EXHIBIT 99.4
CONFORMED COPY
RECAPITALIZATION AGREEMENT
Among
COMPAGNIE GENERALE DES EAUX
ANJOU INTERNATIONAL COMPANY
and
AIR & WATER TECHNOLOGIES CORPORATION
Dated as of September 24, 1997
TABLE OF CONTENTS
ARTICLE I
THE RECAPITALIZATION
Section 1.1 Conversion of Series A Preferred Stock into
AWT Common Stock . . . . . . . . . . . .. . . 2
Section 1.2 Rights Offering . . . . . . . . . . . . . . 2
Section 1.3 Conditional CGE Subscription . . . . . . . . 5
Section 1.4 Use of Proceeds . . . . . . . . . . . . . . 6
ARTICLE II
THE CLOSING
Section 2.1 Closing Date . . . . . . . . . . . . . . . . 6
Section 2.2 AWT Deliveries at the Closing . . . . . . . 6
Section 2.3 CGE and Anjou Deliveries at the Closing . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AWT
Section 3.1 Organization and Qualification . . . . . . . 8
Section 3.2 Capitalization . . . . . . . . . . . . . . . 8
Section 3.3 Authority Relative to this Agreement . . . . 9
Section 3.4 No Conflict; Required Filings and Consents . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CGE AND ANJOU
Section 4.1 Organization and Qualification; Ownership of
Shares . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.2 Authority Relative to this Agreement . . . . 11
Section 4.3 No Conflict; Required Filings and Consents . 11
ARTICLE V
COVENANTS
Section 5.1 Registration Statement . . . . . . . . . . . 12
Section 5.2 Charter Amendment; Information/Proxy
Statement . . . . . . . . . . . . . . . . . 12
Section 5.3 Business Planning Committee . . . . . . . . 13
Section 5.4 Information Statement Disclosure . . . . . . 14
Section 5.5 Clarification of Investment Agreement . . . 14
Section 5.6 USF&G Guarantees . . . . . . . . . . . . . . 15
Section 5.7 Analyst Conferences . . . . . . . . . . . . 16
Section 5.8 No Short-Form Merger . . . . . . . . . . . . 16
Section 5.9 Consent Solicitation; Supplemental Indenture 16
Section 5.10 Warrant Agreement . . . . . . . . . . . . . 16
Section 5.11 Continued Listing . . . . . . . . . . . . . 17
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
Section 6.1 Representations, Warranties and Covenants . 17
Section 6.2 Consents . . . . . . . . . . . . . . . . . . 17
Section 6.3 No Order . . . . . . . . . . . . . . . . . . 17
Section 6.4 Registration Statement; Rights Offering . . 18
Section 6.5 Exchange of Series A Preferred Stock . . . . 18
Section 6.6 Stockholder Approval; Restated Certificate of
Incorporation . . . . . . . . . . . . . . . . 18
Section 6.7 Warrant Agreement . . . . . . . . . . . . . 18
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination . . . . . . . . . . . . . . . . 18
Section 7.2 Amendment . . . . . . . . . . . . . . . . . 18
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . 19
Section 8.2 Notices . . . . . . . . . . . . . . . . . . 19
Section 8.3 Certain Definitions . . . . . . . . . . . . 20
Section 8.4 Severability . . . . . . . . . . . . . . . . 21
Section 8.5 Entire Agreement; Assignment . . . . . . . . 21
Section 8.6 Parties in Interest . . . . . . . . . . . . 22
Section 8.7 Governing Law . . . . . . . . . . . . . . . 22
Section 8.8 Headings . . . . . . . . . . . . . . . . . . 22
Section 8.9 Counterparts . . . . . . . . . . . . . . . . 22
Glossary of Defined Terms
(Not Part of this Agreement)
Defined Term Location of Definition
affiliate . . . . . . . . . . . . . . . . . . . . SECTION 8.3(a)
Agreement . . . . . . . . . . . . . . . . . . . . Preamble
AMEX . . . . . . . . . . . . . . . . . . . . . . SECTION 1.2(a)
Anjou . . . . . . . . . . . . . . . . . . . . . . Preamble
Anjou Note . . . . . . . . . . . . . . . . . . . SECTION 1.4
AWT . . . . . . . . . . . . . . . . . . . . . . . Preamble
Basic Subscription Privilege . . . . . . . . . . SECTION 1.2(b)
beneficial owner . . . . . . . . . . . . . . . . SECTION 8.3(b)
Blue Sky Laws . . . . . . . . . . . . . . . . . . SECTION 3.4(b)
