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Exhibit 10.28
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT), dated as of
October 1, 1999 is entered into by and between
________________________________________________________________ (the
"PURCHASER"), and, Waterlink, Inc., a Delaware corporation, with an address at
0000 Xxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxx, Xxxx 00000 (the "COMPANY").
The Company is offering for sale, to the Purchaser and to certain other
parties (the "OTHER PURCHASERS"), and the Purchaser and the Other Purchasers
have agreed or will agree to purchase, on substantially the same terms as
contained herein, in the aggregate, not more than six million three hundred
thousand (6,300,000) shares of the Company's common stock, par value of $.001
per share (the "COMMON STOCK") pursuant to securities purchase agreements
(together with this Agreement, the "SECURITIES PURCHASE AGREEMENTS"). The
Company has offered for sale, and the Purchaser has agreed to purchase
_______________________________________________________ (_______________) shares
(the "SHARES") of fully registered Common Stock, on the terms and conditions
herein provided. In connection herewith, the Company and the Purchaser hereby
agree as follows:
1. PURCHASE AND SALE OF SHARES. Upon the basis of the representations and
warranties and subject to the terms and conditions set forth herein, the Company
agrees to issue and sell the Shares to the Purchaser on the Closing Date (as
herein defined) at a per share purchase price equal to the average of the
closing sales price for the Common Stock as reported on the New York Stock
Exchange ("NYSE") for the twenty day period ending on the second trading day
prior to the Closing Date (the "Per Share Purchase Price, and the aggregate
purchase price for all of the Shares is referred to as the "PURCHASE PRICE")
and, upon the basis of the representations and warranties and subject to the
terms and conditions set forth herein, the Purchaser agrees to purchase the
Shares from the Company on the Closing Date at the Purchase Price.
Notwithstanding the foregoing, if the Per Share Purchase Price as determined
above would otherwise be less than $2.50 or greater than $3.00, then the Per
Share Purchase Price for all purposes hereunder will be deemed to be $2.50 or
$3.00, respectively, and the parties hereto agree to effect the transaction with
the Purchase Price based on such deemed Per Share Purchase Price.
Notwithstanding the foregoing, in the event that the Company sells any
shares (or securities that may be converted into or exchanged for shares) of
Common Stock in an original issuance (not shares traded on the NYSE in the
aftermarket) for less per share than the Per Share Purchase Price at any time
during the forty-five (45) day period commencing on the Closing Date (except for
shares issued pursuant to (a) stock options, (b) purchases by the Company of
outstanding existing stock options, and (c) warrants outstanding as of the date
hereof) the Company shall have the obligation to promptly notify and pay the
Purchaser (x) the aggregate difference between (i) the Per Share Purchase Price
of the Shares and (ii) the per share price of such additional shares of the
Company's Common Stock (or securities that may be converted into or exchanged
for shares of Common Stock) so sold, (y) multiplied by the number of Shares
purchased hereunder, at the Company's option, in either cash or additional
shares of the Company's Common Stock. If the Company elects to pay in Common
Stock, the Common Stock shall be valued at the price at which the Company sells
any such shares (or securities that may converted into or exchanged for shares)
of Common Stock. Such
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payment by the Company, whether in the form of shares of Common Stock or in the
form of cash, will be payable within five (5) days of such other sale.
2. CLOSING. The closing of the purchase and sale of the Shares (the "OFFERING")
shall take place at the offices of Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP,
counsel to the Company, at the same time as closing on shares of Common Stock
purchased by the Other Purchasers pursuant to the Securities Purchase
Agreements, on the first business day following the satisfaction of the
conditions set forth in Paragraph 6 below, as coordinated by the parties, or on
such other date or at such other time and place as the Company and the Purchaser
may agree upon (such time and date of the closing being referred to herein as
the "CLOSING DATE"). Upon payment of the Purchase Price in full in immediately
available funds by or on behalf of the Purchaser to the Company by wire transfer
to an account specified by the Company to the Purchaser prior to the Closing
Date, the Company will promptly cause its transfer agent to deliver to the
Purchaser certificates representing the Shares in such denominations and
registered in such names as the Purchaser shall have requested not less two
business days prior to the Closing Date. The Company shall provide facsimile
copies of the certificates to the Purchaser on the Closing Date.
