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EXHIBIT 10.21
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AGREEMENT AND PLAN OF REORGANIZATION
by and among
LYONNAISE AMERICAN HOLDING, INC.
GESTRA CORPORATION, N.V.
and
RUSH CREEK LLC
AQUA-CHEM, INC.
A-C ACQUISITION CORP.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DATE: July 31, 1997
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EXHIBIT 10.21
TABLE OF CONTENTS
Section 1. Merger of Aqua-Chem with and into Newco.........................................................2
1.1 The Merger......................................................................................2
1.2 Conversion of the Shares. .....................................................................2
1.3 Closing.........................................................................................2
Section 2. Representations and Warranties of the Sellers...................................................3
2.1 Organization and Standing of Aqua-Chem..........................................................3
2.2 Subsidiaries....................................................................................4
2.3 Capitalization and Share Ownership..............................................................4
2.4 Corporate Approval and Performance..............................................................5
2.5 Financial Statements............................................................................5
2.6 Undisclosed Liabilities.........................................................................6
2.7 Title to Properties.............................................................................6
2.8 Tax Matters.....................................................................................7
2.9 Contracts.......................................................................................8
2.10 Consents and Approvals..........................................................................8
2.11 Investment Representation.......................................................................8
Section 3. Representations and Warranties of the Purchaser.................................................8
3.1 Approval and Performance........................................................................8
3.2 Consents and Approvals..........................................................................9
3.3 Solvency........................................................................................9
Section 4. Further Agreements of the Parties..............................................................10
4.1 Access and Information.........................................................................10
4.2 Conduct of Business Pending Closing............................................................10
4.3 Payment of Transaction-Related Taxes...........................................................12
4.4 Taxes..........................................................................................12
4.5 Non-Competition................................................................................15
4.5.1 LAH Non-compete.......................................................................15
4.5.2 Gestra Non-Compete....................................................................16
4.5.3 Miscellaneous Matters.................................................................16
4.6 Further Obligations of the Parties.............................................................17
4.7 The Sellers' Due Diligence.....................................................................17
4.8 Return of Information..........................................................................17
4.9 Loan Agreement and Performance Bonds...........................................................18
Section 5. Conditions Precedent to the Obligation of the Parties..........................................18
5.1 Conditions to Obligations of the Sellers, Aqua-Chem, Newco and the Purchaser...................18
(a) Injunction............................................................................19
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EXHIBIT 10.21
(b) HSR...................................................................................19
(c) Financing.............................................................................19
5.2 Conditions to the Obligations of the Sellers...................................................19
(a) Representations and Warranties True...................................................19
(b) Performance...........................................................................19
(c) Certificates of the Purchaser's and Newco's Officers..................................19
(d) Opinion of the Purchaser's Counsel....................................................20
5.3 Conditions to the Obligations of the Purchaser and Newco.......................................20
(a) Representations and Warranties True...................................................20
(b) Disclosure Schedule...................................................................20
(c) Performance...........................................................................20
(d) Opinion of the Sellers' Counsel.......................................................21
(e) Gestra Assurances.....................................................................21
(f) Certificates of the Sellers' Officers.................................................21
Section 6. General Indemnification; Survival of Representations and Warranties............................21
6.1 The Sellers' General Indemnity.................................................................21
(a) Knowledge of the Management Group.....................................................22
Insurance Recoveries..................................................................22
(c) Minimum Claim.........................................................................23
(d) Maximum Liability.....................................................................23
(e) Exceptions to Knowledge, Minimum Claim and Maximum Liability
Provisions............................................................................23
6.2 The Purchaser's and Newco's General Indemnity..................................................24
(a) Knowledge of the Sellers..............................................................24
(b) Insurance Recoveries..................................................................24
(c) Minimum Claim.........................................................................25
(d) Maximum Liability.....................................................................25
(e) Exceptions to Knowledge, Minimum Claim and Maximum Liability
Provisions............................................................................25
6.3 Survival of Representations and Warranties.....................................................25
6.4 General Indemnity Procedures...................................................................26
6.5 Termination of General Indemnity...............................................................27
Section 7. [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT
TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR
SECTION 240.24b2]
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EXHIBIT 10.21
Section 8. [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION 240.24B2]
Section 9. Priority and Procedures for Satisfaction of General Indemnity, [THIS PROVISION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION 240.24B2] Obligations........................29
9.1 Upon Redemption of Series A and Series B Preferred Stock.......................................29
9.2 Subsequent to Redemption of Series A and Series B Preferred Stock..............................30
Section 10. Termination....................................................................................32
Section 11. Miscellaneous..................................................................................33
11.1 Expenses.......................................................................................33
11.2 Public Disclosure..............................................................................33
11.3 Governing Law..................................................................................34
11.4 Notices........................................................................................34
11.5 Section Headings...............................................................................35
11.6 Counterparts...................................................................................36
11.7 Entire Agreement; Modification.................................................................36
11.8 Exclusivity of Representations and Warranties and Indemnification Provision;
Relationship Between the Parties...............................................................36
11.9 Post-Closing Access............................................................................37
11.10 Assignment.....................................................................................37
11.11 Waiver of Punitive and Other Damages...........................................................37
11.12 Audit Rights...................................................................................28
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EXHIBIT 10.21
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made and entered into as of the
31st day of July, 1997, by and among LYONNAISE AMERICAN HOLDING, INC., a
Delaware corporation (hereinafter referred to as, "LAH"), and GESTRA CORPORATION
N.V., a company organized in the Netherlands Antilles (hereinafter referred to
as, "Gestra"), RUSH CREEK LLC, a Wisconsin limited liability company
(hereinafter referred to as, the "Purchaser"), AQUA-CHEM, INC., a Delaware
corporation (hereinafter referred to as, "Aqua-Chem"), A-C ACQUISITION CORP., a
Delaware corporation (hereinafter referred to as "Newco"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(hereinafter referred to as "▇▇. ▇▇▇▇▇▇").
WITNESSETH:
WHEREAS, LAH and Gestra (hereinafter sometimes collectively referred to
as, the "Sellers") own all the issued and outstanding shares of capital stock of
Aqua-Chem,
WHEREAS, ▇▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ are the senior officers of Aqua-Chem (hereinafter referred to
as the "Management Group") and are members of the Purchaser,
WHEREAS, Newco is a wholly-owned subsidiary of the Purchaser which has
been organized for the purposes of consummating the transactions contemplated by
this Agreement, and
WHEREAS, the Purchaser, the Sellers, Newco and Aqua-Chem desire that
Aqua-Chem be merged with and into Newco in accordance with the laws of Delaware
and on the terms and conditions hereinafter set forth in this Agreement
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EXHIBIT 10.21
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree
as follows:
SECTION 1. MERGER OF AQUA-CHEM WITH AND INTO NEWCO.
1.1 THE MERGER. At the Closing, as hereinafter defined, and subject to
the terms and conditions set forth in this Agreement and as more fully set forth
in the Certificate of Merger (the "Certificate of Merger") and Agreement and
Plan of Merger, both attached hereto as Exhibit A Aqua-Chem shall, pursuant to
the laws of Delaware, be merged with and into Newco, which shall be the
surviving corporation (the "Merger").
1.2 CONVERSION OF THE SHARES. Upon the Merger becoming effective, each
of the One Thousand Three Hundred shares of Aqua-Chem Common Stock, par value
One Dollar ($1.00) per share (the "Shares"), which constitute all of the issued
and outstanding stock of Aqua-Chem, shall be converted into (a) the right to
receive Thirty Eight Thousand Four Sixty One and 54/100 Dollars ($38,461.54) by
certified or bank cashier's check in (or wire transfer of) immediately available
federal funds, plus (b) one-tenth (1/10) of one(s) share of shares of Newco
Series A Preferred Stock, plus (c) one-tenth (1/10) of one (1) share of Newco
Series B Preferred Stock, both as described in Exhibit B attached hereto
(hereinafter referred to as the "Series A Preferred Stock" and the "Series B
Preferred Stock").
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ S.C., 2100
Bank ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. Central Daylight Time
on the fifth business day after all conditions precedent to the Closing have
been satisfied or waived, but no later than July 31, 1997. The actual date and
time of closing are herein referred to as the "Closing".
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EXHIBIT 10.21
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. For purposes
of this Agreement, indemnities, covenants, representations and warranties
expressly given or expressly made separately by LAH, with respect to matters
pertaining solely to LAH and/or the LAH Related Parties (as hereinafter
defined), or Gestra, with respect to matters pertaining solely to Gestra and/or
the Gestra Related Parties, as the case may be, shall be deemed given or made
only by, and shall be actionable only against, the entity making the warranty or
representation. As to indemnities, covenants, representations and warranties
given or made severally but not jointly by the Sellers, LAH and Gestra shall be
responsible for 80% and 20%, respectively, of any amounts that may become due
and payable under this Agreement as a result of such indemnities, covenants,
warranties and representations, regardless of the reason such amounts have
become due. Except as set forth on the Disclosure Schedule to be delivered by
the Sellers to the Purchaser and Newco prior to the Closing, the Sellers hereby
severally and not jointly represent, warrant and covenant to the Purchaser,
Newco and Aqua-Chem as follows:
2.1 ORGANIZATION AND STANDING OF AQUA-CHEM. Aqua-Chem is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as now owned and conducted.
True and correct copies of Aqua-Chem's Certificate of Incorporation and all
amendments thereto and of Aqua-Chem's By-laws as amended to date will be
included in Section 2.1 of the Disclosure Schedule.
2.2 SUBSIDIARIES. Section 2.2 of the Disclosure Schedule contains a
list of all entities in which Aqua-Chem has an equity interest (the
"Subsidiaries"). Each Subsidiary is a corporation duly incorporated or
organized, validly existing and in good standing under the laws of its
respective
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jurisdiction of incorporation or organization and has the corporate or
partnership power and authority to own its properties and assets and to carry on
its business as now owned and conducted.
