Common Stock of
the Corporation (x) is not a Person with which the
Corporation consolidated or into which the Corporation
merged or which merged into the Corporation or to which such
recapitalization, sale or transfer was made, as the case may
be ("constituent Person"), or an affiliate of a constituent
------------------
Person and (y) failed to exercise any rights of election as
to the kind or amount of securities, cash and other property
receivable upon such reclassification, change,
consolidation, merger, recapitalization, sale or transfer
(provided, that if the kind or amount of securities, cash
and other property receivable upon such reclassification,
change, consolidation, merger, recapitalization, sale or
transfer is not the same for each share of Common Stock of
the Corporation held immediately prior to such
reclassification, change, consolidation, merger,
11
recapitalization, sale or transfer by other than a
constituent Person or an affiliate thereof and in respect of
which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this
------------------
subparagraph (g) the kind and amount of securities, cash and
other property receivable upon such reclassification,
change, consolidation, merger, recapitalization, sale or
transfer by each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality
of the non-electing shares). Such adjustment shall be made
successively whenever any event listed above shall occur.
(ii) In case the Corporation shall issue or sell
any Common Stock (other than Common Stock issued (I) upon
conversion of the Series A Preferred Stock, the Exchange
Notes or the 8% Convertible Subordinated Debentures due May
15, 2015, (II) pursuant to the Corporation's Stock Option
Plans or pursuant to any other Common Stock related employee
compensation plan of the Corporation approved by the
Corporation's Board of Directors or (III) upon exercise or
conversion of any security the issuance of which caused an
adjustment under paragraphs (g)(iii) or (g)(iv) hereof)
without consideration or for a consideration per share less
than the then Conversion Price Per Common Share (as defined
in paragraph (g)(vi)), the Conversion Ratio to be in effect
after such issuance or sale shall be determined by
multiplying the Conversion Ratio in effect immediately prior
to such issuance or sale by a fraction, (A) the numerator of
which shall be the product of the aggregate number of shares
of Common Stock outstanding immediately after such issuance
or sale and the Current Valuation Per Common Share (as
defined in paragraph (g)(vi)) immediately prior to such
issuance or sale and (B) the denominator of which shall be
the sum of (x) the number of shares of Common Stock
outstanding immediately prior to the time of such issuance
or sale multiplied by the Current Valuation Per Common Share
immediately prior to such issuance or sale and (y) the
aggregate consideration, if any, to be received by the
Corporation upon such issuance or sale. In case any portion
of the consideration to be received by the Corporation shall
be in a form other than cash, the fair market value of such
noncash consideration shall be utilized in the foregoing
computation. Such fair market value shall be determined by
the Board of Directors of the Corporation; provided that if
--------
the holders of 25% of the Series A Preferred Stock shall
object to any such determination, the Board of Directors
shall retain an independent appraiser reasonably
satisfactory to such holders to determine such fair market
value. The holders shall be notified promptly of any
consideration other than cash to be received by the
Corporation and furnished with a description of the
12
consideration and the fair market value thereof, as
determined by the Board of Directors.
(iii) In case the Corporation shall fix a record
date for the issuance of rights, options or warrants to the
holders of its Common Stock or other securities entitling
such holders to subscribe for or purchase shares of Common
Stock (or securities convertible into shares of Common
Stock) at a price per share of Common Stock (or having a
conversion price per share of Common Stock, if a security
convertible into shares of Common Stock) less than the then
Conversion Price Per Common Share on such record date, the
maximum number of shares of Common Stock issuable upon
exercise of such rights, options or warrants (or conversion
of such convertible securities) shall be deemed to have been
issued and outstanding as of such record date and the
Conversion Ratio shall be adjusted pursuant to paragraph
(g)(ii) hereof, as though such maximum number of shares of
Common Stock had been so issued for an aggregate
consideration payable by the holders of such rights,
options, warrants or convertible securities prior to their
receipt of such shares of Common Stock. In case any portion
of such consideration shall be in a form other than cash,
the fair market value of such noncash consideration shall be
determined as set forth in paragraph (g)(ii) hereof. Such
adjustment shall be made successively whenever such record
date is fixed; and in the event that such rights, options or
warrants are not so issued or expire unexercised, or in the
event of a change in the number of shares of Common Stock to
which the holders of such rights, options or warrants are
entitled (other than pursuant to adjustment provisions
therein comparable to those contained in this paragraph
(g)), the Conversion Ratio shall again be adjusted to be the
Conversion Ratio which would then be in effect if such
record date had not been fixed, in the former event, or the
Conversion Ratio which would then be in effect if such
holder had initially been entitled to such changed number of
shares of Common Stock, in the latter event.
(iv) In case the Corporation shall issue rights,
options (other than options issued pursuant to a plan
described in clause II of paragraph (g)(ii)) or warrants
entitling the holders thereof to subscribe for or purchase
Common Stock (or securities convertible into shares of
Common Stock) or shall issue convertible securities, and the
price per share of Common Stock of such rights, options,
warrants or convertible securities (including, in the case
of rights, options or warrants, the price at which they may
be exercised) is less than the then Conversion Price Per
Common Share, the maximum number of shares of Common Stock
issuable upon exercise of such rights, options or warrants
13
or upon conversion of such convertible securities shall be
deemed to have been issued and outstanding as of the date of
such sale or issuance, and the Conversion Ratio shall be
adjusted pursuant to paragraph (g)(ii) hereof as though such
maximum number of shares of Common Stock had been so issued
for an aggregate consideration equal to the aggregate
consideration paid for such rights, options, warrants or
convertible securities and the aggregate consideration
payable by the holders of such rights, options, warrants or
convertible securities prior to their receipt of such shares
of Common Stock. In case any portion of such consideration
shall be in a form other than cash, the fair market value of
such noncash consideration shall be determined as set forth
in paragraph (g)(ii) hereof. Such adjustment shall be made
successively whenever such rights, options, warrants or
convertible securities are issued; and in the event that
such rights, options or warrants expire unexercised, or in
the event of a change in the number of shares of Common
Stock to which the holders of such rights, options, warrants
or convertible securities are entitled (other than pursuant
to adjustment provisions therein comparable to those
contained in this paragraph (g)), the Conversion Ratio shall
again be adjusted to be the Conversion Ratio which would
then be in effect if such rights, options, warrants or
convertible securities had not been issued, in the former
event, or the Conversion Ratio which would then be in effect
if such holders had initially been entitled to such changed
number of shares of Common Stock, in the latter event. No
adjustment of the Conversion Ratio shall be made pursuant to
this paragraph (g)(iv) to the extent that the Conversion
Ratio shall have been adjusted pursuant to paragraph
(g)(iii) upon the setting of any record date relating to
such rights, options, warrants or convertible securities and
such adjustment fully reflects the number of shares of
Common Stock to which the holders of such rights, options,
warrants or convertible securities are entitled and the
price payable therefor.
(v) In case the Corporation shall fix a record
date for the making of a distribution to holders of Common
Stock (including any such distribution made in connection
with a consolidation or merger in which the Corporation is
the continuing corporation) of evidences of indebtedness,
assets or other property (other than dividends payable in
Common Stock or rights, options or warrants referred to in,
and for which an adjustment is made pursuant to, paragraph
(g)(iii) hereof), the Conversion Ratio to be in effect after
such record date shall be determined by multiplying the
Conversion Ratio in effect immediately prior to such record
date by a fraction, (A) the numerator of which shall be the
Current Valuation Per Common Share on such record date, and
14
(B) the denominator of which shall be the Current Valuation
Per Common Share on such record date, less the fair market
value (determined as set forth in paragraph (g)(ii) hereof)
of the portion of the assets, other property or evidence of
indebtedness so to be distributed which is applicable to one
share of Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the
Conversion Ratio shall again be adjusted to be the
Conversion Ratio which would then be in effect if such
record date had not been fixed.
(vi) For the purpose of any computation under
paragraph (f) or paragraphs (g)(ii), (iii), (iv) or (v)
hereof, on any determination date, (I) the "Current
-------
Valuation Per Common Share" shall be the greater of the
- --------------------------
Current Market Price Per Common Share and the Conversion
Price Per Common Share (each as defined below), (II) the
"Current Market Price Per Common Share" shall be deemed to
-------------------------------------
be the average (weighted by daily trading volume) of the
Daily Prices (as defined below) per share of the applicable
class of Common Stock for the 20 consecutive trading days
immediately prior to such date, (III) the "Conversion Price
----------------
Per Common Share" shall be deemed to be the amount in
- ----------------
dollars which is equal to $50 divided by the Conversion
Ratio immediately prior to such adjustment, and (IV) "Daily
-----
Price" means (1) if the shares of such class of Common Stock
- -----
then are listed and traded on the American Stock Exchange,
Inc. ("AMEX"), the closing price on such day as reported on
----
the AMEX Composite Transactions Tape; (2) if the shares of
such class of Common Stock then are not listed and traded on
the AMEX, the closing price on such day as reported by the
principal national securities exchange on which the shares
are listed and traded; (3) if the shares of such class of
Common Stock then are not listed and traded on any such
securities exchange, the last reported sale price on such
day on the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ"); or (4) if the shares of such class of Common
------
Stock then are not traded on the NASDAQ National Market, the
average of the highest reported bid and lowest reported
asked price on such day as reported by NASDAQ. For purposes
of any computation under this paragraph (g), the number of
shares of Common Stock outstanding at any given time shall
not include shares owned or held by or for the account of
the Corporation.