Board . . . . . . . . . . . . . . . . . . . . . . Recitals
business day . . . . . . . . . . . . . . . . . . SECTION 8.3(c)
Business Planning Committee . . . . . . . . . . . SECTION 5.3
CGE . . . . . . . . . . . . . . . . . . . . . . . Preamble
CGE Debt . . . . . . . . . . . . . . . . . . . . SECTION 1.4
CGE Material Adverse Effect . . . . . . . . . . . SECTION 4.3(b)
CGE Note . . . . . . . . . . . . . . . . . . . . SECTION 1.4
Charter Amendment . . . . . . . . . . . . . . . . SECTION 5.2(a)
Class A Common Stock . . . . . . . . . . . . . . SECTION 1.1(a)
Closing . . . . . . . . . . . . . . . . . . . . . SECTION 2.1
Closing Date . . . . . . . . . . . . . . . . . . SECTION 2.1
Closing Price . . . . . . . . . . . . . . . . . . SECTION 1.2(d)
Commencement Date . . . . . . . . . . . . . . . . SECTION 1.2(e)
Company Preferred Stock . . . . . . . . . . . . . SECTION 3.2
Conditional CGE Subscription . . . . . . . . . . SECTION 1.3
Consent Solicitation . . . . . . . . . . . . . . SECTION 5.8
control . . . . . . . . . . . . . . . . . . . . . SECTION 8.3(d)
Convertible Debentures . . . . . . . . . . . . . SECTION 3.2
DGCL . . . . . . . . . . . . . . . . . . . . . . SECTION 3.3
Excess Shares . . . . . . . . . . . . . . . . . . SECTION 1.2(b)
Exchange Act . . . . . . . . . . . . . . . . . . SECTION 3.4(b)
Exchange Common Shares . . . . . . . . . . . . . SECTION 1.1(a)
Expiration Date . . . . . . . . . . . . . . . . . SECTION 1.2(e)
Governmental Entity . . . . . . . . . . . . . . . SECTION 3.4(b)
Indenture . . . . . . . . . . . . . . . . . . . . SECTION 5.8
Information Statement . . . . . . . . . . . . . . SECTION 5.2(b)
Investment Agreement . . . . . . . . . . . . . . Recitals
Law . . . . . . . . . . . . . . . . . . . . . . . SECTION 3.4(a)
Material Adverse Effect . . . . . . . . . . . . . SECTION 3.4(b)
Non-Voting Common Stock . . . . . . . . . . . . . SECTION 1.2(f)
Option . . . . . . . . . . . . . . . . . . . . . SECTION 3.2
Oversubscription Privilege . . . . . . . . . . . SECTION 1.2(b)
person . . . . . . . . . . . . . . . . . . . . . SECTION 8.3(e)
Prospectus . . . . . . . . . . . . . . . . . . . SECTION 1.2(f)
Public . . . . . . . . . . . . . . . . . . . . . SECTION 1.3
Recapitalization . . . . . . . . . . . . . . . . Recitals
Record Date . . . . . . . . . . . . . . . . . . . SECTION 1.2(a)
Registration Statement . . . . . . . . . . . . . SECTION 5.1
Requisite Consents . . . . . . . . . . . . . . . SECTION 5.8
Right . . . . . . . . . . . . . . . . . . . . . . SECTION 1.2(a)
Rights Offering . . . . . . . . . . . . . . . . . SECTION 1.2(b)
SEC . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.2 (f)
Securities Act . . . . . . . . . . . . . . . . . SECTION 3.4(b)
Series A Preferred Stock . . . . . . . . . . . . SECTION 1.1(a)
Special Committee . . . . . . . . . . . . . . . . Recitals
Subscription Price . . . . . . . . . . . . . . . SECTION 1.2(d)
Subsidiary . . . . . . . . . . . . . . . . . . . SECTION 3.1
Subsidiary . . . . . . . . . . . . . . . . . . . SECTION 8.3(f)
Supplemental Indenture . . . . . . . . . . . . . SECTION 5.8
Trading Day . . . . . . . . . . . . . . . . . . . SECTION 1.2(d)
Underlying Share . . . . . . . . . . . . . . . . SECTION 1.2(b)
USF&G . . . . . . . . . . . . . . . . . . . . . . SECTION 5.6
Warrant Agreement . . . . . . . . . . . . . . . . SECTION 5.9
Warrant Pool . . . . . . . . . . . . . . . . . . SECTION 1.2(c)
Warrants . . . . . . . . . . . . . . . . . . . . SECTION 1.2(c)
RECAPITALIZATION AGREEMENT (this "Agreement"),
dated as of September 24, 1997, among Air & Water
Technologies Corporation, a Delaware corporation ("AWT"),
Compagnie Generale des Eaux, a company organized under
the laws of the Republic of France ("CGE"), and its
indirectly wholly-owned subsidiary, Anjou International
Company, a Delaware corporation ("Anjou").