2.3 CAPITALIZATION AND SHARE OWNERSHIP.
(a) The aggregate number of shares of capital stock which
Aqua-Chem has the authority to issue is Five Thousand (5,000) shares of
Common Stock par value One Dollar ($1.00) per share, of which One
Thousand Three Hundred (1,300) shares have been validly issued, are
presently outstanding, are fully paid and nonassessable and are owned
beneficially and of record by Sellers. Aqua-Chem has no shares of its
capital stock held as treasury stock. LAH warrants and represents that
it owns beneficially and of record One Thousand Forty (1,040) of the
Shares and that at and immediately before the Closing it will have good
and valid title to the Shares owned by it, free and clear of all
pledges, mortgages, security interests, liens, encumbrances, equities
or claims ("Liens"). Gestra warrants and represents that it owns
beneficially and of record Two Hundred Sixty (260) of the Shares and
that at and immediately before the Closing it will have good and valid
title to the Shares owned by it, free and clear of all Liens.
(b) There are no existing options, calls, commitments or
agreements of any character relating to the capital stock of Aqua-Chem
or any of its Subsidiaries or any securities or obligations convertible
into or exchangeable for, or giving any person any right to subscribe
for or acquire from Aqua-Chem or any of its Subsidiaries, any shares of
capital stock of Aqua-Chem or any of its Subsidiaries. Except as will
be set forth in Section 2.3 of the Disclosure Schedule, all of the
outstanding securities of each Subsidiary are owned beneficially and of
record by Aqua-Chem or another Subsidiary, free and clear of all Liens.
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2.4 CORPORATE APPROVAL AND PERFORMANCE. Each of the Sellers separately
warrants and represents that it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Sellers separately warrants and represents that the execution, delivery and
performance of this Agreement and the merger of Aqua-Chem with and into Newco
pursuant to this Agreement have been duly approved by all requisite corporate
action of such Seller. The execution, delivery and performance of this Agreement
and the merger of Aqua-Chem with and into Newco pursuant to this Agreement have
been duly approved by all requisite corporate action of Aqua-Chem, and this
Agreement constitutes the valid and legally binding agreement of Aqua-Chem
enforceable in accordance with its terms.. Each of the Sellers separately
warrants and represents that the performance of this Agreement by such Seller
will not result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any law, indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which such Seller is a party or by
which such Seller is bound or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over such Seller or the property
of such Seller. Each of the Sellers separately warrants and represents that this
Agreement constitutes the valid and legally binding agreement of such Seller
enforceable in accordance with its terms.
2.5 FINANCIAL STATEMENTS. Section 2.5 of the Disclosure Schedule
contains true and correct copies of Aqua-Chem's consolidated balance sheets as
of December 31, 1994, 1995 and 1996 and the related consolidated statements of
operations for the years then ended certified by KPMG Peat Marwick. Such balance
sheets and statements of operations have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered by such statements and present fairly the
financial position of Aqua-Chem and Subsidiaries
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at such dates and the results of their operations for the years then ended in
conformity with such principles.
2.6 UNDISCLOSED LIABILITIES. Except as set forth or reserved against on
Aqua-Chem's December 31, 1996 balance sheet included in Section 2.5 of the
Disclosure Schedule (hereinafter sometimes referred to as the "1996 Balance
Sheet") or incurred in the ordinary course of business since December 31, 1996,
Aqua-Chem has no liabilities, whether accrued, absolute, contingent or
otherwise, which are required to be so set forth or reserved against in
accordance with generally accepted accounting principles.
2.7 TITLE TO PROPERTIES. Aqua-Chem and its Subsidiaries have good and
marketable title to all of their respective assets, real and personal, purported
to be owned by such entities and used in their businesses or reflected in the
1996 Balance Sheet (except such assets as are licensed, leased or have since
been sold or otherwise disposed of in the ordinary course of business subsequent
to December 31, 1996), in each case subject to no Liens whatsoever, except for
(i) Liens shown on the 1996 Balance Sheet, (ii) Liens for taxes and assessments
not yet due and payable and (iii) minor imperfections of title and encumbrances,
if any, which do not materially detract from the value of the properties in view
of their present use or materially impair the operations of Aqua-Chem and/or its
Subsidiaries. To the Sellers' knowledge, all leases under which Aqua-Chem or any
of its Subsidiaries is a lessee of real or personal property are valid,
effective and enforceable in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws from time to time in effect which affect creditors'
rights generally and by legal and equitable limitations upon the availability of
specific performance as a
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remedy. To the Sellers' knowledge, no material default exists under any
lease to which Aqua-Chem or any of its Subsidiaries are a party.
2.8 TAX MATTERS.
(a) All Federal, state and local income tax returns, and all
other tax returns, required by law to be filed as of the Closing Date
by, or on behalf of, or in which is required to be reported the income,
gains, losses, deductions or credits of, Aqua-Chem and/or any of its
Subsidiaries and/or the affiliated, combined, consolidated or unitary
group of corporations of which Aqua-Chem is the common parent or a
member have been duly filed (or extended as permitted under applicable
tax laws), and all federal, state, local and foreign taxes, interest
and penalties ("Taxes") reflected on such tax returns, or which are
claimed by any taxing authority to be due and payable, have been paid
as of the Closing Date, other than taxes, assessments, fees and charges
which have been reserved for on the 1996 Balance Sheet or which are
being contested by Aqua-Chem in good faith using appropriate
procedures.
(b) There are no pending audits, actions, proceedings,
investigations, disputes or claims with respect to any Taxes payable by
or asserted against Aqua-Chem or any Subsidiary or any affiliated group
of which any of them are a member and, as such, responsible for any
Taxes. Neither Aqua-Chem nor any of the Subsidiaries has received
written notice from any taxing authority of its intent to examine or
audit any tax returns of Aqua-Chem or any Subsidiary.
(c) The reserve for taxes set forth on the 1996 Balance Sheet
is sufficient to cover any and all Taxes that may be assessed against
Aqua-Chem and/or any of its Subsidiaries in the future relating to any
tax period ending on or before December 31, 1996.
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2.9 CONTRACTS. Except for the contracts to be described in Section 2.9
of the Disclosure Schedule, neither Aqua-Chem nor any of its Subsidiaries are a
party to any contract or agreement, whether oral or written, with either of the
Sellers or any of their respective affiliates.
2.10 CONSENTS AND APPROVALS. The only authorizations, consents,
approvals or notices required of the Sellers to be obtained or given or waiting
periods required to expire in connection with or as the result of the Merger
pursuant to this Agreement will be as set forth in Section 2.10 of the
Disclosure Schedule.
2.11 INVESTMENT REPRESENTATION. Each of the Sellers agrees that it is
acquiring the Series A and Series B Preferred Stock for its own account for
investment and not with a view to the offer, sale, transfer or distribution
thereof, that it understands the nature and effect of such representation and
agreement and that it will not sell, offer to sell or transfer any of the Series
A and Series B Preferred Stock so acquired by it except in full compliance with
the Securities Act of 1933 and any and all applicable laws, rules or regulations
of any State or other governmental authority.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND NEWCO.
The Purchaser and Newco represent and warrant to the Sellers as follows:
3.1 APPROVAL AND PERFORMANCE. The Purchaser is duly organized, validly
existing and in current status under the laws of the State of Wisconsin and has
the power and authority to enter into this Agreement and perform its obligations
hereunder. Newco is duly incorporated, validly existing and in current status
under the laws of the State of Delaware and has the power and authority to enter
into this Agreement and perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly approved by all
requisite action of the Purchaser and Newco and the Purchaser and Newco have
full right, power and authority to enter into
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this Agreement and to otherwise perform all of its obligations under this
Agreement. The performance of this Agreement, by the Purchaser and Newco will
not result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any law, indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Purchaser or Newco is a
party or by which the Purchaser or Newco are bound, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Purchaser or Newco or the property of the Purchaser or Newco. This Agreement
constitutes the valid and legally binding agreement of the Purchaser and Newco
enforceable in accordance with its terms.
3.2 CONSENTS AND APPROVALS. Except as set forth in Section 5.1(b) of
this Agreement, there are no authorizations, consents, approvals or notices
required of the Purchaser to be obtained or given or waiting periods required to
expire in connection with or as the result of the purchase of the Shares
pursuant to this Agreement.
3.3 SOLVENCY. Immediately after giving effect to the transactions
contemplated by this Agreement, each of the Purchaser, Newco and the
Subsidiaries shall (a) be able to pay their respective debts as they become due;
(b) own property which has a fair saleable value greater than the amounts
required to pay their respective debts (including a reasonable estimate of the
amount of all contingent liabilities); and (c) have adequate capital to carry on
their respective businesses. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement with the intent to hinder, delay or defraud either present or
future creditors of the Purchaser, Aqua-Chem, Newco or the Subsidiaries.
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SECTION 4. FURTHER AGREEMENTS OF THE PARTIES.
4.1 ACCESS AND INFORMATION. ▇▇. ▇▇▇▇▇▇ and the Sellers shall use their
reasonable efforts to cause Aqua-Chem to furnish to the Purchaser and Newco and
their representatives, including their accountants, lenders and investors, full
access at all reasonable times throughout the period prior to the Closing to the
properties, books, contracts, commitments and records of Aqua-Chem and its
Subsidiaries and to furnish the Purchaser and Newco with all such information
concerning the business of Aqua-Chem and its Subsidiaries as the Purchaser and
Newco may reasonably require. Any such access provided to the Purchaser shall
not unreasonably interfere with the conduct of the business of Aqua-Chem or the
Sellers' interests therein. All such information obtained by the Purchaser,
Newco or their accountants, lenders and investors shall be held in confidence
and used only for the purposes of consummating the transactions contemplated by
this Agreement.