(vii) No adjustment to the Conversion Ratio
pursuant to paragraphs (g)(ii), (iii), (iv) and (v) above
shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Ratio;
15
provided however, that any adjustments which by reason of
- ----------------
this paragraph (g)(vii) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph (g) shall
be made to the nearest four decimal points.
(viii) In the event that, at any time as a result
of the provisions of this paragraph (g), the holder of this
Series A Preferred Stock upon subsequent conversion shall
become entitled to receive any shares of capital stock of
the Corporation other than Common Stock, the number of such
other shares so receivable upon conversion of this Series A
Preferred Stock shall thereafter be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained
herein.
(h) Whenever an adjustment is made to the
Conversion Ratio pursuant to paragraph (8)(g), the
Redemption Threshold shall be adjusted by multiplying the
Redemption Threshold by the Conversion Ratio in effect
immediately prior to such adjustment and dividing such
product by the Conversion Ratio in effect immediately after
such adjustment. All adjustments pursuant to this paragraph
(8) shall be notified to the holders of this Series A
Preferred Stock and such notice shall be accompanied by a
Schedule of Computations of the adjustments.
(9) Voting Rights. (a) Except as otherwise
-------------
provided by applicable law, the holders of the shares of
Series A Preferred Stock (i) shall be entitled to vote with
the holders of the Common Stock on all matters submitted for
a vote of holders of Common Stock, (ii) shall be entitled to
a number of votes equal to the number of votes to which the
shares of Common Stock issuable upon conversion of such
shares of Series A Preferred Stock would have been entitled
if such shares of Common Stock had been outstanding at the
time of the applicable vote and related record date and
(iii) shall be entitled to notice of any stockholders'
meeting in accordance with the certificate of incorporation
and by-laws of the Corporation.
(b) So long as any shares of Series A Preferred
Stock are outstanding, the Corporation shall not, without
the written consent or affirmative vote at a meeting called
for that purpose of the holders of a majority of the shares
of Series A Preferred Stock then outstanding, amend, alter
or repeal, whether by merger, consolidation, combination,
reclassification or otherwise, the Certificate of
Incorporation or By-laws of the Corporation or of any
provision thereof (including the adoption of a new provision
16
thereof) which would result in an alteration or
circumvention of the voting powers, designation and
preferences and relative participating, optional and other
special rights, and qualifications, limitations and
restrictions of the Series A Preferred Stock; provided,
--------
however that any such amendment or alteration that changes
- -------
the dividend payable on, or the liquidation preference or
the par value of, the Series A Preferred Stock shall require
the affirmative vote at a meeting of holders of Series A
Preferred Stock duly called for such purpose, or the written
consent, of the holder of each share of Series A Preferred
Stock.
(c) The consent or votes required in paragraph
(b) above shall be in addition to any approval of
stockholders of the Corporation which may be required by law
or pursuant to any provision of the Corporation's
Certificate of Incorporation or By-Laws, which approval
shall be obtained by vote of the stockholders of the
Corporation in the manner provided in paragraph (a) above.
(10) Issuance and Amendment. (a) The Corporation
----------------------
will not issue more than 1,200,000 shares of Series A
Preferred Stock and the number of shares designated as
shares of Series A Preferred Stock may not be increased or
decreased without the consent of the holders of a majority
of the shares of Series A Preferred Stock outstanding.
(b) Shares of Series A Preferred Stock which have
been issued and reacquired in any manner, including shares
purchased, redeemed, converted or exchanged, shall (upon
compliance with any applicable provisions of the laws of the
State of Delaware) be cancelled and shall not be available
for reissue or redesignation.
(c) Upon any such reacquisition by the
Corporation, a certificate identifying the shares
reacquired, stating that reissuance of such shares is
prohibited and reciting the retirement of such shares shall
be executed, acknowledged and filed in accordance with
provisions of the laws of the State of Delaware.
(11) Definitions. The following terms, as used
-----------
herein, have the following meanings:
"By-Laws", with respect to a corporation, shall
-------
mean the by-laws, articles of association, or similar
corporate organizational document.
17
"Certicate of Incorporation", with respect to a
--------------------------
corporation, shall mean the charter, certificate of
incorporation, or similar corporate organizational document.
"Common Stock" shall mean the Class A Common
------------
Stock, par value $0.001 per share, of the Corporation.
"Common Stock Distribution" shall have the meaning
-------------------------
set forth in paragraph (3)(d)(ii).
"Series A Preferred Stock" shall have the meaning
------------------------
set forth in paragraph (1).
"Dividend Payment Date" shall have the meaning set
---------------------
forth in paragraph (3)(a).
"Exchange Notes" shall have the meaning set forth
--------------
in paragraph (6)
"Notice of Election to Convert" shall mean the
-----------------------------
Notice of Election to Convert on the back of each
certificate representing an outstanding share of Series A
Preferred Stock.
"Notice of Intention to Convert" shall mean a
------------------------------
notice stating that the holder of the shares of Series A
Preferred Stock intends to convert such shares pursuant to
paragraph (8) upon receipt of the Required Approvals.
["STOCK OPTION PLANS" SHALL MEAN THE STOCK OPTION
------------------
AND RESTRICTED STOCK AWARD PLAN AND THE EMPLOYEE STOCK
PURCHASE PLAN OF THE CORPORATION.]
"outstanding", when used with reference to shares
-----------
of stock, shall mean issued shares, excluding shares held by
the Corporation or a subsidiary.
"Person" shall mean any corporation, partnership,
------
trust, organization, association, group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), other entity or individual.
"Required Approvals" shall mean any approvals or
------------------
consents (including regulatory approvals) or the expiration
of any waiting periods required for conversion of the
outstanding shares of Series A Preferred Stock.
"Trading Day" shall mean a day on which the
-----------
principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common
18
Stock are not listed or admitted to trading on any national
securities exchange, a day on which NASDAQ or other similar
system as may be then in use is open for the reporting of
bid and asked prices in the over-the-counter market, or, if
bid and asked prices for the shares of Common Stock are not
so reported by any such system, a Business Day.
(12) General Provisions. (a) The headings of the
------------------
paragraphs, subparagraphs, clauses and subclauses of this
Certificate of Designation are for convenience of reference
only and shall not define, limit or affect any of the
provisions hereof.
(b) The holder of Series A Preferred Stock or
Exchange Notes, by acceptance thereof, acknowledges and
agrees that payments of dividends, interest, premium and
principal on, and exchange, redemption and repurchase of,
such securities by the Corporation are subject to
restrictions contained in certain credit and financing
agreements on the Corporation.
IN WITNESS WHEREOF, Air & Water Technologies
Corporation has caused this Certificate of Designation to be
signed and attested by the undersigned this __ day of
_____________, 1994.
AIR & WATER TECHNOLOGIES
CORPORATION
By________________________
Name:
Title:
By________________________
Name:
Title:
ATTEST:
________________________
Name:
Title:
19
Attachment A
to
Certificate of Designation
AIR & WATER TECHNOLOGIES CORPORATION
51/2% CONVERTIBLE SUBORDINATED NOTES
FOR VALUE RECEIVED, Air & Water Technologies
Corporation, a Delaware corporation (the "Company"), hereby
-------
promises to pay to _____________ or registered assigns, the
principal amount of ____________ ($___________), on the
Maturity Date pursuant to Section 2.01 and promises to pay
interest on the unpaid principal amount of this Note on the
dates and at the rate provided for in Section 2.02.
This Note is one of the series designated 51/2%
Convertible Subordinated Notes, limited in aggregate
principal amount to $60,000,000 (the "Notes").
-----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
-----------
as used herein, have the following meanings:
"Affiliate" of any Person means any other Person
---------
(other than, in the case of the Company, a Subsidiary and,
in the case of a Subsidiary, the Company) directly or
indirectly controlling, controlled by or under common
control with such Person. As used in this definition of
"Affiliate", the term "control" 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 ownership of voting securities, by contract
or otherwise.
"Business Day" means any day except a Saturday,
------------
Sunday or other day on which commercial banks in New York
City are authorized by law to close.
"By-Laws", with respect to a corporation, shall
-------
mean the by-laws, articles of association, or similar
corporate organizational document.
"Capitalized Lease" means, as applied to any
-----------------
Person, any lease of any property (whether real, personal or
mixed) the obligations of such Person as lessee under which,
in conformity with generally accepted accounting principles,
are required to be capitalized on the balance sheet of that
Person.
"Capitalized Lease Obligation" means, as applied
----------------------------
to any Person, the obligation of such Person under any
Capitalized Lease to the extent required to be capitalized
in accordance with generally accepted accounting principles.
"Certicate of Incorporation", with respect to a
--------------------------
corporation, shall mean the charter, certificate of
incorporation, or similar corporate organizational document.
"Common Stock" shall mean the Class A Common
------------
Stock, par value $0.001 per share, of the Company.
"Debt" of any Person means at any date, without
----
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all
obligations of such Person to purchase securities (or other
property) for its own account which arise out of or in
connection with the sale of the same or substantially
similar securities or properties, (v) all obligations of
such Person in respect of letters of credit or bankers'
acceptances or other similar instruments (or reimbursement
obligations with respect thereto), (vi) all obligations of
such Person as lessee under Capitalized Leases, (vii) all
Debt of others Guaranteed by such Person, (viii) all Debt of
others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person and (ix)
all renewals, extensions, refundings, deferrals, amendments
or modifications of Debt described in clauses (i), (ii),
(iii), (iv), (v), (vii) and (viii) and all renewals and
extensions of Capital Leases described in clauses (vi),
(vii) and (viii).
"Default" means any condition or event which
-------
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Event of Default" has the meaning set forth in
----------------
Article VII.