WHEREAS, the Board of Directors of AWT (the
"Board") has deemed it to be in the best interests of AWT
and its stockholders for AWT to effect a comprehensive
recapitalization of AWT as described herein (the
"Recapitalization") which includes certain transactions
between AWT and each of CGE and Anjou;
WHEREAS, AWT, CGE and Anjou have entered into
an Investment Agreement, dated as of March 30, 1994 (the
"Investment Agreement"), pursuant to which CGE and its
affiliates agreed to certain restrictions on certain
transactions with AWT;
WHEREAS, CGE and Anjou beneficially own in the
aggregate approximately 50.0009% of the Class A Common
Stock (as hereinafter defined) and approximately
50.0009% of the aggregate voting power of AWT;
WHEREAS, a special committee comprised of the
Independent Directors (as defined in the Investment
Agreement) of the Board (the "Special Committee") have
(i) determined that the Recapitalization is fair to, and
in the best interests of, AWT and the stockholders of AWT
(other than CGE and its subsidiaries), and (ii) resolved
to approve and recommend this Agreement and the
transactions contemplated hereby to the Board, subject to
the terms and conditions hereof, having taken into
account, among other things, the fairness opinion of the
Special Committee's financial advisor, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., Inc.
WHEREAS, the Board has (i) determined that the
Recapitalization is fair to, and in the best interests
of, AWT and the stockholders of AWT, and (ii) resolved to
approve and adopt this Agreement and the transactions
contemplated hereby subject to the terms and conditions
hereof; and
WHEREAS, the parties to this Agreement desire
to set forth their understanding with respect to matters
described herein;
NOW THEREFORE, in consideration of the
foregoing and the mutual respective representations,
warranties, covenants and agreements contained herein,
and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE RECAPITALIZATION
Section 1.1 Conversion of Series A Preferred
Stock into AWT Common Stock. Upon the terms and
subject to the conditions set forth in this Agreement, at
the close of business on the Trading Day (as hereinafter
defined) immediately preceding the Record Date (as
hereinafter defined), the outstanding 1,200,000 shares
having an aggregate liquidation preference of $60,000,000
of the 5 1/2% Series A Convertible Exchangeable Preferred
Stock of AWT (the "Series A Preferred Stock") held by CGE
or its subsidiaries (representing all of the issued and
outstanding shares of Series A Preferred Stock of AWT)
shall be automatically exchanged for such number of
shares (the "Exchange Common Shares") of Class A Common
Stock, par value $.001 per share, of AWT (the "Class A
Common Stock") equal to the quotient obtained by dividing
$60,000,000 by an exchange price per share equal to the
Subscription Price (as defined hereinafter). As soon as
practicable following 4:00 p.m. on the Trading Day
immediately preceding the Record Date (as hereinafter
defined), CGE and Anjou shall deliver to AWT the
certificates held by them formerly representing Series A
Preferred Stock in exchange for certificates representing
the duly authorized, validly issued, fully-paid and non-
assessable Exchange Common Shares, in such names and
denominations as CGE may request.
Section 1.2 Rights Offering. (a) On a date
(the "Record Date") which is at least five days prior to
the effective date of the Registration Statement (as
defined hereinafter) to be determined by the Board in
accordance with the Certificate of Incorporation and
Bylaws of AWT and the applicable rules of the American
Stock Exchange (the "AMEX"), AWT shall declare a dividend
(subject to the Registration Statement (as hereinafter
defined) becoming effective at a future date) to all
holders of Class A Common Stock of record as of the
Record Date of such number of transferable rights (a
"Right"), which when multiplied by the Subscription Price
shall equal $210,000,000 in gross proceeds. As soon as
practicable following the effective date of the
Registration Statement, AWT will distribute such Rights
to such holders of Class A Common Stock.