4.2 CONDUCT OF BUSINESS PENDING CLOSING. Except as permitted by the
Agreement or otherwise consented to in writing by the Purchaser and Newco, ▇▇.
▇▇▇▇▇▇ and the Sellers agree that pending the Closing:
(a) The Sellers and ▇▇. ▇▇▇▇▇▇ will use their reasonable
efforts to cause Aqua-Chem and each of its Subsidiaries to conduct
their operations in the ordinary course of business and will not cause
or permit Aqua-Chem or any of its Subsidiaries to: (i) incur any
indebtedness for borrowed money, assume, guarantee, endorse or
otherwise become responsible for the obligations of any other
individual, firm or corporation, or make any loans or advances to any
individual, firm or corporation, in each case other than in the
ordinary course of business; (ii) mortgage, pledge or otherwise
voluntarily encumber any of
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its properties or assets; (iii) sell or transfer any of its properties
or assets or cancel, release or assign any indebtedness owed to them or
any claims held by them, other than in the ordinary course of their
respective businesses; or (iv) make any investment of a capital nature
either by purchase of stock or securities, contributions to capital,
property transfer or otherwise, or by the purchase of any property or
assets of any other individual, firm or corporation, other than in the
ordinary course of their respective businesses.
(b) No change will be made in the certificates of
incorporation or the by-laws of Aqua-Chem or its Subsidiaries.
(c) No change will be made in the authorized or issued capital
stock of Aqua-Chem or its Subsidiaries, nor will any options, calls or
commitments for or obligations convertible into or exchangeable for or
giving any person any right to subscribe for or acquire any shares of
such stock be issued or granted or agreed to be issued or granted.
(d) No dividend or other distribution or payment will be
declared or made in respect of the Shares.
(e) No increase will be made in the compensation or benefits
payable or to become payable by Aqua-Chem or any Subsidiary to any
shareholder, director or officer.
(f) No contract, lease or commitment will be entered into,
terminated or modified by or on behalf of Aqua-Chem or its
Subsidiaries, other than contracts entered into, terminated or modified
in the normal course of their respective business.
(g) The Sellers and ▇▇. ▇▇▇▇▇▇ will use their reasonable
efforts to cause Aqua-Chem and its Subsidiaries (without making any
commitments on behalf of the Purchaser unless otherwise agreed to in
advance by the Purchaser and Newco) to preserve their
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business organization intact, to keep available to Aqua-Chem and its
Subsidiaries the services of their present officers and employees and
to preserve for Aqua-Chem and its Subsidiaries the good will of their
suppliers, customers and others having business relations with them.
(h) The Sellers and ▇▇. ▇▇▇▇▇▇ will use their reasonable
efforts not to cause or permit any insurance policy presently covering
Aqua-Chem obtained through LAH to be canceled or terminated or any of
the coverage thereunder to lapse.
4.3 PAYMENT OF TRANSACTION-RELATED TAXES. All transfer, sales, use,
income and similar taxes arising on account of the Merger shall be paid by the
parties as set forth in the Tax Reporting and Indemnification Agreement of even
date herewith, the terms of which by this reference are incorporated herein.
4.4 TAXES.
(a) LAH shall include Aqua-Chem and its Subsidiaries in its
U.S. consolidated federal income tax return for its tax period that
includes the Closing Date and shall also be responsible for the timely
filing of such tax return. The portion of Aqua-Chem's 1997 income,
gains, losses, deductions and credits that are included on such
consolidated return shall be determined under Treas. Reg. Section
1.1502-76(b) by closing the books of Aqua-Chem as of, and determining
the actual amount of Aqua-Chem's income, gains, losses, deductions and
credits through, the Closing Date. After the Closing Date, Aqua-Chem
shall prepare and furnish to LAH on a timely basis, in a manner
consistent with past practice (and without charge to LAH), such tax
information as is reasonably required by LAH (including, without
limitation, U.S. federal income tax information similar to that
previously furnished
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by Aqua-Chem to LAH for tax years ending on or before December 31,
1995) to prepare consolidated, combined or unitary federal, state or
local income tax returns and estimated tax returns that include
Aqua-Chem or any of its Subsidiaries for the tax period ending on the
Closing Date and for the tax period ending on December 31, 1996. The
Sellers shall control the defense of any dispute relating to Taxes of
Aqua-Chem or its Subsidiaries that (a) relate to LAH's consolidated
U.S. federal income tax return or (b) otherwise relate to any tax
period ending on or before the date of Closing.
(b) Except as set forth in Section 4.4(a) above, the Purchaser
and Aqua-Chem shall be responsible for the filing of all tax returns of
Aqua-Chem and its Subsidiaries that are due after the date of Closing
and shall control the defense of any dispute relating to Taxes required
to be reflected on such tax returns.
(c) After the Closing Date, the Purchaser shall cause
Aqua-Chem and its successors to cooperate with the Sellers, including,
without limitation, providing reasonable access to Aqua-Chem's books,
records and other information to the Sellers, their representatives or
agents, for use in preparation of the Sellers' tax returns and in
connection with any examination of the Sellers' tax returns for any
open year prior to the date of Closing until any such year has been
closed. Such cooperation shall also include the retention of tax
records and information and the naming of employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. In this regard,
Aqua-Chem and the Purchaser agree to retain all books and records with
respect to tax matters pertinent to Aqua-Chem and its Subsidiaries
relating to any tax period that includes or ends on or prior to the
date of Closing until such time as the applicable
13
18
EXHIBIT 10.21
statutes of limitations have expired and abide by all record retention
agreements entered into with any taxing authority of which Aqua-Chem
has received written notice.
(d) The share of taxes of LAH, Aqua-Chem and its Subsidiaries
and any other members of the LAH affiliated group which join in the
filing of a U.S. consolidated federal income tax return for the tax
year ending December 31, 1996 and Aqua-Chem's tax period ending on the
Closing Date and included within LAH's tax year ending December 31,
1997 shall be determined under the Tax Allocation Agreement dated June
25, 1984, including the "Lyonnaise-American Holding Co. and
Subsidiaries Changes to Tax Allocation Agreement to reflect Alternative
Minimum Tax and Environmental Tax" (hereinafter referred to as the "Tax
Allocation Agreement"). The determination of each party's share of
taxes (including alternative minimum tax), credits, reimbursements etc.
under the Tax Allocation Agreement shall be consistent with the manner
in which the parties' shares of taxes were determined for periods
ending on or prior to December 31, 1995, and Aqua-Chem, each of the
Subsidiaries and LAH shall make payments of their respective shares of
taxes at the time and in the manner set forth in the Tax Allocation
Agreement. After the Closing Date, neither LAH nor Aqua-Chem and its
Subsidiaries shall have any further rights or obligations under the Tax
Allocation Agreement; provided, however, that LAH and Aqua-Chem and its
Subsidiaries shall remain obligated under the Tax Allocation Agreement
to make payments for their respective shares of taxes, credits,
reimbursements, etc. for the tax period that includes the Closing Date
and for the tax period ending December 31, 1996 as described in this
paragraph.
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19
EXHIBIT 10.21
(e) If Aqua-Chem or any of its Subsidiaries realize any tax
savings for any tax periods ending after the Closing Date whether by
way of deduction, credit, reduction in income or gain, offset,
allocation or otherwise (hereinafter referred to as "Tax Savings") as
result of any adjustment to the taxable income, loss or credits of
Aqua-Chem or any of its Subsidiaries for any tax periods ending on or
prior to the Closing Date ("Pre-Closing Tax Adjustments"), and such Tax
Savings are not otherwise taken into account as a reduction in any
indemnity payable to Aqua-Chem or its Subsidiaries hereunder, Aqua-Chem
shall promptly pay to the Sellers the amount of such Tax Savings during
the year in which the Tax Savings are actually realized.
(f) LAH agrees that it shall not make an election under Treas.
Reg. Section 1.1502-20(g) to reattribute net operating losses of
Aqua-Chem to LAH and shall reimburse Aqua-Chem for any of its net
operating losses used by LAH for its tax year ending December 31, 1997
in accordance with the Tax Allocation Agreement.
4.5 NON-COMPETITION.
4.5.1 LAH NON-COMPETE. For a period of five years from and after the
Closing Date, neither LAH nor any of its affiliates, including, without
limitation, any parent or subsidiary companies or other companies under common
control with LAH (hereinafter referred to as "LAH Related Parties"), will
participate or engage, directly or indirectly, anywhere throughout the world in
any business in which it is not already engaged as currently conducted (as will
be described in Section 4.5 of the Disclosure Schedule) in competition with the
▇▇▇▇▇▇▇-▇▇▇▇▇▇ and/or Industrial Combustion businesses of Aqua-Chem as currently
conducted. For a period of three years from and after the Closing Date, neither
LAH nor any of its LAH Related Parties will participate or engage,
15
20
EXHIBIT 10.21
directly or indirectly, anywhere throughout the world in any business in which
it is not already engaged as currently conducted (as will be described in
Section 4.5 of the Disclosure Schedule) in competition with the Water
Technologies business of Aqua-Chem as currently conducted; provided, however,
that the foregoing restriction shall not prohibit LAH or any LAH Related
Parties, from acquiring a business with existing interests in this sector.
4.5.2 GESTRA NON-COMPETE. For a period of five years from and after the
Closing Date, neither Gestra nor any of its affiliates, including, without
limitation, any parent or subsidiary companies or other companies under common
control with Gestra (hereinafter referred to as "Gestra Related Parties"), will
participate or engage, directly or indirectly, anywhere throughout the world
other than in the United States in any business in which it is not already
engaged as currently conducted (as will be described in Section 4.5 of the
Disclosure Schedule) in competition with the Water Technologies, ▇▇▇▇▇▇▇-▇▇▇▇▇▇,
and/or Industrial Combustion businesses of Aqua-Chem as currently conducted.