2
"Guarantee" by any Person means any obligation,
---------
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt of any other Person and,
without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such
Debt of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include
- --------
endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has
a corresponding meaning.
"Interest Payment Date" means the last Business
---------------------
Day of each March, June, September and December.
"Lien" means, with respect to any asset, any
----
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Company or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Capitalized
Lease or other title retention agreement relating to such
asset.
"Maturity Date" means the earlier of (i) the tenth
-------------
anniversary of the date of issue of this Note and (ii) any
date fixed for redemption in accordance with Article V.
"Noteholder" means each Person which is a holder
----------
of any of the Notes, and their respective successors.
"Notice of Election to Convert" shall mean the
-----------------------------
Notice of Election to Convert set forth in Schedule A to
this Note.
"Notice of Intention to Convert" shall mean a
------------------------------
notice stating that the Noteholder intends to convert this
Note pursuant to Article IV upon receipt of the Required
Approvals.
"outstanding", when used with reference to shares
-----------
of stock, shall mean issued shares, excluding shares held by
the Company or a Subsidiary.
3
"Person" shall mean any corporation, partnership,
------
trust, organization, association, group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), other entity or individual.
"Required Approvals" shall mean any approvals or
------------------
consents (including regulatory approvals) or the expiration
of any waiting periods required for conversion of this Note.
"Series A Preferred Stock" shall mean the 51/2%
------------------------
Series A Convertible Exchangeable Preferred Stock of the
Company.
["STOCK OPTION PLANS" SHALL MEAN THE STOCK OPTION
------------------
AND RESTRICTED STOCK AWARD PLAN AND THE EMPLOYEE STOCK
PURCHASE PLAN OF THE CORPORATION.]
"Subsidiary" means any corporation or other entity
----------
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
at the time directly or indirectly owned by the Company.
"Trading Day" shall mean a day on which the
-----------
principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, a day on which NASDAQ or other similar
system as may be then in use is open for the reporting of
bid and asked prices in the over-the-counter market, or, if
bid and asked prices for the shares of Common Stock are not
so reported by any such system, a Business Day.
ARTICLE II
PAYMENT OF PRINCIPAL AND INTEREST
SECTION 2.01. Mandatory Redemption. On the
--------------------
Maturity Date (the "Principal Repayment Date") the principal
------------------------
amount of this Note together with all accrued and unpaid
interest to the Maturity Date shall be due and payable, and
the Company shall repay such amount on the Maturity Date to
the Noteholder.
SECTION 2.02. Interest Rate. (a) Except as
-------------
provided in Article IV, this Note shall bear interest on the
outstanding principal amount thereof, for each day from the
date of this Note until it becomes due, at a rate per annum
equal to 51/2%. Such interest shall be payable in four equal
4
quarterly payments in arrears on each Interest Payment Date
and on the Maturity Date.
(b) Any overdue principal of or interest on the
Loan shall bear interest, payable on demand, for each day
from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum
equal to 61/2%.
SECTION 2.03. Computation of Interest. Interest,
-----------------------
other than interest for a quarterly period, shall be
computed on the basis of a year of 365 days and paid for the
actual number of days elapsed (including the first day but
excluding the last day).
ARTICLE III
SUBORDINATION
SECTION 3.01. Definitions. The following term, as
-----------
used in this Article, shall have the following meaning:
"Superior Indebtedness" means all Debt of the Company
---------------------
(including, without limitation, any interest which accrues
after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the
Company) other than the Notes.
SECTION 3.02. Subordination to Superior Indebtedness.
--------------------------------------
The Company and the Noteholders agree for the benefit of the
holders of the Superior Indebtedness that the Notes shall, in
the manner hereinafter set forth, be subordinate and junior in
right of payment to all Superior Indebtedness of the Company.
SECTION 3.03. Limitations on Payments and
---------------------------
Acceleration. (a) Upon the maturity of all or any part of the
- ------------
Superior Indebtedness by lapse of time, acceleration or
otherwise, such Superior Indebtedness shall first be paid in
full, or such payment shall be duly provided for in cash or in
a manner satisfactory to the holders of the Superior
Indebtedness, before any payment by the Company is made on
account of the principal of or interest on the Notes or to
acquire the Notes.
(b) In the event and during the continuation of any
default in the payment of any principal of or interest on any
Superior Indebtedness when due and payable (each a "Payment
-------
Default"), whether at maturity, upon any redemption, by
- -------
declaration or otherwise, no payment shall be made by the
5
Company on or with respect to the principal of, or interest on,
the Notes or to acquire the Notes unless and until such Payment
Default shall have been remedied. In any such event, no holder
of the Notes shall accept or receive any payment of or on
account of the Notes, notwithstanding the terms of the Notes.
(c) In the event that any event or condition shall
occur and be continuing which would permit, or which with
notice or lapse of time or both would permit, the holder or
holders of any Superior Indebtedness (or a trustee acting on
behalf of the holders thereof) to declare such Superior
Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable (each such event or
condition being referred to in this Note as a "Non-Payment
-----------
Default"), no payment shall be made by the Company on or with
- -------
respect to the principal of, or interest on, the Notes or to
acquire the Notes during any period commencing on the date
written notice of such Non-Payment Default (a "Blockage
--------
Notice") shall have been given to the Company and the holders
- ------
of the Notes by the holders of a majority in principal amount
of the Superior Indebtedness then outstanding with respect to
which such Non-Payment Default shall have occurred (or their
authorized agent) and ending on the earliest to occur of the
date (the "Blockage Expiration Date") (i) 180 days after the
------------------------
date of the Blockage Notice, (ii) such Non-Payment Default
shall have been remedied or effectively waived or shall have
ceased to exist and (iii) the Superior Indebtedness in respect
of which such Non-Payment Default shall have occurred shall
have been paid in full, provided that the foregoing provisions
--------
do not limit the number of Blockage Notices which may be given
during any 360-day period, provided further that the number of
-------- -------
days on which payment on the Notes may be prohibited under this
subdivision (c) during any 360-day period shall not exceed 180
days. At the Blockage Expiration Date, the Company shall,
subject to Section 3.03(b), promptly pay the holder or holders
of the Notes all sums not paid as a result of this Section
3.03(c). In any such event, no holder of the Notes shall
accept or receive during any such period any payment of or an
account of the Notes, notwithstanding the terms of the Notes.
SECTION 3.04. Note Subordinated to Prior Payment of
-------------------------------------
all Superior Indebtedness on Dissolution, Liquidation or
- --------------------------------------------------------
Reorganization of Company. In the event of any insolvency or
- -------------------------
bankruptcy proceedings, and any receivership, liquidation,
reorganization or other similar proceedings in connection
therewith, relative to the Company or to its creditors, in
their capacity as creditors of the Company, or to substantially
all of its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy,
then
6
(a) the holders of all Superior Indebtedness shall
first be entitled to receive payment in full of the
principal thereof, interest and all other amounts payable
thereon (accruing before and after the commencement of the
proceedings) before any holder of the Notes is entitled to
receive any payment on account of the principal of or
interest on the Notes; and
(b) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities to which any holder of the Notes would be
entitled, but for the provisions of this Article III, shall
be paid or distributed by the liquidating trustee or agent
or other person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the holders of the
Superior Indebtedness or any other representative on behalf
of the holders of Superior Indebtedness, to the extent
necessary to make payment in full of all principal, interest
and all other amounts payable on all Superior Indebtedness
remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of the Superior
Indebtedness.
SECTION 3.05. Rights of Holders of Superior
-----------------------------
Indebtedness; Subrogation. (a) Should any payment or
- -------------------------
distribution or security or the proceeds of any thereof be
collected or received by any holder of the Notes in respect of
the Notes, and such collection or receipt is prohibited
hereunder prior to the payment in full of the Superior
Indebtedness, such holder will forthwith deliver the same to
the holders of the Superior Indebtedness for the equal and
ratable benefit of the holders of the Superior Indebtedness in
precisely the form received (except for the endorsement or the
assignment of or by such holder where necessary) for
application to payment of all Superior Indebtedness in full,
after giving effect to any concurrent payment or distribution
to the holders of Superior Indebtedness and, until so
delivered, the same shall be held in trust by such holder as
the property of the holders of the Superior Indebtedness.
(b) All payments and distributions received by the
holders of the Superior Indebtedness in respect of the Notes,
to the extent received in or converted into cash, may be
applied by the holders of the Superior Indebtedness first to
the payment of any and all reasonable out-of-pocket expenses
(including attorney's fees and legal expenses) paid or incurred
by the holders of the Superior Indebtedness or such
representative in enforcing the provisions hereof or in
endeavoring to collect or realize upon the Notes or any
security therefor, and any balance thereof shall, solely as
7
between any holder of the Notes, on the one hand, and the
holders of the Superior Indebtedness, on the other hand, be
applied by the holders of the Superior Indebtedness in such
order of application as the holders of the Superior
Indebtedness may from time to time select, toward the payment
of the Superior Indebtedness remaining unpaid.
(c) No holder of the Notes shall be subrogated to the
rights of the holders of the Superior Indebtedness to receive
payments or distributions of assets of the Company until all
amounts payable with respect to the Superior Indebtedness shall
be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Superior
Indebtedness of any cash, property or securities to which any
holder of the Notes would be entitled except for these
provisions shall, as between the Company, its creditors other
than the holders of the Superior Indebtedness, and such holders
of the Notes, be deemed to be a payment by the Company to or on
account of the Superior Indebtedness.