(b) Each Right shall entitle the holder
thereof to acquire (the "Basic Subscription Privilege"),
at the Subscription Price, one share of Class A Common
Stock (an "Underlying Share") and, for each holder other
than CGE and its subsidiaries, such number of Warrants
(as hereinafter defined) determined in accordance with
Section 1.2(c). All holders of Rights (other than CGE
and its subsidiaries) who exercise the Basic Subscription
Privilege may also subscribe for additional Underlying
Shares that are not otherwise purchased pursuant to the
exercise of Rights ("Excess Shares") at the Subscription
Price, if any (the "Oversubscription Privilege"). If an
insufficient number of Excess Shares are available to
satisfy fully all elections to exercise the
Oversubscription Privilege, the available Excess Shares
shall be prorated among holders who exercise their
Oversubscription Privilege. CGE hereby agrees to
exercise its Basic Subscription Privilege in full. The
"Rights Offering" means the offering of Underlying Shares
to holders of Rights pursuant to both the Basic
Subscription Privilege and the Oversubscription
Privilege.
(c) As promptly as practicable following the
Closing, but in no event later than the date on which
certificates representing Underlying Shares are sent to
persons exercising Rights in the Rights Offering, AWT
shall issue to each person who exercises Rights in the
Rights Offering (other than CGE and its subsidiaries)
such number of transferable warrants to purchase shares
of Class A Common Stock having substantially the terms
set forth on Exhibit A hereto (the "Warrants") equal to
the product of the Warrant Pool (as hereinafter defined)
multiplied by a fraction the numerator of which is the
total number of Underlying Shares purchased by each such
holder in the Rights Offering and the denominator of
which is the total number of Underlying Shares purchased
by Rights holders (other than CGE and its subsidiaries)
in the Rights Offering. For purposes of this Section
1.2(c), "Warrant Pool" shall mean that number of Warrants
equal to the product of 10,000,000 multiplied by a
fraction the numerator of which is the total number of
Underlying Shares purchased by holders of Rights (other
than CGE and its subsidiaries) in the Rights Offering and
the denominator of which is the total number of
Underlying Shares issuable upon the full exercise of
Rights by Rights holders (other than CGE and its
subsidiaries) in the Rights Offering.
(d) "Subscription Price" means the price per
share of Class A Common Stock equal to 82% of the average
daily Closing Prices of the Class A Common Stock for the
ten consecutive Trading Days ending five days prior to
the Record Date; provided, however, that in no event
shall the Subscription Price be less than $1.75 per
share of Class A Common Stock or exceed $2.50 per share
of Class A Common Stock. For purposes of this Agreement,
(i) "Closing Price" means on any day the last reported
sale price regular way on such day or in case no sale
takes place on such day, the average of the reported bid
and asked prices regular way on the AMEX or, if the Class
A Common Stock is not listed on such exchange, on the
principal national securities exchange or quotation
system on which such Class A Common Stock is listed or
admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities
exchange or quotation system, the average of the closing
bid and asked prices in the over-the-counter market on
such day as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as
furnished by any New York Stock Exchange Member firm
selected from time to time by the Board for that purpose
and (ii) "Trading Day" means a day on which securities
traded on the national securities exchange or quotation
system or in the over-the-counter market used to
determine the Closing Price.
(e) The expiration date of the Rights Offering
(the "Expiration Date") shall be no later than the date
which is thirty calendar days following the date (subject
to AWT's right to extend such date for a period not to
exceed 10 days) (the "Commencement Date") upon which the
Prospectus is first sent to holders of record of the
Class A Common Stock as of the Record Date. The
Prospectus shall be sent to such holders on or about the
effective date of the Registration Statement.