4.5.3 MISCELLANEOUS MATTERS. The Sellers acknowledge and agree that (a)
Aqua-Chem's businesses are international in scope, (b) the foregoing
restrictions are reasonable and necessary to protect the goodwill of Aqua-Chem,
(c) in addition to any other remedies available to it, Aqua-Chem shall be
entitled to injunctive relief without the posting of a bond or other collateral,
(d) neither LAH nor Gestra shall oppose the granting of such an injunction and
(e) in the event that any of the foregoing restrictions should be determined by
a final non-appealable order of a court of competent jurisdiction to be overly
broad and, therefore, unenforceable, such restrictions without further action of
the parties shall be deemed to be amended to the extent necessary to render such
restrictions enforceable and, as so amended, shall be enforced. The parties
expressly recognize that lost profits
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21
EXHIBIT 10.21
from business opportunities missed as a result of a Seller's violation of the
covenants in Section 4.5.1 or 4.5.2 shall constitute direct damages and, under
such circumstances, are not prohibited as damages by reason of Section 11.11 of
this Agreement.
4.6 FURTHER OBLIGATIONS OF THE PARTIES. The parties shall apply for and
diligently prosecute all applications for, and shall use their best efforts
promptly to obtain, all consents, authorizations and approvals from such
governmental authorities as shall be necessary to permit the consummation of the
transactions contemplated by this Agreement and shall use their best efforts to
bring about the satisfaction as soon as practicable of all the conditions to
Closing contained in Section 5 of this Agreement, including obtaining the
required financing, and to effect the consummation of the transactions
contemplated by this Agreement.
4.7 THE SELLERS' DUE DILIGENCE. ▇▇. ▇▇▇▇▇▇ shall cooperate with the
Sellers to enable the Sellers to perform their due diligence during the period
prior to the date of Closing.
4.8 RETURN OF INFORMATION. In the event the Closing under this
Agreement does not occur for any reason, the Purchaser and Newco shall
immediately return to Aqua-Chem any and all information regarding Aqua-Chem, its
business and prospects and any information about the Sellers obtained by the
Purchaser, Newco and their representatives in the course of investigating the
Merger, negotiating this Agreement or delivered to them pursuant to this
Agreement. In view of the proprietary nature of the information referred to in
this Section 4.8, the parties acknowledge and agree that there is no adequate
remedy at law in the event of breach of this Agreement by the Purchaser or
Newco, and that, therefore, in the event of any breach, the Sellers shall, in
addition to any other remedies available to them, be entitled to obtain an
immediate injunction, without the
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EXHIBIT 10.21
posting of a bond or other collateral, ordering the Purchaser and Newco to
return any and all such information.
4.9 LOAN AGREEMENT AND PERFORMANCE BONDS. On the date of Closing, the
Purchaser and Newco shall cause Aqua-Chem to pay off all amounts owed to its
existing lenders pursuant to the Loan Agreement between Aqua-Chem and such
lenders to close this transaction. The Purchaser, Newco and Aqua-Chem shall use
their best efforts to cause LAH and the LAH Related Parties to be released (and
it shall be a condition to the obligations of the Sellers to close this
transaction that LAH and all related parties be released) from any guarantees or
backing in any way of obligations of Aqua-Chem or any of its subsidiaries,
including performance bonds outstanding on the date of Closing and, in the event
they are unable to obtain a release and Sellers waive their condition to
Closing, the Purchaser, Newco and Aqua-Chem, from and after the date of Closing,
shall indemnify and hold harmless LAH and the LAH Related Parties from any and
all liabilities, damages and expenses (including reasonable attorneys' fees)
incurred by any of them in connection with such performance bonds or other
obligations. The Purchaser, Newco and Aqua-Chem, prior to the date of the
Closing, shall take any and all actions necessary to cause the LAH guarantee of
performance bonds to be terminated as to any performance bonds to be issued on
or after the date of Closing.
SECTION 5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PARTIES.
5.1 CONDITIONS TO OBLIGATIONS OF THE SELLERS, AQUA-CHEM, NEWCO AND THE
PURCHASER.
The obligations set forth herein of the Sellers, Aqua-Chem, Newco and the
Purchaser to consummate the transactions contemplated by this Agreement at the
Closing are subject to the fulfillment (or waiver), at or prior to the Closing,
of the following conditions:
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23
EXHIBIT 10.21
(a) Injunction. There shall not be in effect any injunction or
other order issued by a court of competent jurisdiction restraining or
prohibiting the consummation of the transactions contemplated by this
Agreement.
(b) HSR. All applicable waiting periods under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended,
applicable to the transactions contemplated by this Agreement shall
have terminated or expired.
(c) Financing. The Purchaser, Newco and Aqua-Chem shall have
obtained equity and debt financing in any amount sufficient to enable
them to consummate the transactions contemplated by this Agreement and
to provide Newco with working capital.
5.2 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS. The obligations
set forth herein of the Sellers to consummate the transactions contemplated
by this Agreement at the Closing are subject to the fulfillment (or waiver) at
or prior to the Closing of the following conditions:
(a) Representations and Warranties True. The Purchaser's and
Newco's representations and warranties contained in this Agreement
shall be true and correct at the Closing as though made at such time.
(b) Performance. The Purchaser and Newco shall have performed
and complied with all agreements and satisfied all conditions required
by this Agreement to be performed or satisfied by them prior to or at
the Closing.
(c) Certificates of the Purchaser's and Newco's Officers. The
Sellers shall have received a certificate, dated the Closing, of an
officer of each of the Purchaser and Newco as to Paragraphs 5.2(a) and
5.2(b) and such other certificates or documents as the Sellers shall
reasonably deem necessary.
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24
EXHIBIT 10.21
(d) Opinion of the Purchaser's Counsel. The Sellers shall have
received an opinion, dated as of the Closing, of the Purchaser's legal
counsel satisfactory in form and substance to the Sellers.
5.3 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND NEWCO. The
obligations as set forth herein of the Purchaser and Newco to consummate the
transactions contemplated in this Agreement at the Closing are subject to the
fulfillment (or waiver) at or prior to the Closing of the following conditions:
(a) Representations and Warranties True. The Sellers'
representations and warranties contained in this Agreement (as amended
by the Disclosure Schedule delivered to the Purchaser and Newco prior
to the Closing) shall be true and correct at the Closing as though made
at such time.
(b) Disclosure Schedule. The Disclosure Schedule shall be
satisfactory in form and substance to Newco and the Purchaser; provided
that no items in the Disclosure Schedule reflecting any event,
condition or development after the date hereof, or reflecting any
discovery of an event or condition unknown as of the date hereof, may
constitute the basis on which the Purchaser and Newco do not consummate
the transactions contemplated in this Agreement at the Closing, unless
such items in the aggregate would reasonably be expected to have a
material adverse effect on Aqua-Chem's business or financial condition.
(c) Performance. The Sellers and Aqua-Chem shall have
performed and complied with all agreements and satisfied all conditions
required by this Agreement to be performed or satisfied by them prior
to or at the Closing.
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25
EXHIBIT 10.21
(d) Opinion of the Sellers' Counsel. The Purchaser and Newco
shall have received an opinion, dated as of the Closing, of the
Sellers' legal counsel, satisfactory in form and substance to the
Purchaser and Newco.
(e) Gestra Assurances. Gestra shall have presented the
Purchaser and Newco with written assurances, reasonably satisfactory in
form and substance to the Purchaser, of Gestra's ability to fulfill its
General Indemnity obligations.
(f) Certificates of the Sellers' Officers. The Purchaser and
Newco shall have received a certificate, dated as of the Closing, of an
officer or authorized person of each of the Sellers as to Paragraphs
5.3(a) and 5.3(c).
SECTION 6. GENERAL INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.
6.1 THE SELLERS' GENERAL INDEMNITY. From and after the Closing, the
Sellers severally and not jointly shall indemnify and hold harmless the
Purchaser, Newco and Aqua-Chem and their respective officers, directors,
employees, stockholders, successors and affiliates ("Purchaser Group") from and
against any loss, liability or damages (including reasonable attorneys' fees)
and other costs (excluding salaries and fringe benefits of employees of the
Purchaser Group) and expenses incurred or sustained by the Purchaser Group as a
result of the nonfulfillment of any agreement of the Sellers or the breach or
inaccuracy of any representation or warranty made by the Sellers under this
Agreement, plus interest at the rate hereinafter specified on the foregoing
amounts from the date the same were initially incurred to the "Date of Recovery"
(which shall mean the actual date of the redemption of the Series A and Series B
Preferred Stock, if recovery is by means of offset against either the Series A
or Preferred B Stock, or the date of receipt of actual payment by the Purchaser
Group, if recovery is by means of direct payment by the Sellers). All of the
foregoing amounts are
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EXHIBIT 10.21
hereinafter collectively referred to as "General Indemnity Damages" and the
indemnity set forth above is hereinafter referred to as the "General Indemnity."
The General Indemnity is subject to the following terms and conditions: (1)
there shall not be any duplicative payments or indemnities by the Sellers; (2)
no breach of any representation or warranty shall arise from, relate to, or be
caused by matters which are the subject of the indemnities set forth in Section
7 or 8 of this Agreement; (3) the Sellers' obligations with respect to General
Indemnity Damages shall be satisfied solely and exclusively in the manner
specified in Section 9 of this Agreement; and (4) the interest rate used in
computing General Indemnity Damages shall be (i) four percent (4%) for such
General Indemnity Damages as are recovered by offset or recovery of amounts due
or paid with respect to the Series B Preferred Stock and (ii) six percent (6%)
for such General Indemnity Damages as are recovered by offset or recovery of
amounts due or paid with respect to the Series A Preferred Stock (with no
interest otherwise being applicable).