(d) Subject to the payment in full of all Superior
Indebtedness, the holders of the Notes shall be subrogated
(equally and ratably with the holders of all subordinated
indebtedness of the Company which, by its terms, is not
superior in right of payment to the Notes, and ranks on a
parity with the Notes) to the rights of the holders of Superior
Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the
Superior Indebtedness until all amounts owing on the Notes
shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Notes of cash,
property, securities or other assets by virtue of the
subrogation herein provided which otherwise would have been
made to the holders of the Superior Indebtedness shall, as
between the Company, its creditors other than the holders of
Superior Indebtedness and the holders of the Notes, be deemed
to be a payment to or on account of the Notes. The holders of
the Notes agree that, in the event that all or any part of any
payment made on account of the Superior Indebtedness is
recovered from the holders of Superior Indebtedness as a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law, any payment or
distribution received by the holders of the Notes on account of
the Notes at any time after the date of the payment so
recovered, whether pursuant to the right of subrogation
provided for in this Section 3.05 or otherwise, shall be deemed
to have been received by such holders of the Notes in trust as
the property of the holders of the Superior Indebtedness and
such holders shall forthwith deliver the same to the holders of
the Superior Indebtedness for the equal and ratable benefit of
8
the holders of the Superior Indebtedness for application to
payment of all Superior Indebtedness until paid in full.
SECTION 3.06. Renewals, Extensions and Increases of
-------------------------------------
Superior Indebtedness. Each holder of the Notes by his
- ---------------------
acceptance thereof thereby waives any and all notice of
renewal, extension, accrual or (consistent with the definition
of Superior Indebtedness) increase in the amount of any of the
Superior Indebtedness, present or future, and agrees and
consents that without notice to or assent by any holder or
holders of the Notes:
(i) the obligation and liabilities of the Company or
any other party or parties for or upon the Superior
Indebtedness (or any promissory note, security document or
guaranty evidencing or securing the same) may, from time to
time, in whole or in part, be renewed, extended, increased
(consistent with the definition of Superior Indebtedness),
modified, amended, accelerated, compromised, supplemented,
terminated, sold, exchanged, waived or released;
(ii) the holders of the Superior Indebtedness or any
other representative acting on behalf of the holders of the
Superior Indebtedness and the holders of the Superior
Indebtedness may exercise or refrain from exercising any
right, remedy or power granted by or in connection with any
agreements relating to the Superior Indebtedness; and
(iii) any balance or balances of funds with any
holders of the Superior Indebtedness at any time standing to
the credit of the Company may, from time to time, in whole
or in part, be surrendered or released;
all as the holders of the Superior Indebtedness or any other
representative or representatives acting on behalf of the
holders of the Superior Indebtedness and the holders of the
Superior Indebtedness may deem advisable and all without
impairing, abridging, diminishing, releasing or affecting the
subordination of the Notes to the Superior Indebtedness
provided for herein.
SECTION 3.07. Obligation of Company Unconditional.
-----------------------------------
Nothing contained in this Article III or in the Notes is
intended to or shall impair, as between the Company, its
creditors other than the holders of the Superior Indebtedness,
and the holders of the Notes, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of
the Notes the principal of, and interest on the Notes, as and
when the same shall become due and payable, by lapse of time,
acceleration or otherwise, in accordance with their terms, or
is intended to or shall affect the relative rights of the
9
holders of the Notes and other creditors of the Company other
than the holders of the Superior Indebtedness, nor shall
anything herein or therein prevent the holder of the Notes
(i) from taking all appropriate actions to preserve their
rights under the Notes not inconsistent with the rights of the
holders of the Superior Indebtedness under this Article III, or
(ii) from exercising all remedies, including without limitation
equitable remedies, otherwise permitted by applicable law upon
default under the Notes, subject to the rights, if any, under
this Article III of the holders of the Superior Indebtedness in
respect of cash, property or securities of the Company
otherwise payable or delivered to such holders upon the
exercise of any such remedy. The provisions of this Article
III are and are intended solely for the purpose of defining the
relative rights of holders of the Notes, on the one hand, and
the holders of the Superior Indebtedness, on the other hand.
SECTION 3.08. Miscellaneous. (a) Each holder of the
-------------
Notes by its acceptance thereof thereby acknowledges and agrees
that the holders of the Superior Indebtedness have relied upon
and will continue to rely upon the subordination provided for
in this Article III in entering into the agreements relating to
Superior Indebtedness and in extending credit to the Company
pursuant thereto.
(b) No present or future holder of Superior
Indebtedness shall be prejudiced in his right to enforce the
subordination contained herein in accordance with the terms
hereof by any act or failure to act on the part of the Company
or any holder of the Notes. The subordination provisions
contained in this Article III are for the benefit of the
holders of the Superior Indebtedness from time to time and, so
long as Superior Indebtedness is outstanding under any
agreement, may not be rescinded, cancelled or modified in any
way without the prior written consent thereto of holders of at
least 75% in aggregate principal amount of the Superior
Indebtedness at the time outstanding.
(c) The subordination provisions contained in this
Article III shall be binding upon any holder of the Notes and
upon the heirs, legal representatives, successors and assigns
of any holder of the Notes; and, to the extent that any holder
of the Notes is either a partnership or a corporation, all
references herein to any holder of the Notes shall be deemed to
include any successor or successors, whether immediate or
remote, to such partnership or corporation.
10
ARTICLE IV
CONVERSION
SECTION 4.01. Conversion. (a) Subject to the
----------
provisions of this Article IV, the Noteholder shall have the
right, at any time, at such Noteholder's option, to convert any
or all of the principal amount of this Note, in whole or in
part, into fully paid and non-assessable shares of Common
Stock. The number of shares of Common Stock deliverable upon
conversion of each $50 of principal amount of this Note,
adjusted as hereinafter provided, is referred to herein as the
"Conversion Ratio." The Conversion Ratio as of the date of
----------------
issue of this Note shall be the Conversion Ratio under the
Series A Preferred Stock immediately prior to the exchange of
such Series A Preferred Stock for this Note, subject to
adjustment from time to time pursuant to Section 4.07 hereof.
Notwithstanding any call for redemption pursuant to Article V,
the right to convert shares so called for redemption shall
terminate at the close of business on the date immediately
preceding the date fixed for such redemption or exchange, as
the case may be, unless the Company shall default in making
payment of the amount payable upon such redemption or in making
the exchange and payment of any amount payable upon such
exchange.
SECTION 4.02. Exercise Procedure. (a) In order to
------------------
exercise the conversion privilege, the Noteholder shall
surrender this Note at the office of the Company, with the
Notice of Election to Convert completed and signed. Unless the
shares issuable on conversion are to be issued in the same name
as the name in which this Note is registered, each share
surrendered for conversion shall be accompanied by instruments
of transfer, in form satisfactory to the Company, duly executed
by the Noteholder or the Noteholder's duly authorized attorney
and an amount sufficient to pay any transfer or similar tax.
(b) As promptly as practicable after the surrender by
the Noteholder as aforesaid, the Company shall issue and shall
deliver to such Noteholder, or on the Noteholder's written
order to the Noteholder's transferee, a certificate or
certificates for the whole number of shares of Common Stock
issuable upon the conversion of such shares in accordance with
the provisions of this Article IV.
(c) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date
on which this Note shall have been surrendered and such notice
received by the Company as aforesaid, and the person in whose
name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be
11
deemed to have become the holder of record of the shares of
Common Stock represented thereby at such time on such date and
such conversion shall be into a number of shares of Common
Stock equal to the product of (A) the principal amount of this
Note surrendered for conversion divided by 50 and (B) the
Conversion Ratio in effect at such time on such date. All
shares of Common Stock delivered upon conversion of this Note
will upon delivery be duly and validly issued and fully paid
and non-assessable, free of all liens and charges and not
subject to any preemptive rights. Upon the surrender of this
Note, the principal amount of this Note surrendered for
conversion shall no longer be deemed to be outstanding and all
rights of a Noteholder with respect to the principal amount of
this Note surrendered for conversion shall immediately
terminate except the right to receive the Common Stock and
other amounts, including any accrued and unpaid interest on
this Note, payable pursuant to this Article IV.
SECTION 4.03. Effect of Election. (a) Upon delivery
------------------
to the Company by the Noteholder of a Notice of Election to
Convert or a Notice of Intention to Convert, the right of the
Company to redeem the principal amount of this Note which is to
be converted shall terminate, regardless of whether a notice of
redemption has been mailed.
(b) Interest on the outstanding principal amount of
this Note delivered for conversion shall cease to accrue on the
date of delivery by the Noteholder of such Notice of Election
to Convert or Notice of Intention to Convert. Any such accrued
and unpaid interest shall be payable by the Company to the
Noteholder on the next succeeding Interest Payment Date. [From
and after the date of such delivery, this Note shall
participate equally and ratably with the holders of shares of
Common Stock in all dividends paid on the Common Stock as if
this Note had been converted to shares of Common Stock at the
time of such delivery.](1)
(c) Except as provided above and in Section 4.07, the
Company shall make no adjustment for accrued and unpaid
interest on this Note, on conversion of this Note or for
dividends in cash on the shares of Common Stock issued upon
such conversion.
SECTION 4.04. Issuance of Shares. (a) The Company
------------------
covenants that it shall at all times reserve and keep
available, free from preemptive rights, such number of its
- --------------------
(1)This provision should also be included in the
Company's charter.
12
authorized but unissued shares of Common Stock as shall be
required for the purpose of effecting conversions of the Notes.
(b) Prior to the delivery of any securities which the
Company shall be obligated to deliver upon conversion of the
Notes, the Company shall comply with all applicable federal and
state laws and regulations which require action to be taken by
the Company.