(f) Notwithstanding anything contained in this
Agreement to the contrary, promptly following the
execution of this Agreement and prior to the initial
filing of the Registration Statement with the Securities
and Exchange Commission (the "SEC"), AWT and CGE shall
(with the prior approval of the Special Committee)
determine to take one of the actions described in clauses
(i), (ii) or (iii) below. AWT shall either:
(i) elect to adopt as a term of the Rights
Offering and this Agreement a provision which
provides that in the event AWT fails to obtain the
Requisite Consents (as hereinafter defined) and any
person's beneficial ownership of the voting power of
the capital stock of AWT entitled to vote in the
election of directors would, upon the exercise of
such holder's Basic Subscription Privilege or
Oversubscription Privilege or pursuant to Section
1.3 of this Agreement, exceed 74% of the total
voting power then outstanding, then AWT shall issue
to such person only such number of shares of Class A
Common Stock as would cause such person's aggregate
beneficial ownership of the then outstanding voting
power of AWT to equal 74% and any additional shares
to be issued thereunder to such person shall be
shares of Class B Common Stock, par value $.001 per
share (the "Non-Voting Common Stock"), of AWT which
shall be non-voting shares of common stock of AWT;
or
(ii) elect to take all actions necessary to
amend the Restated Certificate of Incorporation to
amend the terms of the Class A Common Stock to
provide that until such time as Section 1501 of the
Indenture (as hereinafter defined) is amended to
eliminate the right of the holders of Convertible
Debentures (as hereinafter defined) to require AWT
to repurchase the Convertible Debentures or until
Section 1501 of the Indenture is terminated in
accordance with its terms), stockholders' shares of
Class A Common Stock shall automatically convert
into shares of Class B Common Stock if and only to
the extent the beneficial ownership of Class A
Common Stock would cause such person's beneficial
ownership of the then outstanding voting power of
AWT entitled to vote in the election of directors to
exceed 74%; or
(iii) elect to amend this Agreement such that
(x) the Restated Certificate of Incorporation of AWT
would be amended to authorize a new class of non-
voting common stock which would automatically
convert into Class A Common Stock, except to the
extent the holder thereof would own more than 74% of
the aggregate voting power of AWT entitled to vote
in the election of directors of AWT immediately
following such conversion and (y) the Underlying
Shares offered in the Rights Offering would be
shares of such new class of non-voting common stock.
The parties hereto acknowledge that it is the
intent of the foregoing provision to prevent any person
from beneficially owning in excess of 74% of the voting
power of the capital stock of AWT entitled to vote in the
election of directors prior to the receipt of the
Requisite Consents or the termination of the effect of
Section 1501 of the Indenture.
(g) Except as otherwise provided by this
Agreement, the terms of the Rights Offering shall be set
forth in the prospectus (the "Prospectus") forming a part
of the Registration Statement (as hereinafter defined)
which terms shall be reasonably satisfactory to CGE and
the Special Committee.
(h) CGE and AWT each agree to support the
Rights Offering through the development and
implementation of a timely coordinated "roadshow" to
current AWT stockholders and potential investors in Class
A Common Stock.
Section 1.3 Conditional CGE Subscription. In
the event that all Underlying Shares are not purchased
pursuant to the Rights Offering (including pursuant to
the Oversubscription Privilege), CGE and AWT hereby agree
that, as immediately following the Expiration Date, CGE
shall subscribe for and purchase from AWT and AWT shall
issue and sell to CGE, or a subsidiary thereof designated
by CGE, at the Subscription Price, such number of shares
of Class A Common Stock (the "Conditional CGE
Subscription"), such that (i) the total number of shares
of Class A Common Stock subscribed by CGE in the
Conditional CGE Subscription shall be no greater than (A)
the total number of shares of Class A Common Stock
available to be purchased by holders of Rights other than
CGE and its subsidiaries (the "Public"), minus (B) the
total number of shares of Class A Common Stock actually
purchased by the Public, and (ii) in no event shall the
gross proceeds resulting from CGE's and its subsidiaries'
Basic Subscription Privilege and Conditional CGE
Subscription pursuant to this Section 1.3 exceed
$185,000,000.