3. REGISTRATION.
(a) On or before the Closing Date, the Company's Registration
Statement on Form S-1 will (i) be declared effective by the
Securities and Exchange Commission ("COMMISSION") (including
all exhibits thereto and all information and documents
incorporated by reference therein, the "REGISTRATION
STATEMENT") and (ii) include the registration of the original
issuance of the Shares of Common Stock purchased by the
Purchaser pursuant to this Agreement.
(b) If not completed on or prior to the Closing Date, then
promptly after the Closing Date, the Company shall take all
requisite action to list the Shares for trading on the NYSE.
4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants, as of the date hereof and as of the Closing Date, as follows:
(a) no consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction
over the Company or any of the Company's affiliates is
required for the execution of this Agreement or the sale of
the Shares to the Purchaser;
(b) neither the sale of the Shares nor the performance of the
Company's other obligations pursuant to this Agreement will
violate, conflict with, result in a breach of, or constitute a
default (or an event that, with the giving of notice or the
lapse of time or both, would constitute a default or trigger
any right of a third party to acquire equity interests in the
Company or cause mandatory adjustment of the price at which
any outstanding security of the Company is convertible into
Common Stock) under (i) the Certificate of Incorporation or
the Bylaws of the Company; (ii) any decree,
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judgment, order or determination of any court, governmental
agency or body, or arbitrator having jurisdiction over the
Company or any of the Company's properties or assets; (iii)
any law, treaty, rule or regulation applicable to the Company
(other than the federal securities laws, representations and
warranties with respect to which are made by the Company, or
the requirements of the NYSE, except that stockholder approval
is required and will be obtained pursuant to the Company's
proxy statement to be dated prior to the Closing Date and the
special meeting of the Company's stockholders to be held as
promptly as practicable, but in all events prior to the
Closing Date); or (iv) the terms of any bond, debenture, note
or other evidence of indebtedness, or any agreement, stock
option or similar plan by which the Company is bound or to
which any property of the Company is subject, in any event
above, which violation, conflict or breach would have a
material adverse effect on the Company (unless the Per Share
Purchase Price is less than the average of the closing prices
on the twenty business days ending on the Closing Date on all
domestic securities exchanges on which the Common Stock is
then listed, then an adjustment in the warrant exercise price
of certain warrants held by Bank of America Illinois might be
required);
(c) the Company has taken all corporate action required to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder and will use the
proceeds of sale of the shares of Common Stock to the
Purchaser and the Other Purchasers in the manner described in
the Prospectus (as herein defined);
(d) the Company has duly authorized the issuance of the Shares
and, when issued and delivered to and paid for by the
Purchaser in accordance with the terms hereof, the Common
Stock will be duly and validly issued, fully paid and
non-assessable and will not constitute "restricted securities"
within the meaning of Rule 144(a)(3) promulgated under the
Securities Act of 1933, as amended (the "ACT");
(e) the Company's Prospectus dated October 1, 1999 (the
"PROSPECTUS") included in the Company's Registration Statement
on Form S-1 (Registration No.333- 84985); the Company's Form
8-A filed on May 23, 1997, as amended on June 20, 1997; the
Company's Annual Report on Form 10-K for its Fiscal Year Ended
September 30, 1998; the Company's Proxy Statement dated
December 4, 1998 for its Annual Meeting held on January 21,
1999; the Company's Proxy Statement dated July 16, 1998 for
its Special Meeting held on August 18, 1998; the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended
June 30, 1999, March 31, 1999, and December 31, 1998;(all of
the documents listed above in this Paragraph 4(e) being
referred to collectively as the "DISCLOSURE DOCUMENTS") have
been delivered to the Purchaser and, as of the date of each
such respective document included therein and when considered
as of today together and with this Agreement, such Disclosure