SECTION 4.05. Taxes on Conversion. The Company will
-------------------
pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of
Common Stock on conversion of any part of the principal amount
of this Note pursuant hereto; provided, that the Company shall
--------
not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the Noteholder to be
converted and no such issue or delivery shall be made unless
and until the person requesting such issue or delivery has paid
to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been
paid.
SECTION 4.06. No Fractions of Common Stock to be
----------------------------------
Issued. In connection with the conversion of the principal
- ------
amount of this Note, no fractions of shares of Common Stock
shall be issued, but in lieu thereof the Company shall pay a
cash adjustment in respect of such fractional interest in an
amount equal to such fractional interest multiplied by the
Daily Price (as defined in Section 4.07(f)) per share of Common
Stock on the Trading Day on which this Note is deemed to have
been converted. If more than one Note is surrendered for
conversion by the same Noteholder (or Affiliate of such
Noteholder) at the same time, the number of full shares of
Common Stock issuable on conversion of the principal amount
thereof surrendered for conversion shall be computed on the
basis of the total principal amounts of the Notes so
surrendered.
Section 4.07. Anti-dilution. (a) In case the Company
-------------
shall at any time after the date of initial issue of this Note
(I) declare a dividend or make a distribution on Common Stock
payable in Common Stock, (II) subdivide or split the
outstanding Common Stock, (III) combine or reclassify the
outstanding Common Stock into a smaller number of shares, (IV)
issue any shares of its capital stock in a reclassification of
Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing corporation), or (V) consolidate with, or merge with
or into, any other Person, the Conversion Ratio in effect at
the time of the record date for such dividend or distribution
13
or of the effective date of such subdivision, split,
combination, consolidation, merger or reclassification shall be
proportionately adjusted so that the conversion of this Note
after such time shall entitle the Noteholder to receive the
aggregate number of shares of Common Stock or other securities
of the Company (or shares of any security into which such
shares of Common Stock have been combined, consolidated, merged
or reclassified pursuant to clause (III), (IV) or (V) above)
which, if this Note had been converted immediately prior to
such time, such Noteholder would have owned upon such
conversion and been entitled to receive by virtue of such
dividend, distribution, subdivision, split, combination,
consolidation, merger or reclassification, assuming such holder
of Common Stock of the Company (x) is not a Person with which
the Company consolidated or into which the Company merged or
which merged into the Company or to which such
recapitalization, sale or transfer was made, as the case may be
("constituent Person"), or an affiliate of a constituent Person
------------------
and (y) failed to exercise any rights of election as to the
kind or amount of securities, cash and other property
receivable upon such reclassification, change, consolidation,
merger, recapitalization, sale or transfer (provided, that if
--------
the kind or amount of securities, cash and other property
receivable upon such reclassification, change, consolidation,
merger, recapitalization, sale or transfer is not the same for
each share of Common Stock of the Company held immediately
prior to such reclassification, change, consolidation, merger,
recapitalization, sale or transfer by other than a constituent
Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing
------------
share"), then for the purpose of this Section 4.07 the kind and
- -----
amount of securities, cash and other property receivable upon
such reclassification, change, consolidation, merger,
recapitalization, sale or transfer by each non-electing share
shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such
adjustment shall be made successively whenever any event listed
above shall occur.
(b) In case the Company shall issue or sell any Common
Stock (other than Common Stock issued (I) upon conversion of
the Series A Preferred Stock, the Notes or the 8% Convertible
Subordinated Debentures due May 15, 2015, (II) pursuant to the
Company's Stock Option Plans or pursuant to any other Common
Stock related employee compensation plan of the Company
approved by the Company's Board of Directors or (III) upon
exercise or conversion of any security the issuance of which
caused an adjustment under Sections 4.07(c) or (d) hereof)
without consideration or for a consideration per share less
than the then Conversion Price Per Common Share (as defined in
Section 4.07(f)), the Conversion Ratio to be in effect after
14
such issuance or sale shall be determined by multiplying the
Conversion Ratio in effect immediately prior to such issuance
or sale by a fraction, (A) the numerator of which shall be the
product of the aggregate number of shares of Common Stock
outstanding immediately after such issuance or sale and the
Current Valuation Per Common Share (as defined in Section
4.07(f)) immediately prior to such issuance or sale and (B) the
denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to the
time of such issuance or sale multiplied by the Current
Valuation Per Common Share immediately prior to such issuance
or sale and (y) the aggregate consideration, if any, to be
received by the Company upon such issuance or sale. In case
any portion of the consideration to be received by the Company
shall be in a form other than cash, the fair market value of
such noncash consideration shall be utilized in the foregoing
computation. Such fair market value shall be determined by the
Board of Directors of the Company; provided that if the
--------
Noteholders of 25% or more of the aggregate principal amount of
the Notes shall object to any such determination, the Board of
Directors shall retain an independent appraiser reasonably
satisfactory to such Noteholders to determine such fair market
value. The Noteholders shall be notified promptly of any
consideration other than cash to be received by the Company and
furnished with a description of the consideration and the fair
market value thereof, as determined by the Board of Directors.
(c) In case the Company shall fix a record date for
the issuance of rights, options or warrants to the holders of
its Common Stock or other securities entitling such holders to
subscribe for or purchase shares of Common Stock (or securities
convertible into shares of Common Stock) at a price per share
of Common Stock (or having a conversion price per share of
Common Stock, if a security convertible into shares of Common
Stock) less than the then Conversion Price Per Common Share on
such record date, the maximum number of shares of Common Stock
issuable upon exercise of such rights, options or warrants (or
conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the
Conversion Ratio shall be adjusted pursuant to Section 4.07(b)
hereof, as though such maximum number of shares of Common Stock
had been so issued for an aggregate consideration payable by
the holders of such rights, options, warrants or convertible
securities prior to their receipt of such shares of Common
Stock. In case any portion of such consideration shall be in a
form other than cash, the fair market value of such noncash
consideration shall be determined as set forth in Section
4.07(b) hereof. Such adjustment shall be made successively
whenever such record date is fixed; and in the event that such
rights, options or warrants are not so issued or expire
unexercised, or in the event of a change in the number of
15
shares of Common Stock to which the holders of such rights,
options or warrants are entitled (other than pursuant to
adjustment provisions therein comparable to those contained in
this Section 4.07), the Conversion Ratio shall again be
adjusted to be the Conversion Ratio which would then be in
effect if such record date had not been fixed, in the former
event, or the Conversion Ratio which would then be in effect if
such holder had initially been entitled to such changed number
of shares of Common Stock, in the latter event.
(d) In case the Company shall issue rights, options
(other than options issued pursuant to a plan described in
clause II of Section 4.07(b)) or warrants entitling the holders
thereof to subscribe for or purchase Common Stock (or
securities convertible into shares of Common Stock) or shall
issue convertible securities, and the price per share of Common
Stock of such rights, options, warrants or convertible
securities (including, in the case of rights, options or
warrants, the price at which they may be exercised) is less
than the then Conversion Price Per Common Share, the maximum
number of shares of Common Stock issuable upon exercise of such
rights, options or warrants or upon conversion of such
convertible securities shall be deemed to have been issued and
outstanding as of the date of such sale or issuance, and the
Conversion Ratio shall be adjusted pursuant to Section 4.07(b)
hereof as though such maximum number of shares of Common Stock
had been so issued for an aggregate consideration equal to the
aggregate consideration paid for such rights, options, warrants
or convertible securities and the aggregate consideration
payable by the holders of such rights, options, warrants or
convertible securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall
be in a form other than cash, the fair market value of such
noncash consideration shall be determined as set forth in
Section 4.07(b) hereof. Such adjustment shall be made
successively whenever such rights, options, warrants or
convertible securities are issued; and in the event that such
rights, options or warrants expire unexercised, or in the event
of a change in the number of shares of Common Stock to which
the holders of such rights, options, warrants or convertible
securities are entitled (other than pursuant to adjustment
provisions therein comparable to those contained in this
Section 4.07), the Conversion Ratio shall again be adjusted to
be the Conversion Ratio which would then be in effect if such
rights, options, warrants or convertible securities had not
been issued, in the former event, or the Conversion Ratio which
would then be in effect if such holders had initially been
entitled to such changed number of shares of Common Stock, in
the latter event. No adjustment of the Conversion Ratio shall
be made pursuant to this Section 4.07(d) to the extent that the
Conversion Ratio shall have been adjusted pursuant to Section
16
4.07(c) upon the setting of any record date relating to such
rights, options, warrants or convertible securities and such
adjustment fully reflects the number of shares of Common Stock
to which the holders of such rights, options, warrants or
convertible securities are entitled and the price payable
therefor.
(e) In case the Company shall fix a record date for
the making of a distribution to holders of Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, assets or other
property (other than dividends payable in Common Stock or
rights, options or warrants referred to in, and for which an
adjustment is made pursuant to, Section 4.07(c) hereof), the
Conversion Ratio to be in effect after such record date shall
be determined by multiplying the Conversion Ratio in effect
immediately prior to such record date by a fraction, (A) the
numerator of which shall be the Current Valuation Per Common
Share on such record date, and (B) the denominator of which
shall be the Current Valuation Per Common Share on such record
date, less the fair market value (determined as set forth in
Section 4.07(b) hereof) of the portion of the assets, other
property or evidence of indebtedness so to be distributed which
is applicable to one share of Common Stock. Such adjustments
shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made,
the Conversion Ratio shall again be adjusted to be the
Conversion Ratio which would then be in effect if such record
date had not been fixed.