Section 1.4 Use of Proceeds. Other than the
first $25,000,000 of gross proceeds received pursuant to
the Rights Offering from subscriptions by the Public,
which shall be retained by AWT for general corporate
purposes, the proceeds to AWT from the transactions
contemplated by this Article I shall first be used to
repay the $185,000,000 aggregate principal amount of debt
of CGE (the "CGE Debt"), consisting of (i) the
$125,000,000 million aggregate principal amount note of
AWT held by CGE under the Credit Agreement dated as of
June 14 ,1994, between CGE and AWT (the "CGE Note") and
(ii) the $60,000,000 aggregate principal amount note of
AWT held by Anjou under the Revolving Credit Agreement
dated as of August 6, 1996, between Anjou and AWT (the
"Anjou Note"). Any proceeds remaining following the
repayment of the CGE Debt shall be retained for general
corporate purposes.
ARTICLE II
THE CLOSING
Section 2.1 Closing Date. Upon the terms and
subject to the conditions contained in this Agreement,
the closing of certain of the transactions contemplated
by this Agreement (the "Closing") shall take place at the
offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
place as the parties may mutually agree, as soon as
practicable following the satisfaction or waiver of the
conditions set forth in Article VI. The date on which
the Closing occurs is hereinafter referred to as the
"Closing Date").
Section 2.2 AWT Deliveries at the Closing. At
the Closing AWT shall deliver or cause to be delivered to
CGE and Anjou, the following:
(a) Certificates representing duly authorized,
validly issued, fully-paid and non-assessable Underlying
Shares and Conditional CGE Shares purchased by CGE and
Anjou or their subsidiaries pursuant to the terms of the
Rights Offering and Section 1.3 of this Agreement in the
names and denominations specified by CGE prior to the
Closing Date;
(b) The certificate contemplated by Section
6.1(a);
(c) Copies of any consents to obtained by AWT
as contemplated by Section 6.2;
(d) Payment by wire transfer of immediately
available funds to an account designated by CGE prior to
the Closing Date of $185,000,000, in repayment of the CGE
Note and the Anjou Note; and
(e) To the extent the Requisite Consents have
been obtained in the Consent Solicitation, a duly
executed Supplemental Indenture (as hereinafter defined).
(f) Such other and further instruments as CGE
or Anjou may reasonably request.
Section 2.3 CGE and Anjou Deliveries at the
Closing. At the Closing CGE and Anjou shall deliver to
AWT, the following:
(a) The certificate contemplated by Section
6.1(b);
(b) Payment by wire transfer of immediately
available funds to an account designated by AWT prior to
the Closing Date of an amount equal to the product of the
number of Conditional CGE Shares purchased by CGE
pursuant to Section 1.3 multiplied by the Subscription
Price;
(c) Evidence of payment by wire transfer of
immediately available funds to the subscription agent for
the Rights Offering by CGE of an amount equal to the
product of the Subscription Price and the number of
Rights exercised by CGE pursuant to its Basic
Subscription Privilege.
(d) Copies of any consents to be obtained by
CGE or Anjou as contemplated by Section 6.2;
(e) The Anjou Note and the CGE Note for
cancellation upon repayment of the principal amounts
thereof; and
(f) Such other and further instruments as AWT
may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AWT
As of the date hereof, AWT hereby represents
and warrants to CGE and Anjou that:
Section 3.1 Organization and Qualification.
Each of AWT and each subsidiary of AWT (a "Subsidiary")
is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization and has the requisite power and authority
and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business
as it is now being conducted. AWT and each Subsidiary is
duly qualified or licensed to do business, and is in good
standing, under the laws of each jurisdiction where the
ownership, lease or operation of its property or the
conduct of its business makes such qualification or
licensing necessary.
Section 3.2 Capitalization. As of the date of
this Agreement, the authorized capital stock of AWT
consists of 100,000,000 shares of Common Stock, par value
$.001 per share, and 2,500,000 shares of preferred stock,
par value $.01 per share ("Company Preferred Stock"). As
of the date of this Agreement, (i) 32,019,254 shares of
Class A Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable,
(ii) 89,902 shares of AWT Common Stock are held in the
treasury of AWT, and (iii) 1,239,509 options to purchase
Class A Common Stock (in each case, an "Option") were
outstanding pursuant to AWT's employee stock option
plans, each such Option entitling the holder thereof to
purchase one share of Class A Common Stock, and of which
Options to purchase an aggregate of 854,532 shares of
Class A Common Stock were exercisable. As the date
hereof, 1,200,000 shares of Series A Preferred Stock,
convertible into 4,800,000 shares of Class A Common
Stock are issued and outstanding. As of the date of this
Agreement, $115,000,000 aggregate principal amount of 8%
Convertible Subordinated Debentures due 2015 (the
"Convertible Debentures"), convertible into shares of
Class A Common Stock are issued and outstanding. Except
as set forth above, there are no options, warrants or
other rights, agreements, arrangements or commitments of
any character issued or authorized by AWT relating to the
issued or unissued capital stock of AWT or any Subsidiary
or obligating AWT or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in,
AWT or any Subsidiary. All shares of Class A Common
Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of AWT
or any Subsidiary to repurchase, redeem or otherwise
acquire any shares of Class A Common Stock or any capital
stock of any Subsidiary or to provide funds to, or make
any investment (in the form of a loan, capital
contribution or otherwise) in, any person. Each
outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and
nonassessable.