The right of the Purchaser Group to indemnification under this
Section shall be limited as follows:
(a) Knowledge of the Management Group. Except as set forth in
Section 6.1(e) below, the Sellers shall have no obligation to indemnify
the Purchaser Group for any General Indemnity Damages incurred as the
result of the breach or inaccuracy of a representation or warranty to
the extent that the matter constituting the breach or inaccuracy of
such representation or warranty asserted by the Purchaser Group was
known by the Management Group at the Closing Date.
(b) Insurance Recoveries. The amount of any General Indemnity
Damages the Purchaser Group may otherwise be entitled to recover under
this Section shall be reduced by
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27
EXHIBIT 10.21
the net amount the Purchaser Group recovers (after deducting all
attorneys' fees, expenses and other costs of recovery) from any insurer
or other party liable for such General Indemnity Damages, and the
Purchaser Group shall use reasonable efforts to effect any such
recovery.
(c) Minimum Claim. Except as set forth in Section 6.1(e)
below: (i) no representation or warranty of the Seller's shall be
deemed to be breached unless the General Indemnity Damages (excluding
interest as set forth in the first paragraph of this Section 6.1 above)
incurred by the Purchaser Group from the set of facts constituting the
breach equal or exceed $50,000; provided that once such threshold has
been equaled or exceeded all General Indemnity Damages (excluding
interest) shall be included for purposes of the limitation set forth in
the next sentence; and (ii) the Sellers shall not have any liability to
indemnify the Purchaser Group under this Section unless the aggregate
amount of General Indemnity Damages (excluding interest) suffered by
the Purchaser Group exceeds $300,000, in which event the Sellers shall
only be obligated to indemnify the Purchaser Group for its aggregate
General Indemnity Damages (excluding interest) in excess of $300,000.
(d) Maximum Liability. Except as set forth in Section 6.1(e)
below, the aggregate amount of General Indemnity Damages (including
interest as set forth in the first paragraph of this Section 6.1 above)
payable to the Purchaser Group and the maximum liability of the Sellers
under this Section resulting from the breach or inaccuracy of all
representations and warranties shall be $5,000,000.
(e) Exceptions to Knowledge, Minimum Claim and Maximum
Liability Provisions. The limitations of Sections 6.1(a), (c) and (d)
shall not apply to General
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EXHIBIT 10.21
Indemnity Damages arising from a breach or inaccuracy of the
representations and warranties set forth in Section 2.3(a) of this
Agreement.
6.2 THE PURCHASER'S AND NEWCO'S GENERAL INDEMNITY. From and after the
Closing, the Purchaser and Newco shall indemnify and hold harmless the Sellers
and their respective officers, directors, employees, stockholders, successors
and affiliates ("Seller Group") from and against any loss, liability or damage
(including reasonable attorneys' fees) and other costs (excluding salaries and
fringe benefits of employees of the Seller Group) and expenses (hereinafter
collectively referred to as "Damages"), incurred or sustained by the Seller
Group as a result of the nonfulfillment of any agreement of the Purchaser or
Newco or the breach or inaccuracy of any representation or warranty made by the
Purchaser or Newco under this Agreement; provided, that there shall not be any
duplicative payments or indemnities by the Purchaser or Newco.
The right of the Seller Group to indemnification under this Section
shall be limited as follows:
(a) Knowledge of the Sellers. Neither the Purchaser nor Newco
shall have any obligation to indemnify the Seller Group for any Damages
incurred as the result of the breach or inaccuracy of a representation
or warranty to the extent that the breach or inaccuracy of such
representation or warranty asserted by the Seller Group was known by
the Seller Group at the Closing Date.
(b) Insurance Recoveries. The amount of any Damages the Seller
Group may otherwise be entitled to recover under this Section shall be
reduced by the net amount the Seller Group recovers (after deducting
all attorneys' fees, expenses and other costs of
24
29
EXHIBIT 10.21
recovery) from any insurer or other party liable for such Damages, and
the Seller Group shall use reasonable efforts to effect any such
recovery.
(c) Minimum Claim. No representation or warranty of the
Purchaser or Newco shall be deemed to be breached unless the Damages
incurred by the Seller Group from the set of facts constituting the
breach equal or exceed $50,000; provided, that once such threshold has
been equaled or exceeded all Damages shall be included for purposes of
the limitation set forth in the next sentence. Neither the Purchaser
nor Newco shall have any liability to indemnify the Seller Group under
this Section unless the aggregate amount of Damages suffered by the
Seller Group exceeds $300,000, in which event the Purchaser and Newco
shall only be obligated to indemnify the Seller Group for its aggregate
Damages in excess of $300,000.
(d) Maximum Liability. The aggregate amount of Damages payable
to the Seller Group and the combined maximum liability of the Purchaser
and Newco under this Section resulting from the breach or inaccuracy of
all representations and warranties shall be $5,000,000.
(e) Exceptions to Knowledge, Minimum Claim and Maximum
Liability Provisions. The limitations of Sections 6.2(a), (c) and (d)
shall not apply to Damages arising from a breach or inaccuracy of the
representations and warranties set forth in Section 3.1 of this
Agreement.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
hereinafter set forth in this Section 6.3, any claim for indemnification under
Section 6.1 or Section 6.2 with respect to the representations and warranties
of the Sellers or the Purchaser or Newco set forth in this Agreement
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30
EXHIBIT 10.21
must be brought prior to the second anniversary of the Closing. The
representations and warranties of the Sellers set forth in Section 2.8 of this
Agreement shall survive the Closing until the expiration of the applicable
statute of limitations (including any extensions thereof) for any tax period of
Aqua-Chem or its Subsidiaries which ends on or before the date of Closing. The
representations and warranties set forth in Section 2.3(a) of this Agreement
shall survive the Closing until the expiration of the statute of limitations
governing contracts.
6.4 GENERAL INDEMNITY PROCEDURES. A party entitled to indemnification
under Section 6.1 or 6.2 of this Agreement shall herein be referred to as an
"Indemnitee." A party obligated to indemnify an Indemnitee hereunder shall
herein be referred to as an "Indemnitor." Promptly after an Indemnitee either
(a) receiving notice of any claim or the commencement of any action by any third
party which such Indemnitee reasonably believes may give rise to a claim for
indemnification from an Indemnitor hereunder or (b) sustaining any Damages not
involving a third-party claim or action which such Indemnitee reasonably
believes may give rise to a claim for indemnification from an Indemnitor
hereunder, such Indemnitee shall notify such Indemnitor in writing in reasonable
detail of such claim, action or Damages, as the case may be. Upon receipt of
such notice, the Indemnitor, at its expense, shall be entitled to participate in
such claim or action, assume the defense thereof with counsel reasonably
satisfactory to the Indemnitee and, if the Indemnitor assumes the defense of
such claim, settle or compromise such claim or action; provided, that (a) any
such settlement or compromise includes an absolute and unconditional release of
the Indemnitee, (b) does not involve remedies (other than monetary damages)
materially affecting the Indemnitee or its property or business and (c) such
settlement or compromise does not have material, future, negative implications
for the Indemnitee's business. After notice to the Indemnitee of the
Indemnitor's
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EXHIBIT 10.21
election to assume the defense of such claim or action, the Indemnitor may not,
thereafter, challenge its duty to indemnify the Indemnitee and shall not be
liable to the Indemnitee for any legal or other expenses subsequently incurred
by the Indemnitee in connection with the defense thereof other than reasonable
costs of investigation; provided, that the Indemnitee, at its own expense, shall
have the right to employ counsel to represent it if either (x) such claim or
action involves remedies other than monetary damages and such remedies, in the
Indemnitee's reasonable judgment, could have a material adverse effect on such
Indemnitee or (y) the Indemnitee may have available to it one or more defenses
or counterclaims which are not available to or are inconsistent with any
position of the Indemnitor. If the Indemnitor does not elect to assume the
defense of such claim or action, the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with respect thereto and shall
not settle or compromise any such claim or action without the prior written
consent of the Indemnitor, which consent shall not unreasonably be withheld. The
parties hereto agree to render to each other such assistance as may reasonably
be requested in order to insure the proper and adequate defense of any such
claim or action.
6.5 TERMINATION OF GENERAL INDEMNITY. Notwithstanding anything to the
contrary in this Agreement, the General Indemnity shall, except as to pending
claims with respect to which the Sellers have previously received written
notice, terminate upon the first to occur of the following events: (a)
cumulatively more than two-thirds (2/3) of the outstanding equity interests in
Newco (which for purposes of this Section 6.5 and Sections 7.3 and 8.2 shall
include any successor thereto or any holding company whose principal asset
consists of its investment in Newco or such successor) are, in one or more
transactions, sold to an "Unrelated Third Party," which shall mean one or more
parties not directly or indirectly controlled by, controlling, or under common
control with
27
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EXHIBIT 10.21
Newco (an "Overall Ownership Shift"); (b) at such time as the Management Group
and other then current management employees of Newco or their family members or
trusts, limited liability companies or partnerships for their benefit (together,
the "Employee Ownership Group") collectively cease to retain a beneficial
ownership interest of at least 50% of the equity interest in Newco initially
reserved for the Employee Ownership Group (excluding any amounts reserved for
the Employee Ownership Group which are contingent upon the future performance of
Newco) unless such reduction is the result of (i) the issuance of additional
equity interests by Newco to persons other than the Employee Ownership Group or
(ii) a sale of such equity interests by the Employee Ownership Group due to
Newco's being in substantial distress as, for example, evidenced by the
declaration of a default by the holders of Newco's debt instruments (an
"Employee Ownership Shift"); (c) the transfer of substantially all of the assets
of Newco to an Unrelated Third Party whether by sale, merger, consolidation or
otherwise (an "Asset Shift") or (d) the consummation of an initial public
offering of the equity securities of Newco (an "IPO").