(f) For the purpose of any computation under Section
4.06 or Sections 4.07(b), (c), (d) or (e) hereof, on any
determination date, (I) the "Current Valuation Per Common
----------------------------
Share" shall be the greater of the Current Market Price Per
- -----
Common Share and the Conversion Price Per Common Share (each as
defined below), (II) the "Current Market Price Per Common
-------------------------------
Share" shall be deemed to be the average (weighted by daily
- -----
trading volume) of the Daily Prices (as defined below) per
share of the applicable class of Common Stock for the 20
consecutive trading days immediately prior to such date, (III)
the "Conversion Price Per Common Share" shall be deemed to be
---------------------------------
the amount in dollars which is equal to $50 divided by the
Conversion Ratio immediately prior to such adjustment, and (IV)
"Daily Price" means (1) if the shares of such class of Common
-----------
Stock then are listed and traded on the American Stock
Exchange, Inc. ("AMEX"), the closing price on such day as
----
reported on the AMEX Composite Transactions Tape; (2) if the
shares of such class of Common Stock then are not listed and
traded on the AMEX, the closing price on such day as reported
by the principal national securities exchange on which the
17
shares are listed and traded; (3) if the shares of such class
of Common Stock then are not listed and traded on any such
securities exchange, the last reported sale price on such day
on the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ");
------
or (4) if the shares of such class of Common Stock then are not
traded on the NASDAQ National Market, the average of the
highest reported bid and lowest reported asked price on such
day as reported by NASDAQ. For purposes of any computation
under this Section 4.07, the number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company.
(g) No adjustment to the Conversion Ratio pursuant to
Sections 4.07(b), (c), (d) and (e) above shall be required
unless such adjustment would require an increase or decrease of
at least 1% in the Conversion Ratio; provided however, that any
----------------
adjustments which by reason of this Section 4.07(g) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 4.07 shall be made to the nearest four decimal
points.
(h) In the event that, at any time as a result of the
provisions of this Section 4.07, the Noteholder of this Note
upon subsequent conversion shall become entitled to receive any
shares of capital stock of the Company other than Common Stock,
the number of such other shares so receivable upon conversion
of this Note shall thereafter be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained herein.
Section 4.08. Adjustment of Redemption Threshold.
----------------------------------
Whenever an adjustment is made to the Conversion Ratio pursuant
to Section 4.07, the Redemption Threshold (as defined in
Section 5.01(b) shall be adjusted by multiplying the Redemption
Threshold by the Conversion Ratio in effect immediately prior
to such adjustment and dividing such product by the Conversion
Ratio in effect immediately after such adjustment. All
adjustments pursuant to Sections 4.07 and 4.08 shall be
notified to the Noteholders and such notice shall be
accompanied by a Schedule of Computations of the adjustments.
ARTICLE V
REDEMPTION
SECTION 5.01. Redemption. The Notes shall be
----------
redeemable by the Corporation as provided below.
18
(a) The Notes shall not be redeemable prior to the
Initial Redemption Date. The "Initial Redemption Date" shall
-----------------------
be June 30, 1997.
(b) At the option of the Corporation, the Notes may be
redeemed at any time or from time to time (subject to the
provisions set forth below and in Article IV) on or after the
Initial Redemption Date, in whole or in part, at the price (the
"Redemption Price"), payable in cash, equal to the percentage
----------------
set forth below of the principal amount of the Notes for
redemptions during the 12-month periods beginning on the
Initial Redemption Date or the annual anniversaries thereof
indicated below, plus, in each case, an amount equal to accrued
and unpaid interest thereon, to the date fixed for redemption:
12-month period beginning on Percentage
---------------------------- ----------
Initial Redemption Date 103.85%
First Anniversary thereof 103.30%
Second Anniversary thereof 102.75%
Third Anniversary thereof 102.20%
Fourth Anniversary thereof 101.65%
Fifth Anniversary thereof 101.10%
Sixth Anniversary thereof 100.55%
Seventh Anniversary thereof
and thereafter 100.00%
Notwithstanding the foregoing, the Corporation may elect to
redeem the Notes at any time on or after the Initial Redemption
Date and prior to the fourth anniversary of the Initial
Redemption Date only if for at least 20 Trading Days during the
period consisting of the 30 consecutive Trading Days ending on
the date notice of such redemption is given, including the last
Trading Day of such period, the Closing Price per share of
Common Stock exceeds $18.75, as adjusted pursuant to Section
4.08 (the "Redemption Threshold").
--------------------
(c) In the event that less than all of the principal
amount of the Notes is to be redeemed pursuant to this Article
V, the Corporation shall call for redemption the Notes pro rata
among the holders, based on the principal amount of Notes held
by each holder. Any redemption for which the principal amount
of Notes is called for redemption on a pro rata basis (whether
or not some of the principal amount of Notes so called are
subsequently converted pursuant to Article IV) shall comply
with this Section 5.01(c).
SECTION 5.02. Procedure for Redemption. (a) In the
------------------------
event the Company shall redeem the Notes, notice of such
19
redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the
redemption date, to the Noteholders of record at such
Noteholders' addresses as the same appears on the books of the
Company. Each such notice shall state: (i) the redemption
date; (ii) the redemption price; (iii) the place or places
where the Notes is to be surrendered for payment of the
redemption price; (iv) that interest on the Notes will cease to
accrue on such redemption date, and (v) the principal amount of
the Notes to be redeemed.
(b) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Company in providing money for the payment of the redemption
price or a Notice of Intention to Convert or Notice of Election
to Convert has been delivered to the Company pursuant to
Article IV), interest on the principal amount of the Notes
called for redemption shall cease to accrue, and such principal
amount of the Notes called for redemption shall no longer be
deemed to be outstanding and shall be cancelled and shall not
be available for reissue, and all rights of the Noteholders as
creditors of the Company (except the right to receive from the
Company the redemption price and any other amounts payable
pursuant to Section 5.01) in respect of such principal amount
of the Notes called for redemption shall cease. Upon surrender
in accordance with said notice of the Notes representing the
principal amount of the Notes called for redemption (properly
endorsed or assigned for transfer, if the Board of Directors of
the Company shall so require and the notice shall so state),
the principal amount of the Notes so called for redemption
shall be redeemed by the Company at the redemption price
aforesaid.
ARTICLE VI
VOTING RIGHTS
Section 6.01. General. Except as otherwise provided
-------
by applicable law, the Noteholders of the Notes (i) shall be
entitled to vote with the holders of the Common Stock on all
matters submitted for a vote of holders of Common Stock, (ii)
shall be entitled to a number of votes equal to the number of
votes to which the shares of Common Stock issuable upon
conversion of the Notes would have been entitled if such shares
of Common Stock had been outstanding at the time of the
applicable vote and related record date and (iii) shall be
entitled to notice of any stockholders' meeting in accordance
with the Certificate of Incorporation and By-Laws of the
Company.
20
Section 6.02. No Changes to Voting Rights. So long
---------------------------
as any of the principal amount of the Notes is outstanding, the
Company shall not, without the written consent or affirmative
vote of Noteholders which in the aggregate own more than 50% of
the aggregate principal amount of the Notes then outstanding,
at a meeting called for that purpose of the Noteholders, amend,
alter or repeal, whether by merger, consolidation, combination,
reclassification or otherwise, the Certificate of Incorporation
or By-laws of the Company or of any provision thereof
(including the adoption of a new provision thereof) which would
result in an alteration or circumvention of the voting powers
or other rights of the Notes; provided, however that any such
-------- -------
amendment or alteration that changes the interest payable on,
or the principal amount of, the Notes shall require the
affirmative vote at a meeting of holders of the Notes duly
called for such purpose, or the written consent, of the holders
of 100% of the aggregate principal amount of the Notes then
outstanding.
Section 6.03. Stockholder Approval Required. The
-----------------------------
consent or votes required in Section 6.02 above shall be in
addition to any approval of stockholders of the Company which
may be required by law or pursuant to any provision of the
Company's Certificate of Incorporation or By-Laws, which
approval shall be obtained by vote of the stockholders of the
Company in the manner provided in Section 6.01 above.
ARTICLE VII
DEFAULTS
If one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Company shall fail to pay when due any
principal of the Notes, or shall fail to pay within fifteen
days of the due date thereof any interest or other amount
payable hereunder;
(b) the Company shall fail to observe or perform any
covenant or agreement contained in the Notes (other than
those covered by clause (a) above) for 30 days after written
notice thereof has been given to the Company by the
Noteholder;
(c) the Company (i) shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
21
conservator, liquidator, custodian or other similar official
of it or any substantial part of its property, or (ii) shall
consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or
(iii) shall make a general assignment for the benefit of
creditors, or (iv) shall fail generally to pay its debts as
they become due, or (v) shall take any corporate action to
authorize any of the foregoing;
(d) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, conservator, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90
days; or an order for relief shall be entered against the
Company under the Federal bankruptcy laws as now or
hereafter in effect;
(e) a judgment or order for the payment of money in
excess of $5,000,000 shall be rendered against the Company
or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
then, and in every such event, unless such Event of Default is
no longer continuing, the Noteholder may by notice to the
Company accelerate the maturity of the Notes by declaring the
Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company; provided
--------
that in the case of any of the Events of Default specified in
subsection (c) or (d) above with respect to the Company,
without any notice to the Company or any other act by the
Noteholder, the Notes (together with accrued interest thereon)
shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Company.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and
-------
other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar
22
writing) and shall be given to such party, at its address,
telex number or facsimile number set forth on the signature
pages hereof or such other address, telex number or facsimile
as such party may hereafter specify for the purpose of notice
to the other party. Each such notice, request or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if
given by facsimile, when such facsimile is transmitted to the
facsimile number specified in this Section and the appropriate
confirmation is received, or (iii) if given by any other means,
when delivered at the address specified in this Section.