Section 3.3 Authority Relative to this
Agreement. AWT has all necessary corporate power and
authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The form, terms, and
provisions of this Agreement and the execution and
delivery of this Agreement by AWT, the performance by AWT
of its obligations hereunder and the consummation by AWT
of the transactions contemplated by this Agreement have
been duly and validly approved by the Special Committee.
The execution and delivery of this Agreement by AWT, the
performance by AWT of its obligations hereunder and the
consummation by AWT of the transactions contemplated by
this Agreement have been duly and validly authorized by
all necessary corporate action and, except for the
requisite approval of the Charter Amendment (as
hereinafter defined) under the General Corporation Law of
the State of Delaware (the "DGCL"), no other corporate
proceedings on the part of AWT are necessary to authorize
this Agreement or to consummate any of the transactions
contemplated by this Agreement. This Agreement has been
duly and validly executed and delivered by AWT and,
assuming the due authorization, execution and delivery by
CGE, constitutes a legal, valid and binding obligation of
AWT enforceable against AWT in accordance with its terms.
Section 3.4 No Conflict; Required Filings and
Consents. (a) The execution and delivery of this
Agreement by AWT do not, and the performance of this
Agreement by AWT will not, (i) conflict with or violate
the Certificate of Incorporation or Bylaws or equivalent
organization documents of AWT or any of its Subsidiaries,
(ii)) conflict with or violate any United States federal,
state or local or any foreign statute, rule, regulation,
ordinance, code, ruling, decree, order or any other
requirement or rule of law (a "Law"), applicable to AWT
or by which any property or asset of AWT is bound, or
(iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would
become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance
on any property or asset of AWT or any Subsidiary
pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which AWT or any
Subsidiary is a party or by which AWT or any Subsidiary
or any property or asset of either of them is bound,
except for any such conflicts, violations, breaches,
defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially
delay the performance by AWT of any of its obligations
under this Agreement or the consummation of any of the
transactions contemplated hereby.
(b) The execution and delivery of this
Agreement by AWT do not, and the performance of this
Agreement by AWT will not, require any consent, approval,
authorization or permit of, or filing with or
notification to, any United States federal, state or
local or any foreign government or any court,
administrative or regulatory agency or commission or
other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), except (i) for
applicable requirements, if any, of (x) the Securities
Act of 1933, as amended (the "Securities Act"), (y) the
Securities Exchange Act of 1934 (the "Exchange Act"), or
(z) state securities or "blue sky" laws ("Blue Sky
Laws"), (ii) compliance with the rules and regulations of
the AMEX, (iii) the filing of the Charter Amendment with
the Secretary of State of the State of Delaware, and (iv)
where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not, individually or in the
aggregate, have a Material Adverse Effect or prevent or
materially delay the performance by AWT of any of its
obligations under this Agreement or the consummation of
any of the transactions contemplated by this Agreement.
The term "Material Adverse Effect" means any change or
effect that is or is reasonably likely to be materially
adverse to the business, operations, properties,
financial condition, prospects, assets or liabilities of
AWT and the Subsidiaries taken as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CGE AND ANJOU
As of the date hereof, CGE and Anjou hereby,
jointly and severally, represent and warrant to AWT that:
Section 4.1 Organization and Qualification;
Ownership of Shares. (a) CGE is a company duly organized
and validly existing under the laws of the Republic of
France, and Anjou is a corporation duly organized,
validly existing, and in good standing under the laws of
the State of Delaware.