SECTION 7. [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION 240.24b2]
.
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33
EXHIBIT 10.21
SECTION 7. [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO 17 CFR SECTION 240.24b2]
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34
EXHIBIT 10.21
SECTION 8. [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION 240.24b2]
SECTION 9. PRIORITY AND PROCEDURES FOR SATISFACTION OF GENERAL
INDEMNITY, [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO 17 CFR SECTION 240.24b2]
9.1 UPON REDEMPTION OF SERIES A AND SERIES B PREFERRED STOCK. The
General Indemnity, [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION 240.24b2] obligations of
each Seller as the same shall have accrued from the date of Closing to the date
of redemption of the Series A and Series B Preferred Stock shall be satisfied
from such Seller's shares of the Series A and Series B Preferred Stock and
required cash payments in accordance with the priorities and solely and
exclusively in the manner hereinafter set forth.
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35
EXHIBIT 10.21
(a) First, the [THIS PROVISION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT
TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION
240.24b2] obligation (as the same shall exist at the time of
redemption of the Series B Preferred Stock) shall be satisfied in full
and solely and exclusively (i) first, by reducing the redemption price
of the Series B Preferred Stock and (ii) second, by reducing the
dividends accrued on the Series B Preferred Stock.
(b) Second, the [THIS PROVISION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR
SECTION 240.24b2] obligation (as the same shall exist at the time of
redemption of the Series A and Series B Preferred Stock) shall be
satisfied in full and solely and exclusively (i) first, by reducing
any remaining redemption price of the Series B Preferred Stock, (ii)
second, by reducing any remaining dividends accrued on the Series B
Preferred Stock, (iii) third, by reducing the dividends accrued on the
Series A Stock and (iv) fourth, by reducing the redemption price of
the Series A Preferred Stock.
(c) Third, the General Indemnity obligation (as the same shall
exist at the time of redemption of the Series B Preferred Stock) shall
be satisfied in full and solely and exclusively (i) first, by reducing
any remaining redemption price of the Series B Preferred Stock, (ii)
second, by reducing any remaining dividends accrued on the Series B
Preferred Stock, (iii) third, by reducing any remaining dividends
accrued on the Series A Preferred Stock, (iv) fourth, by reducing any
remaining redemption price of the Series A Preferred Stock and (v)
fifth, by cash payment from the Seller.
9.2 SUBSEQUENT TO REDEMPTION OF SERIES A AND SERIES B PREFERRED STOCK.
Subject in all respects to the limitations on indemnification set forth
in Sections 6, 7 and 8 of this Agreement, the General Indemnity, [THIS
PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO 17 CFR SECTION 240.24b2] obligations of each Seller as the same
shall accrue from and after the date of redemption of the Series A and Series B
Preferred
30
36
EXHIBIT 10.21
Stock shall be satisfied in accordance with the priorities and solely and
exclusively in the manner hereinafter set forth.
(a) First, any unfulfilled [THIS PROVISION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR
SECTION 240.24b2] obligation shall be satisfied by cash payment from
the Seller to the Purchaser Group, with such payment not to exceed an
amount equal to (i) the cash proceeds in payment of the redemption
price and accrued dividends actually received by the Seller upon
redemption of its Series B Preferred Stock, plus (ii) the amount of
any General Indemnity obligation of the Seller that was satisfied at
the time of redemption by offset against the redemption price and/or
accrued dividends paid with respect to the Seller's Series B Preferred
Stock, plus (iii) the amount of any [THIS PROVISION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR
SECTION 240.24b2] obligation of the Seller that was satisfied at the
time of redemption by offset against the redemption price and/or
accrued dividends paid with respect to the Seller's Series B Preferred
Stock, minus (iv) any previous payments made by the Seller to the
Purchaser Group subsequent to the date of such redemption pursuant to
this paragraph (a).
(b) Second, any unfulfilled [THIS PROVISION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR
SECTION 240.24b2] obligation shall be satisfied by cash payment from
the Seller to the Purchaser Group, with such payment not to exceed an
amount equal to (i) the cash proceeds in payment of the redemption
price and accrued dividends actually received by the Seller upon
redemption of its Series A and Series B Preferred Stock, plus (ii) the
amount of any General Indemnity obligation of the Seller that was
satisfied at the time of redemption by offset against the redemption
price and/or accrued dividends paid with respect to the Seller's
Series A or Series B Preferred Stock, minus (iii) the sum of (A) any
previous payments made by the Seller to the Purchaser Group subsequent
to the date of such redemption pursuant to paragraph (a) immediately
above or this paragraph
31
37
EXHIBIT 10.21
(b), plus (B) any current payment to be made by the Seller pursuant to
paragraph (a) immediately above.
(c) Third, any unfulfilled General Indemnity obligation shall
be satisfied by cash payment from the Seller to the Purchaser Group,
with such payment not to exceed an amount equal to Five Million Dollars
($5,000,000) minus the sum of (i) the amount of any General Indemnity
obligation of the Seller that was satisfied at the time of redemption
by offset against the redemption price and/or accrued dividends paid
with respect to the Seller's Series A or Series B Preferred Stock, and
minus the sum of (ii) any previous payments made by the Seller to the
Purchaser Group subsequent to the date of such redemption pursuant to
this paragraph (c).
Notwithstanding anything to the contrary in this Section 9.2, the total
indemnity to the Purchaser Group with respect to [THIS PROVISION HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO 17 CFR SECTION
240.24b2] and interest thereon shall not exceed the lesser of (i) the
redemption price plus accrued dividends for the Series A and Series B Preferred
Stock and (ii) $10,000,000.
SECTION 10. TERMINATION.
Notwithstanding anything in this Agreement to the contrary, this
Agreement may be terminated as follows, and in no other manner:
(a) by the mutual written consent of the parties to this
Agreement; or
(b) by the Sellers and Aqua-Chem on the one hand or by the
Purchaser and Newco on the other hand if, for any reason, the Closing
has not occurred on or prior to August 1, 1997.
32
38
EXHIBIT 10.21
SECTION 11. MISCELLANEOUS.
11.1 EXPENSES. The Purchaser and Newco have used the services of SPP
Hambro & Co. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as placement agent and financial advisor in
connection with the transactions contemplated by this Agreement. The Purchaser
and Newco have agreed to pay such parties a success fee for their services and
shall be solely responsible for such fees in the event the transactions
contemplated by this Agreement are consummated. Aqua-Chem has agreed to pay the
monthly retainer due ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the expense reimbursements due ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ and SPP Hambro & Co., the fees and disbursements of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ S.C. and the costs of obtaining financing for the transactions
contemplated by this Agreement. Neither the Purchaser nor Aqua-Chem has entered
into an agreement with any other party obligating either of them to pay any
brokerage or other commissions or fees in connection with the transactions
contemplated by this Agreement. The Sellers have used the services of ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P. in connection with the preparation and
execution of this Agreement and consummation of the transactions contemplated
hereby and shall be solely responsible for all fees and disbursements owed to
them. Neither of the Sellers has entered into an agreement with any other party
obligating either of them to pay any brokerage or other commissions or fees in
connection with the transactions contemplated by this Agreement.
11.2 PUBLIC DISCLOSURE. Each of the parties to this Agreement hereby
agrees with the other parties that, except as may be necessary to comply with
the requirements of applicable law (in the reasonable opinion of counsel), no
press release or similar public announcement or communication or any
announcement or communications to customers or suppliers of Aqua-Chem
33
39
EXHIBIT 10.21
or its Subsidiaries will be made or caused to be made concerning the execution
or performance of this Agreement unless specifically approved in advance by both
parties.
11.3 GOVERNING LAW. This Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and in accordance
with the laws of the State of Wisconsin. Any dispute relating to this Agreement
or its interpretation or the transactions contemplated hereby shall be resolved
by binding arbitration in Chicago, Illinois, in accordance with the rules of the
American Arbitration Association by a panel of three arbitrators. Any
arbitration award so obtained may be enforced in any Wisconsin State court or
Federal court of the United States of America sitting in Milwaukee, Wisconsin
and each of the parties hereto hereby irrevocably and unconditionally submits
itself and its property to the jurisdiction of such courts. Each of the parties
hereby agrees that a judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
11.4 NOTICES. Any notices or other communications required under this
Agreement shall be in writing and, shall be deemed to have been given and
received when (a) delivered in person (b) if mailed, sent by United States
certified mail, return receipt requested or (c) if by overnight delivery, sent
by an internationally recognized delivery service, with proper postage prepaid
and if mailed and sent by overnight delivery:
to the Sellers and/or Aqua-Chem, addressed to:
Lyonnaise American Holding, Inc. Gestra Corporation N.V.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ c/o J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Northumbrian Water Group Rezayat America Inc.
24. ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
34
40
EXHIBIT 10.21
Aqua-Chem, Inc.
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
if to the Purchaser and/or Newco, addressed to:
Rush Creek LLC
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-C Acquisition Corp.
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ S.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties to this Agreement in the manner herein
provided.
11.5 SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
35
41
EXHIBIT 10.21
11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
11.7 ENTIRE AGREEMENT; MODIFICATION. This Agreement embodies the entire
agreement and understanding among the parties hereto and supersedes all prior
agreements and understandings. Except as set forth herein, there are no
agreements or understandings, and no party makes any representations or
warranties to any other party, except as and to the extent set forth herein.
This Agreement may be modified only by a written instrument signed by each of
the parties hereto.