Documents do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the
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statements therein not misleading in light of the
circumstances in which they were made with respect to the
Company;
(f) the Company's Financial Statements for the year ended
September 30, 1998, as amended, included in the Disclosure
Documents comply in all material respects with the applicable
requirements of the Securities Exchange Act of 1934, as
amended, and have been prepared, and fairly present in all
material respects the consolidated financial condition,
results of operations and cash flows of the Company and its
subsidiaries at the respective dates and for the respective
periods indicated, in accordance with generally accepted
accounting principles consistently applied throughout such
periods (except as noted therein);
(g) except as set forth in the Disclosure Documents or
pursuant to this Agreement, since September 30, 1998 (i) the
Company has not incurred any material liabilities, direct or
contingent, except (A) in the ordinary course of business, (B)
additional borrowings under the Company's Credit Agreement
dated February 19, 1997, as amended, with Bank of America
Illinois, as agent (the "Credit Agreement"), and other debt
instruments under which the Company had borrowed approximately
$89.3 million as of September 27, 1999, (C) warrants issued in
connection with the improvement of the Company's capital
structure and the giving of guarantees of the repayment of, in
the aggregate, $2.6 million of the Company's debt under the
Credit Agreement, and (D) in connection with the Company's
1999 Strategic Operating Plan, as described in the Disclosure
Documents; and (ii) there has been no material adverse change
in the properties, business, results of operations or
financial condition of the Company; and
(h) as of July 31, 1999 (and without giving effect to the sale
of Shares of Common Stock hereunder), the Company had a total
of 12,635,861 shares of Common Stock issued and outstanding;
approximately 1,121,741 shares of Common Stock were subject to
outstanding options granted under the Company's 1997 Omnibus
Incentive Plan; approximately 1,008,075 shares of Common Stock
were subject to outstanding options granted under the
Company's 1995 Stock Option Plan; approximately 457,616 shares
of Common Stock were reserved for issuance under the Company's
Employee Stock Purchase Plan; approximately 150,000 shares of
Common Stock were reserved for issuance under the Company's
1997 Non- Employee Director Stock Option Plan and 636,137
shares were reserved for issuance pursuant to exercise of
outstanding Warrants, and there will be no changes in these
numbers prior to the Closing Date except as a result of shares
issued in connection with the conversion or exchange of any
securities of the Company or stock options granted under or
shares issued under any existing stock option plan or other
existing employee bonus or existing incentive plan of the
Company.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents and
warrants, as of the date hereof and as of the Closing Date, as follows:
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(a) no consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction
over the Purchaser is required for the execution of this
Agreement or the purchase of the Shares by the Purchaser;
(b) neither the purchase of the Shares nor the performance of
the Purchaser's other obligations pursuant to this Agreement
will violate, conflict with, result in a breach of, or
constitute a default under (i) the charter documents of the
Purchaser; (ii) any decree, judgment, order or determination
of any court, governmental agency or body, or arbitrator
having jurisdiction over the Purchaser or any of the
Purchaser's properties or assets; (iii) any law, treaty, rule
or regulation applicable to the Purchaser; or (iv) the terms
of any bond, debenture, note or other evidence of
indebtedness, or any agreement, stock option or similar plan
by which the Purchaser is bound or to which any property of
the Purchaser is subject, in any event above, which violation,
conflict or breach would have a material adverse effect on the
Purchaser;
(c) the Purchaser has taken all corporate action required to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder; and
(d) the Purchaser has not purchased or sold, directly or
indirectly, shares of Common Stock except pursuant to this
Agreement during the twenty day period referred to in
Paragraph 1 above.