SECTION 8.02. No Waivers. No failure or delay by the
----------
Noteholder in exercising any right, power or privilege
hereunder or under any Note shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.03. Amendments, Waivers and Issuance. (a)
--------------------------------
Any provision of the Notes may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed
by the Company and Noteholders which in the aggregate own more
than 50% of the aggregate principal amount of the Notes.
(b) The Company will not issue more than $60,000,000
aggregate principal amount of the Notes without the consent of
Noteholders which in the aggregate own more than 50% of the
aggregate principal amount of the Notes.
SECTION 8.04. Governing Law. The Notes shall be
-------------
governed by and construed in accordance with the laws of the
State of New York.
AIR & WATER TECHNOLOGIES
CORPORATION
By________________________
Name:
Title:
23
[Subject to review by Minnesota counsel]
EXHIBIT B
PLAN OF MERGER
dated as of
____________, 1994
among
AIR & WATER TECHNOLOGIES CORPORATION
PSC PROFESSIONAL SERVICES GROUP, INC.
and
[name of merger subsidiary]
PLAN OF MERGER
Agreement dated as of ____________, 1994 among PSC
Professional Services Group, Inc., a Minnesota corporation
("PSG"), Air & Water Technologies Corporation, a Delaware
corporation ("AWT"), and [name of acquisition subsidiary], a
Minnesota corporation and a wholly owned subsidiary of Buyer
("Merger Subsidiary").
The parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. (a) At the effective time of
----------
the merger (the "Merger"), Merger Subsidiary shall be merged
with and into PSG in accordance with the Section 302A.611 of
the Minnesota Business Corporation Act, whereupon the
separate existence of Merger Subsidiary shall cease, and PSG
shall be the surviving corporation (the "Surviving
Corporation").
(b) Concurrently with the closing of the
transactions contemplated by the Investment Agreement dated
March __, 1994 among AWT, Compagnie Generale des Eaux and
Anjou International Company, PSG and Merger Subsidiary will
file articles of merger with the Secretary of State of the
State of Minnesota and make all other filings or recordings
required by Minnesota Law in connection with the Merger.
The Merger shall become effective at such time as the
articles of merger is duly filed with the Secretary of State
of the State of Minnesota or at such later time as is
specified in the certificate of merger (the "Effective
Time").
(c) From and after the Effective Time, the
Surviving Corporation shall possess all the rights,
privileges, powers and franchises and be subject to all of
the restrictions, disabilities and duties of PSG and Merger
Subsidiary, all as provided under Minnesota Law.
1.2 Conversion of Shares. At the Effective Time:
--------------------
(a) each share of common stock, par value $_____,
of PSG (the "PSG Common Stock") held by PSG as treasury
2
stock shall be cancelled, and no payment shall be made
with respect thereto;
(b) each share of common stock of Merger
Subsidiary outstanding immediately prior to the
Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with
the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation;
and
(c) all outstanding PSG Common Stock outstanding
immediately prior to the Effective Time shall, except
as otherwise provided in Section 1.2(a) be converted
into the right to receive in the aggregate 5,850,000
shares of Class A Common Stock, par value $.001 of AWT.
ARTICLE 2
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The articles of
-------------------------
incorporation of Merger Subsidiary in effect at the
Effective Time shall be the articles of incorporation of the
Surviving Corporation until amended in accordance with
applicable law, except that the name of the Surviving
Corporation shall be changed to "Professional Services
Group, Inc."
2.2 Bylaws. The bylaws of PSG in effect at the
------
Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
2.3 Directors and Officers. From and after the
----------------------
Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law,
(i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and
(ii) the officers of PSG at the Effective Time shall be the
officers of the Surviving Corporation.
3
ARTICLE 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be
-------------
construed in accordance with and governed by the law of the
State of Minnesota.
3.2 Counterparts; Effectiveness. This Agreement
---------------------------
may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
AIR & WATER TECHNOLOGIES CORPORATION
By____________________________
Title:
PSC PROFESSIONAL SERVICES GROUP, INC.
By____________________________
Title:
[MERGER SUBSIDIARY]
By____________________________
Title:
4
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
-----------------------------
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Terms defined in the
-----------
Investment Agreement (the "AGREEMENT") dated as of March [25],
1994 among Air & Water Technologies Corporation, a Delaware
corporation (the "COMPANY"), Compagnie Generale des Eaux, a
French corporation ("CGE"), Anjou International Company, a
Delaware corporation ("ANJOU", and together with CGE, the
"SHAREHOLDER") are used herein as therein defined. In addition,
the following terms, as used herein, have the following meanings:
"DEMAND REGISTRATION" means a Demand Registration as
defined in Section 2.1.
"PIGGYBACK REGISTRATION" means a Piggyback Registration
as defined in Section 2.2.
"REGISTRABLE SECURITIES" means shares of Common Stock,
Series A Preferred or the Company's 51/2% Convertible Subordinated
Notes, owned from time to time by the Shareholder and its
Affiliates, and any other securities issued by the Company in
exchange for or upon conversion of any such securities.
"UNDERWRITER" means a securities dealer who purchases
any Registrable Securities as principal and not as part of such
dealer's market-making activities.
"1933 ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration. (a) Shareholder may
-------------------
make up to four written requests for registration under the 1933
Act of all or part of its Registrable Securities (a "DEMAND
REGISTRATION"); provided that the Company shall not be obligated
--------
(i) to effect more than one Demand Registration in any 6-month
period, (ii) to effect a Demand Registration for less than five
percent of the outstanding Shares, (iii) to effect a Demand
Registration within 6 months of Shareholder selling any
Registrable Securities pursuant to a Piggyback Registration under
Section 2.2 or (iv) subject to Section 2.2, to effect a Demand
Registration if the Company shall have filed or announced its
intention to file a registration statement of an offering of
Shares for its own account and shall be taking steps in pursuance
thereof or if the Company shall have completed such a registered
offering within the immediately preceding 90 days. Such request
will specify the number of shares of Registrable Securities
proposed to be sold and will also specify the intended method of
disposition thereof. A registration will not count as a Demand
Registration until it has become effective.
(b) If Shareholder so elects, the offering of such
Registrable Securities pursuant to such Demand Registration shall
be in the form of an underwritten offering. Shareholder shall
select the book-running and other managing Underwriters in
connection with such offering and any additional investment
bankers and managers to be used in connection with the offering.
SECTION 2.2. Piggyback Registration. If the Company
----------------------
proposes to file a registration statement under the 1933 Act with
respect to an offering of Common Stock (i) for the Company's own
account (other than a registration statement on Form S-4 or S-8
or relating solely to securities issued pursuant to any present
or future restricted stock, stock option, stock purchase or
dividend reinvestment plan or other similar type of plan of the
Company which provides for the issuance of equity securities or
options or rights to purchase equity securities of the Company
(or any substitute form that may be adopted by the Commission)),
or (ii) for the account of any of its holders of Common Stock,
then the Company shall give written notice of such proposed
filing to Shareholder as soon as practicable (but in no event
less than 20 days before the anticipated filing date), and such
notice shall offer, subject to the terms and conditions hereof,
Shareholder the opportunity to register such Registrable
Securities as Shareholder may request on the same terms and
conditions as the Company's or such holders' shares (a "PIGGYBACK
REGISTRATION").
SECTION 2.3. Reduction of Offering. Notwithstanding
---------------------
anything contained herein, if the managing Underwriter or
Underwriters of an offering described in Section 2.1 or 2.2 shall
advise the Company that (i) the size of the offering that
Shareholder, the Company and any other Persons intend to make or
(ii) the kind of securities that Shareholder, the Company and
such other Persons intend to include in such offering are such
that the success of the offering would be materially and
adversely affected, then (A) if the size of the offering is the
2
basis of such Underwriter's advice, the amount of Registrable
Securities to be offered for the account of Shareholder shall be
reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing Underwriter or Underwriters;
provided that (x) in the case of a Demand Registration, the
--------
amount of Registrable Securities to be offered for the account of
the Shareholder shall be reduced only after the amount of
securities to be offered for the account of the Company and such
other Persons has been reduced to zero, and (y) in the case of a
Piggyback Registration, if securities are being offered for the
account of Persons other than the Company, then the proportion by
which the amount of such Registrable Securities intended to be
offered for the account of Shareholder is reduced shall not
exceed the proportion by which the amount of such securities
intended to be offered for the account of such other Persons is
reduced; and (B) if the combination of securities to be offered
is the basis of such Underwriter's advice, (x) the Registrable
Securities to be included in such offering shall be reduced as
described in clause (A) above (subject to the proviso in clause
(A)), or (y) in the case of a Piggyback Registration, if the
actions described in sub-clause (x) of this clause (B) would, in
the judgment of the managing Underwriter, be insufficient to
eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering,
such Registrable Securities will be excluded from such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever
--------------------
Shareholder requests that any Registrable Securities be
registered pursuant to Section 2.1 hereof, the Company will use
its best efforts to effect the registration of such Registrable
Securities as quickly as practicable, and in connection with any
such request:
(a) The Company will as expeditiously as possible
prepare and file with the Commission a registration
statement on any form for which the Company then
qualifies and which counsel for the Company shall deem
appropriate and available for the sale of the
Registrable Securities to be registered thereunder in
accordance with the intended method of distribution
thereof, and use best efforts to cause such filed
registration statement to become and remain effective
for a period of not less than 90 days; provided that if
--------
the Company shall furnish to Shareholder a certificate
3
signed by its Chairman, Chief Executive Officer or
Chief Financial Officer stating that in his or her good
faith judgment it would be detrimental or otherwise
disadvantageous to the Company or its shareholders for
such a registration statement to be filed, or, in the
case of an effective registration statement, for sales
to be effected thereunder, the Company shall have a
period of not more than 90 days within which to file
such registration statement measured from the date of
receipt of the request in accordance with Section 2.1
or, in the case of an effective registration statement,
the Company shall be entitled to require Shareholder to
refrain from selling Registrable Securities under such
registration statement for a period of up to 90 days.