11.8 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
PROVISION; RELATIONSHIP BETWEEN THE PARTIES. It is the explicit intent and
understanding of each of the parties hereto that no party nor any of its
affiliates, representatives or agents is making any representation or warranty
whatsoever, oral or written, express or implied, other than those set forth in
this Agreement, and no party is relying on any statement, representation or
warranty, oral or written, express or implied, made by any other party or any
other party's affiliates, representatives or agents, except for the
representations and warranties so set forth. The indemnity provided for in
Section 6 hereto shall be the sole and exclusive remedy of the Purchaser Group
and the Seller Group from and after the Closing for any inaccuracy of any
representation or warranty or any failure of breach of any covenant,
obigations, condition or agreement to be performed or fulfilled by any party.
[THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO 17 CFR SECTION 240.24b2]
36
42
EXHIBIT 10.21
11.9 POST-CLOSING ACCESS. In connection with any matter relating to any
period prior to, or any period ending on, the Closing, the Purchaser shall, upon
request and at the expense of the Sellers, permit the Sellers and their
representatives full access at all reasonable times to the books and records of
Newco and the Subsidiaries which shall have been transferred to the Purchaser to
the extent necessary to permit the Sellers to defend any third party claims for
which the Purchaser Group is seeking indemnification. The Purchaser shall not
dispose of such books and records during the seven-year period following the
Closing Date without the Sellers' consent, which shall not be unreasonably
withheld. Following the expiration of such seven-year period, the Purchaser may
dispose of such books and records at any time upon giving 60 days prior written
notice to the Sellers, unless the Sellers agree to take possession of such books
and records within 60 days at no expense to the Purchaser.
11.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns; provided, however, that prior to the Closing, this
Agreement may not be assigned without the prior written consent of all parties.
11.11 WAIVER OF PUNITIVE AND OTHER DAMAGES. Notwithstanding anything to
the contrary contained in this Agreement, except with respect to the provisions
of Section 4.5 of this Agreement relating to lost profits, the parties to this
Agreement expressly waive and forego any right to recover punitive, exemplary,
lost profits, consequential or similar damages in any arbitration, lawsuit,
litigation or proceeding arising out of or resulting from any controversy or
claim arising out of or relating to this Agreement or the transactions
contemplated hereby.
37
43
EXHIBIT 10.21
11.12 AUDIT RIGHTS. Sellers and their representatives shall have the
right to audit Newco's books and records relating to the calculation of (i) the
redemption value of the Series B preferred Stock and/or (ii) General Indemnity
Damages, [THIS PROVISION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO 17CFR SECTION 240.24b2.] during business hours at Newco's
offices for the purposes of confirming such calculations. All relevant
books and records will be kept at such offices and will be made available for
inspection and copying. All information received as part of such audits
(including all copies thereof and any analyses reflecting such information)
shall be destroyed by Sellers immediately upon resolution of any dispute
concerning such calculations, and no such information shall be disclosed by
Sellers to any third party except as may be necessary to enforce their rights
under this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be excuted by their duly authorized officers as of the date first
above written.
RUSH CREEK LLC LYONNAISE AMERICAN HOLDING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Authorized Signatory
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
AQUA-CHEM, INC. GESTRA CORPORATION, N.V.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- ------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Authorized Signatory
A-C ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
38
44
EXHIBIT 10.21
EXHIBIT A
CERTIFICATE OF MERGER
AQUA-CHEM, INC.
(A Delware corporation)
WITH AND INTO
A-C ACQUISITION CORP.
(a Delaware corporation)
On behalf of the Surviving Corporation named herein, and pursuant to
Section 251 of the Delaware General Corporation Law, the undersigned hereby
makes and executes this Certificate of Merger and states as follows:
1. The Constituent Corporations:
A-C Acquisition Corp., a Delaware corporation, the Surviving
Corporation.
Aqua-Chem, Inc., a Delaware corporation, the Merging
Corporation.
2. Agreement and Plan of Merger
An Agreement and Plan of Merger has been approved, adopted,
certified, executed, and acknowledged by each of the
Constituent Corporations in accordance with subsection (c) of
Section 251 of the Delaware General Corporation Law.
3. Surviving Corporation
The name of the Surviving Corporation is A-C Acquisition Corp.
4. Amendment to Certificate of Incorporation.
The Certificate of Incorporation of A-C Acquisition Corp.
shall be amended as follows:
45
EXHIBIT 10.21
EXHIBIT A
a) The name of the corporation shall be
Aqua-Chem, Inc.
b) Schedule A to Article Four of the
Certificate of Incorporation is hereby
replaced in its entirety by Schedule A,
attached hereto.
The Certificate of Incorporation of the Surviving Corporation,
as so amended, shall remain in effect as the Certificate of
Incorporation of the Surviving Corporation after the merger.
5. Agreement and Plan of Merger on File.
The executed Agreement and Plan of Merger is on file at an
office of the Surviving Corporation, located at ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
6. Copy of Agreement and Plan of Merger Available
A copy of the Agreement and Plan of Merger will be furnished
by the Surviving Corporation, upon request and without cost,
to any stockholder of any Constituent Corporation.
Dated: July 31, 1997.
A-C ACQUISITION CORP.
By: /s/ ▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
2
46
EXHIBIT 10.21
SCHEDULE A
WATER TECH
PROJECTED EARNINGS BEFORE INCOME AND TAXES
1997 - 2001
EBIT
1997 $2,474,000
1998 $3,156,000
1999 $4,720,000
2000 $6,890,000
2001 $8,979,000
AQUA-CHEM, INC.
PROJECTED EARNINGS BEFORE INCOME AND TAXES
1997-2001
EBIT
1997 $13,065,000
1998 $15,108,000
1999 $19,684,000
2000 $25,454,000
2001 $32,713,000
47
EXHIBIT 10.21
EXHIBIT B
TERMS SHEET
SERIES A PREFERRED STOCK
REDEMPTION PRICE: $5,000,000
DIVIDEND: $75,000 per quarter, commencing on the Closing
Date; dividend is cumulative and payable only
upon redemption.
OFFSET ADJUSTMENTS: Redemption Price and Dividends are
subject to offset pursuant to the terms of
the Stock Purchase Agreement.
TRANSFER RESTRICTIONS: Not Transferable other than to
companies controlled by, controlling or under
common control with the initial Holder,
provided that such transferee is not engaged
in any business which is in competition with
any business engaged in by Aqua-Chem.
VOTING RIGHTS: None
LIQUIDATION PREFERENCE: Right to receive Redemption Price
plus all accrued dividends before any amounts
are distributed with respect to the Common
Stock.
REDEMPTION PROVISIONS:
PUT OPTION -- Holders of Series A Preferred shall
have the right, at the Holders election, by
written notice to the Company, to require the
Company to redeem the Series A Preferred at
the Redemption Price plus accrued dividends
(i) simultaneous with the occurrence of an
Overall Ownership Shift, Employee Ownership
Shift or an Asset Shift (ii) within the 120
day period following an IPO of the Company's
equity securities (iii) within the 120 day
period following a refinancing and retirement
of the ▇.▇. ▇▇▇▇▇▇▇ Subordinated Debt, (iv)
seven years after issuance. In the event that
the Put Option would become exercisable by
reason of an Overall Ownership Shift or an
Employee Ownership Shift under the
circumstances other than a sale of all of the
stock of the Company (other than the Series A
and B Preferred Stock), and the exercise of
the Put Option under such other circumstances
would cause the Company to be in default of
covenants with lenders, the exercise of the
Put Option shall
1
48
EXHIBIT 10.21
EXHIBIT B
be deferred until such time as its exercise would
not cause a default (but not later than 7 years
after issuance). During any such deferral
period, the Company shall use its best efforts
with lenders to obtain an amendment or waiver
to permit such exercise and shall not permit any
increase to occur in the compensation payable to
any member of the Management Group or repurchase
any of its other outstanding stock. No deferral
or delay in the exercise of the Put Option
shall prevent the termination of the [THIS
PROVISION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO 17CFR SECTION 240.24b2]
or General Indemnity in accordance with the
terms of the Stock Purchase Agreement.
CALL OPTION -- Company shall have the right to call the Series
A Preferred at any time at the Redemption Price
plus accrued dividends.
DEFAULT: In the event of a default in payment of
redemption price or accrued dividends, dividend
increases to $112,500 per quarter (50% increase).
RIGHT TO RECEIVE FINANCIAL INFORMATION; NON DISCLOSURE:
The Company shall each year furnish the Holders with its June 30 internally
prepared unaudited income statement and balance sheet on or before August 31
and with its annual audited year end income statement and balance sheet on or
before March 31. Access to such financial statements shall be strictly limited
by Holder to those persons employed by Holder and its affiliates who have
responsibility for monitoring the investment in the Company and, under no
circumstances, shall such financial statements or the information contained
therein be made available or disclosed to any other persons or used for any
other purposes.
2
49
EXHIBIT 10.21
EXHIBIT B
TERMS SHEET
SERIES B PREFERRED STOCK
REDEMPTION PRICE:
NORMAL REDEMPTION PRICE
Except as hereinafter specifically set forth to the contrary in this
Terms Sheet, the redemption price of the Series B Preferred Stock (the
"Normal Redemption Price") shall be based upon the level of attainment
of Water Tech cumulative EBIT for the period 1997 through 2001 as set
forth in attached Schedule as hereinafter set forth.
If actual cumulative EBIT is less than 80% of cumulative EBIT shown on
the Schedule, the Normal Redemption Price shall be zero.
If actual cumulative EBIT is 80% or more of cumulative EBIT shown on
the Schedule, the Normal Redemption Price shall be $2.5 million.
If actual cumulative EBIT is 120% or more of cumulative EBIT shown on
the Schedule, the Normal Redemption Price shall be $7.5 million.