6. CONDITIONS OF CLOSING. The obligations of each party hereunder shall be
subject to:
(a) the accuracy in all material respects of the
representations and warranties of the other party hereto as of
the date hereof and as of the Closing Date, as if such
representations and warranties had been made again on and as
of the Closing Date;
(b) the performance in all material respects by the other
party of its obligations hereunder which must be performed
prior to the Closing Date;
(c) the Company shall have amended its bylaws to provide that
effective on the Closing Date, the Company, without the
approval of the owners of a majority of the Common Stock,
shall not grant to any officer of the Company any stock
options at less than the closing market price on the date of
grant or reduce the price of any options which either were
granted as a non-qualified stock option grant to an incoming
employee or vendor or were granted under any of the Company's
existing or future stock option plans, PROVIDED, HOWEVER, that
the foregoing shall not preclude the Company from issuing new,
lower priced options issued from a stock option plan to
persons holding higher priced options from such plan,
PROVIDED, HOWEVER, that if such new lower priced options are
granted in exchange for such higher priced options, the shares
covered by such higher priced options shall be canceled or
surrendered and not available for re-grant under such stock
option plan; and the bylaws will provide
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that this provision regarding stock options cannot be amended
or eliminated without the approval of the owners of a majority
of the Common Stock;
(d) the Registration Statement has been declared effective and
no stop order suspending the effectiveness of the Registration
Statement shall have been issued;
(e) the stockholder approval referred to in Paragraph 4(b)
above shall have been obtained; and
(f) the Purchaser shall have received the legal opinion of
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP, counsel to the
Company, in the form set forth in Exhibit A hereto.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Purchaser, each person, if any, who controls the Purchaser
within the meaning of Section 15 of the Act and each officer,
director, employee and agent of the Purchaser and of any such
controlling person against any and all liabilities, claims,
damages or expenses whatsoever, as incurred arising out of or
resulting from any breach or alleged breach or other violation
of any representation, warranty, covenant or undertaking by
the Company contained in this Agreement, and the Company will
reimburse the Purchaser for its reasonable legal and other
expenses (including the reasonable cost of any investigation
and preparation, and including the reasonable fees and
expenses of counsel) incurred in connection therewith.
(b) The Purchaser agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company within
the meaning of Section 15 of the Act and each officer,
director, employee and agent of the Company and of any such
controlling person against any and all losses, liabilities,
claims, damages or expenses whatsoever, as incurred arising
out of or resulting from any breach or alleged breach or other
violation or alleged violation of any representation,
warranty, covenant or undertaking by the Purchaser contained
in this Agreement, and the Purchaser will reimburse the
Company for its reasonable legal and other expenses (including
the reasonable cost of any investigation and preparation, and
including the reasonable fees and expenses of counsel)
incurred in connection therewith.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective agreements,
representations, warranties, indemnities and other statements made by or on
behalf of each party hereto pursuant to this Agreement, as of the date they were
made, shall, unless otherwise specified, survive until the third anniversary of
the Closing Date and shall expire thereafter.
9. MISCELLANEOUS.
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(a) This Agreement may be executed in one or more counterparts
and such counterparts shall constitute but one and the same
agreement and authorized signatures may be evidenced to the
other party by facsimile copies thereof; provided that the
originally signed signature page of any party is provided to
the other party within two business days after the original
execution.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto. This Agreement shall not be
assignable by any party hereto without the prior written
consent of the other party hereto and no other person shall
have any right or obligation hereunder. Any assignment
contrary to the terms hereof shall be null and void and of no
force or effect.
(c) This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and
supersedes any prior agreements or understandings, whether
written or oral, between the parties respecting such subject
matter.
(d) If within 45 days of the Closing Date hereof the Company
enters into or is a party to any agreement to issue additional
equity securities (or securities convertible or exchangeable
therefor), the Company shall promptly provide notice of such
agreement to the Purchaser, together with a copy of such
agreement.
10. DISCLOSURE. In connection with the offering, the Company has agreed to cause
a person reasonably acceptable to the Company and designated by CID Equity
Capital V L.P., one of the Other Purchasers, to be nominated for election, at
the next annual meeting of the Company's stockholders, as a director on the
Company's Board of Directors.
11. GOVERNING LAW. This Agreement shall be governed by the internal laws of the
State of Ohio.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
WATERLINK, INC.
By:
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T. Xxxxx Xxxx, President and
Chief Executive Officer
[PURCHASER]
By:
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