If the Company furnishes a notice under this paragraph
at a time when a registration statement filed pursuant
to this Agreement is effective, the Company shall
extend the period during which such registration
statement shall be maintained effective as provided in
this Section 3.1(a) hereof by the number of days during
the period from and including the date of the giving of
notice under this paragraph to the date when sales
under the registration statement may recommence.
(b) The Company will, if requested, prior to
filing such registration statement or any amendment or
supplement thereto, furnish to Shareholder and each
managing Underwriter, if any, copies thereof, and
thereafter furnish to Shareholder and each such
Underwriter, if any, such number of copies of such
registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto
and documents incorporated by reference therein) and
the prospectus included in such registration statement
(including each preliminary prospectus) as Shareholder
or such Underwriter may reasonably request in order to
facilitate the sale of the Registrable Securities.
(c) After the filing of the registration
statement, the Company will promptly notify Shareholder
of any stop order issued or, to the knowledge of the
Company, threatened to be issued by the Commission and
take all necessary actions required to prevent the
entry of such stop order or to remove it if entered.
(d) The Company will use its reasonable best
efforts qualify the Registrable Securities for offer
and sale under such other securities or blue sky laws
of such jurisdictions in the United States as
Shareholder reasonably (in light of Shareholder's
4
intended plan of distribution) requests; provided that
--------
the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
paragraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) generally consent to service
of process in any such jurisdiction.
(e) The Company shall, as promptly as
practicable, notify Shareholder, at any time when a
prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, of
the occurrence of an event requiring the preparation of
a supplement or amendment to such registration
statement or prospectus so that, as thereafter
delivered to the purchasers of such Registrable
Securities, such registration statement or prospectus
will not contain an untrue statement of a material fact
or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading, and as promptly as
practicable make available to Shareholder and to the
Underwriters any such supplement or amendment.
Shareholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the
kind described in the preceding sentence, Shareholder
will forthwith discontinue the offer and sale of
Registrable Securities pursuant to the registration
statement covering such Registrable Securities until
receipt of the copies of such supplemented or amended
prospectus and, if so directed by the Company,
Shareholder will deliver to the Company all copies,
other than permanent file copies then in Shareholder's
possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such
notice. In the event the Company shall give such
notice, the Company shall extend the period during
which such registration statement shall be maintained
effective as provided in Section 3.1(a) hereof by the
number of days during the period from and including the
date of the giving of such notice to the date when the
Company shall make available to Shareholder such
supplemented or amended prospectus.
(f) The Company will enter into customary
agreements (including an underwriting agreement in
customary form and satisfactory in form and substance
to the Company in its reasonable judgment) and take
5
such other actions as are reasonably required in order
to expedite or facilitate the sale of such Registrable
Securities.
(g) The Company will furnish to Shareholder and
to each managing Underwriter, if any, a signed
counterpart, addressed to Shareholder and each
Underwriter, of (i) an opinion or opinions of counsel
to the Company and (ii) a comfort letter or comfort
letters from the Company's independent public
accountants, each in customary form and covering such
matters of the type customarily covered by opinions or
comfort letters delivered to such parties.
(h) The Company will make generally available to
its securityholders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months,
beginning within three months after the effective date
of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the
1933 Act and the rules and regulations of the
Commission thereunder.
(i) The Company will use its best efforts to
cause all such Registrable Securities to be listed on
each securities exchange on which similar securities
issued by the Company are then listed.
The Company may require Shareholder promptly to furnish
in writing to the Company such information regarding Shareholder,
the plan of distribution of the Registrable Securities and other
information as the Company may from time to time reasonably
request or as may be legally required in connection with such
registration.
SECTION 3.2. Registration Expenses. In connection
---------------------
with any Demand Registration or Piggyback Registration, the
Company shall pay the following expenses incurred in connection
with such registration (the "REGISTRATION EXPENSES"): (i) all
filing fees with the Commission and the National Association of
Securities Dealers, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing
expenses, (iv) the fees and expenses incurred in connection with
the listing of the Registrable Securities, (v) fees and expenses
of counsel and independent certified public accountants for the
Company (including the expenses of any comfort letters pursuant
to Section 3.1(g) hereof) and (vi) the reasonable fees and
expenses of any additional experts retained by the Company in
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connection with such registration. The Shareholder shall pay any
underwriting fees, discounts or commissions attributable to the
sale of Registrable Securities of the Shareholder and any
out-of-pocket expenses of Shareholder, including Shareholder's
counsel's fees and expenses. The Company shall pay internal
Company expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties).
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The
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Company agrees to indemnify and hold harmless Shareholder, its
officers and directors, and each Person, if any, who controls
Shareholder within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act from and against any and all
losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the
Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus (including documents
incorporated by reference therein), or caused by any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information
furnished in writing to the Company by or on behalf of
Shareholder expressly for use therein; provided that the
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foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of Shareholder if a
copy of the then current prospectus was not provided to purchaser
at or prior to the time of such purchase and such current
prospectus would have cured the defect giving rise to such loss,
claim, damage or liability or for any sales occurring after the
Company has informed Shareholder under Section 3.1(e) and prior
to the delivery by the Company of any supplement or amendment to
such prospectus. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of
Shareholder provided in this Section 4.1.
SECTION 4.2. Indemnification by Shareholder.
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Shareholder agrees to indemnify and hold harmless the Company,
its officers and directors, and each Person, if any, who controls
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the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the 1934 Act to the same extent
as the foregoing indemnity from the Company to Shareholder, but
only with reference to information furnished in writing by or on
behalf of Shareholder expressly for use in any registration
statement or prospectus relating to the Registrable Securities,
or any amendment or supplement thereto, or any preliminary
prospectus. Shareholder also agrees to indemnify and hold
harmless Underwriters of the Registrable Securities, their
officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceedings.
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In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2, such
Person (the "INDEMNIFIED PARTY") shall promptly notify the Person
against whom such indemnity may be sought (the "INDEMNIFYING
PARTY") in writing and the Indemnifying Party, upon the request
of the Indemnified Party, shall retain counsel reasonably
satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any
such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel would, in the
opinion of counsel reasonably acceptable to the Indemnifying
Party, be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying
Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition
to any local counsel) at any time for all such Indemnified
Parties, and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for
the Indemnified Parties, such firm shall be designated in writing
by the Indemnified Parties. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent, or if there be
a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and
against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
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SECTION 4.4. Contribution. If the indemnification
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provided for in this Article IV is unavailable to the Indemnified
Parties in respect of any losses, claims, damages or liabilities
referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company, Shareholder and the Underwriters from
the offering of the securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative
fault of the Company, Shareholder and the Underwriters in
connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits
received by the Company, Shareholder and the Underwriters shall
be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but
before deducting expenses) received by each of the Company and
Shareholder and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus, bear to the aggregate
public offering price of the securities. The relative fault of
the Company, Shareholder and the Underwriters shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by such party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and Shareholder agree that it would not be
just and equitable if contribution pursuant to this Section 4.4
were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages or liabilities referred
to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such
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Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission, and Shareholder shall not be required to contribute any
amount in excess of the amount by which the net proceeds of the
offering (before deducting expenses) received by Shareholder
exceeds the amount of any damages which Shareholder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten
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Registrations. No Person may participate in any underwritten
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registered offering contemplated hereunder unless such Person (a)
agrees to sell its securities on the basis provided in any
underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements and these Registration
Rights.
SECTION 5.2. Rule 144. The Company covenants that it
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will use best efforts to file any reports required to be filed by
it under the 1933 Act and the 1934 Act and that it will take such
further action as Shareholder may reasonably request, all to the
extent required from time to time to enable Shareholder to sell
Registrable Securities without registration under the 1933 Act
within the limitation of the exemptions provided by Rule 144
under the 1933 Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of Shareholder, the Company will
deliver to Shareholder a written statement as to whether it has
complied with such requirements.
SECTION 5.3. Holdback Agreements. (a) Shareholder
-------------------
agrees not to offer, sell, contract to sell or otherwise dispose
of any Registrable Securities, or any securities convertible into
or exchangeable or exercisable for such securities, during the 14
days prior to, and during the 90 day period beginning on, the
effective date of any registration statement registering the
Registrable Securities other than the Registrable Securities to
be sold pursuant to such registration statement.
(b) The Company agrees not to offer, sell, contract to
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sell or otherwise dispose of any securities similar to the
Registrable Securities to be sold pursuant hereto, or any
securities convertible into or exchangeable or exercisable for
such securities, during the 14 days prior to, and during the 90
day period beginning on, the effective date of any registration
statement registering the Registrable Securities other than any
shares of Common Stock sold upon the exercise of an option or
warrant or the conversion of a security outstanding at such date
or pursuant to any Company Stock Plan or issued by the Company as
consideration for an acquisition.
SECTION 5.4. Restricted Sales. Nothing in this
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Agreement shall be construed to permit any sales or other
disposition of Registrable Securities, the sale or disposition of
which is prohibited under the terms of the Investment Agreement.
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