If actual cumulative EBIT is more than 80% but less than 120% of
cumulative EBIT shown on the Schedule, the Normal Redemption Price
shall move proportionately from $2.5 million to $7.5 million, so that
at 90% it shall be $3.75 million, at 100% it is $5 million, at 110% it
is $6.25 million, etc.
Cumulative EBIT thresholds shown on the Schedule shall not be adjusted
in the event of an acquisition.
If prior to December 31, 2001 either (a) the Water Tech business is
sold to an Unrelated Third Party or (b) there occurs an Overall
Ownership Shift or an Employee Ownership Shift, then in any of such
event, post sale EBIT requirements will be deemed to be fulfilled to
the extent of actual pre-divestiture fulfillment of EBIT requirements.
SALE OF WATER TECH BUSINESS (WITH ALTERNATIVES DEPENDENT UPON WHETHER
TRANSACTION RESTRUCTURED AS MERGER)
(APPLICABLE ONLY IF TRANSACTION RESTRUCTURED AS MERGER)
If the Water Tech business is sold to an Unrelated Third Party prior to
redemption of the Series B Preferred Stock, the redemption price shall be
the greater of (i) the Normal Redemption Price or (ii) the "Alternative
Redemption Price" as hereinafter defined.
1
50
EXHIBIT 10.21
EXHIBIT B
(APPLICABLE IF TRANSACTION IS NOT RESTRUCTURED AS MERGER)
If the Water Tech business is sold to an Unrelated Third Party prior to
redemption of the Series B Preferred Stock and the Normal Redemption Price is
zero, redemption price shall be the "Alternative Redemption Price" as
hereinafter defined.
ALTERNATIVE REDEMPTION PRICE
If the sale of the Water Tech business occurs prior to the fifth
anniversary of the Closing Date the Alternative Redemption Price shall
be an amount equal to (1) $10,000 for each percentage point of the net
book value of Water Tech that the actual selling price represents, up
to and including 200% of net book value, plus (2) $15,000 for each
percentage point of the net book value of Water Tech above 200% that
the actual selling price represents.
If the sale of the Water Tech business occurs subsequent to the fifth
anniversary of the Closing Date, the Alternative Redemption Price shall
be one-half of the amount determined under the immediately preceding
formula.
lf the actual selling price represents less than 50% of the net book
value of Water Tech, then the Alternative Redemption Price shall be
zero.
In determining the selling price for purposes of the preceding
calculations, an appropriate dollar for dollar adjustment shall be made
to reflect any Water Tech assets or liabilities retained by Aqua-Chem.
IPO (APPLICABLE ONLY IF TRANSACTION RESTRUCTURED AS MERGER)
If prior to the first to occur of (i) December 31, 2001 or (ii) a sale of the
Water Tech business, there occurs an IPO, then, in such event, but only in such
event, the redemption price for the Series B Preferred Stock shall be the
greatest of (a) $5,000,000, (b) the Normal Redemption Price or (c) the
Alternative Redemption Price. In determining the Alternative Redemption Price in
the event of an IPO, the Alternative Redemption Price provisions applicable upon
a sale of the Water Tech business shall be applied with the Water Tech business
deemed to have been sold at a selling price representing the same multiple of
Water Tech EBIT for the most recently completed fiscal year as the multiple of
Company-wide EBIT for such fiscal year that the offering price in the IPO
represents. If the IPO occurs after December 31, 2001 but before a sale of the
Water Tech business the redemption price for the Series B Preferred Stock shall
be the same as it would be had the transaction not been restructured as a
merger.
2
51
EXHIBIT 10.21
EXHIBIT B
SALE OF THE COMPANY (APPLICABLE ONLY IF TRANSACTION RESTRUCTURED AS
MERGER)
If prior to the first to occur of (i) December 31, 2001 or (ii) a sale of the
Water Tech business, there occurs either (a) an Overall Ownership Shift, (b) an
Employee Ownership Shift or (c) an Asset Shift and, in the further event, that
at the time of the closing of a transaction described in clause (a), (b) or (c)
above the actual cumulative Company-wide EBIT for the cumulative period
beginning 1997 and ending on such closing date is at least 80% of the projected
cumulative Company-wide EBIT for such cumulative period as set forth in the
attached Schedule then, in the event that all of the preceding conditions
precedent have been met, the redemption price for the Series B Preferred Stock
shall be the greatest of (x) $5,000,000, (y) the Normal Redemption Price or (z)
the Alternative Redemption Price. In determining the Alternative Redemption
Price in the event of a sale transaction described in this paragraph, Water Tech
shall be deemed to have been sold at a selling price representing the same
multiple of Water Tech EBIT for the most recently completed fiscal year as (i)
in the event of an Overall Ownership or an Employee Ownership Shift, the
multiple of per share Company-wide EBIT for such fiscal year that the actual per
share selling price of a share of the Company's common stock represents or (ii)
in the event of an Asset Shift, the multiple of Company-wide EBIT for such year
that the selling price (adjusted for any retained assets or liabilities)
represents. If (a), (b) or (c) above occur after December 31, 2001 but before a
sale of the Water Tech business, or if they occur and the Company-wide EBIT test
above has not been met, the redemption price for the Series B Preferred Stock
shall be the same as it would be had the transaction not been restructured as a
merger.
ALTERNATIVE REDEMPTION PRICE UPON SALE OF COMPANY (APPLICABLE IF TRANSACTION IS
NOT RESTRUCTURED AS MERGER)
If prior to a sale of the Water Tech business there occurs either an Overall
Ownership Shift or an Employee Ownership Shift, the redemption price shall be
the Alternative Redemption Price and Water Tech shall be deemed to have been
sold at selling price representing the same multiple of Water Tech EBIT for the
most recently completed fiscal year as the multiple of per share Company- wide
EBIT for such fiscal year that the actual per share selling price of a share of
the Company's common stock represents.
MAXIMUM REDEMPTION PRICE
Notwithstanding anything to the contrary herein, the maximum redemption price
under any circumstances or alternatives shall not exceed $7.5 million.
AUDITORS: DISPUTE RESOLUTION: The Company shall retain a Big Six
accounting firm to audit its annual
financial statements and may switch to a
non-Big Six accounting firm only with the
prior written consent of Holders of Series B
Preferred, which consent shall not
unreasonably be withheld. In connection with
any
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52
EXHIBIT 10.21
EXHIBIT B
redemption of the Series B Preferred,
Holders (upon execution of a confidentiality
agreement) shall have the right to review the
Company's determination of the redemption
price and auditors work papers. Any disputes
to be resolved by binding arbitration in
accordance with the arbitration provisions
set forth in the Stock Purchase Agreement.
DIVIDEND: $50,000 per quarter, commencing on the Closing
Date; dividend is cumulative and payable only
upon redemption.
OFFSET ADJUSTMENTS: Notwithstanding anything to the contrary
herein, the redemption price (regardless
of how determined) and dividends are
subject to offset pursuant to the terms
of the Stock Purchase Agreement.
TRANSFER RESTRICTIONS: Not Transferable other than to companies
controlled by, controlling or under common
control with the initial Holder, provided
that such transferee is not engaged in any
business which is in competition with any
business engaged in by Aqua-Chem.
VOTING RIGHTS: None
LIQUIDATION PREFERENCE: Right to receive Redemption Price
(as determined pursuant to the applicable
formula set forth herein) plus all accrued
dividends before any amounts are distributed
with respect to the Common Stock.
REDEMPTION PROVISIONS:
PUT OPTION -- The Holders of Series B Preferred
Stock shall have the right at the Holders
election, by written notice to the Company, to
require the Company to redeem the Series B
Preferred at the applicable Redemption Price
plus accrued dividends (i) simultaneous with
the occurrence of an Overall Ownership Shift,
Employee Ownership Shift or an Asset Shift
(ii) within the 120 day period following an
IPO of the Company's equity securities (iii)
within the 120 day period following a
refinancing and retirement of the ▇.▇. ▇▇▇▇▇▇▇
Subordinated Debt, (iv) seven years after
issuance. In the event that the Put Option
would become exercisable by reason of an
Overall Ownership Shift or an Employee
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53
EXHIBIT 10.21
EXHIBIT B
Ownership Shift under the circumstances
other than a sale of all of the stock of
the Company (other than the Series A and B
Preferred Stock), and the exercise of the
Put Option under such other circumstances
would cause the Company to be in default
of covenants with lenders, the exercise of
the Put Option shall be deferred until
such time as its exercise would not cause
a default (but not later than 7 years
after issuance). During any such deferral
period, the Company shall use its best
efforts with lenders to obtain an
amendment or waiver to permit such
exercise and shall not permit any increase
to occur in the compensation payable to
any member of the Management Group or
repurchase any of its other outstanding
stock. No deferral or delay in the
exercise of the Put Option shall prevent
the termination of the [THIS PROVISION HAS
BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION
AND IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO 17CFR
SECTION 240.24b2] or General Indemnity
in accordance with the terms of the Stock
Purchase Agreement.
CALL OPTION -- Company shall have the right at any time
seven years after issuance to call the
Series B Preferred at the Normal
Redemption Price plus accrued dividends.
DEFAULT: In the event of a default in payment of
the Redemption Price or accrued dividends,
dividend increases to $75,000 per quarter
(50% increase).
RIGHT TO RECEIVE FINANCIAL INFORMATION; NON DISCLOSURE:
The Company shall each year furnish the Holders with its June 30 internally
prepared unaudited income statement and balance sheet on or before August 31
and with its annual audited year end income statement and balance sheet on or
before March 31. Access to such financial statements shall be strictly limited
by Holder to those persons employed by Holder and its affiliates who have
responsibility for monitoring the investment in the Company and, under no
circumstances, shall such financial statements or the information contained
therein be made available or disclosed to any other persons or used for any
other purposes.
5