(b) As of the date of this Agreement, CGE and
Anjou beneficially own an aggregate of 18,409,975 shares
of Class A Common Stock (which beneficial ownership
includes 4,800,000 shares of Class A Common Stock
issuable upon conversion of the Series A Preferred
Stock), and CGE also beneficially owns 1,200,000 shares
of the Series A Preferred Stock.
Section 4.2 Authority Relative to this
Agreement. Each of CGE and Anjou has all necessary
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The
execution and delivery of the Agreement by CGE and Anjou,
the performance by CGE and Anjou of their respective
obligations hereunder and the consummation by CGE and
Anjou of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of
CGE or Anjou are necessary to authorize this Agreement or
to consummate any of the transactions contemplated
hereby. This Agreement has been duly and validly
executed and delivered by CGE and Anjou and, assuming the
due authorization, execution and delivery by AWT,
constitutes a legal, valid and binding obligation of each
of CGE and Anjou enforceable against each of CGE and
Anjou in accordance with its terms.
Section 4.3 No Conflict; Required Filings and
Consents. (a) The execution and delivery of this
Agreement by CGE and Anjou do not, and the performance of
this Agreement by CGE and Anjou will not, (i) conflict
with or violate the statuts (articles of association) and
bylaws (or other similar organizational documents) of CGE
or the Certificate of Incorporation or Bylaws of Anjou,
(ii) conflict with or violate any Law applicable to CGE
or Anjou or by which any property or asset of either or
them is bound, or (iii) result in any breach of or
constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or
to give to others any right of termination, amendment,
acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property
or asset of CGE or Anjou pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to
which CGE or Anjou is a party or by which CGE or Anjou or
any property or asset of either of them is bound, except
for any such conflicts, violations, breaches, defaults or
other occurrences which would not, individually or in the
aggregate, materially delay the performance by CGE or
Anjou of any of its obligations under this Agreement or
the consummation of any of the transactions contemplated
hereby.
(b) The execution and delivery of this
Agreement by CGE and Anjou do not, and the performance of
this Agreement by CGE and Anjou will not, require any
consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of (x) the
Securities Act, (y) the Exchange Act or (z) Blue Sky
Laws, (ii) compliance with the rules and regulations of
the AMEX, and (iii) where failure to obtain such
consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or
materially delay the performance by CGE or Anjou of any
of its obligations under this Agreement or the
consummation of any of the transactions contemplated
hereby.
ARTICLE V
COVENANTS
Section 5.1 Registration Statement. As soon
as reasonably practicable, AWT shall file with the SEC a
registration statement (the "Registration Statement")
under the Securities Act in connection with the Rights
Offering and with respect to the Rights, the Underlying
Shares and the Warrants and shall use its best efforts to
effect the registration of the Rights, the Underlying
Shares and the Warrants. AWT shall provide CGE and the
Special Committee and their respective counsel with a
copy of any written comments or telephonic notification
of any oral comments AWT may receive from the SEC or its
staff with respect to the Registration Statement promptly
after the receipt thereof. AWT shall provide CGE and the
Special Committee and their respective counsel with a
reasonable opportunity to participate in all
communications with the SEC and its staff, including any
meetings and telephone conferences, relating to the
issuance of the Rights or the Underlying Shares.
Section 5.2 Charter Amendment;
Information/Proxy Statement. (a) In order to consummate
the Recapitalization, AWT, acting through the Board,
shall, as promptly as reasonably practicable, in
accordance with applicable Law and AWT's Certificate of
Incorporation and Bylaws, duly approve and adopt an
amendment to AWT's Certificate of Incorporation (the
"Charter Amendment") substantially in the form of Exhibit
B to this Agreement to increase the authorized capital
stock of AWT in order to permit the consummation of the
transactions contemplated by this Agreement.
CGE and Anjou agree to vote for or give
their written consent to AWT, as applicable, in respect
of the Charter Amendment and any other amendment to the
Restated Certificate of Incorporation necessary to
consummate the transactions contemplated by this
Agreement.
(b) To the extent practicable, concurrent with
the preparation and filing with the SEC of the
Registration Statement, AWT will prepare and file with
the SEC, and CGE will cooperate with AWT in such
preparation and filing, a preliminary information
statement, or if required by the applicable rules of the
AMEX, a preliminary proxy statement relating to the
Charter Amendment and use its best efforts to furnish the
information required to be included by the SEC in an
information or proxy statement on Schedule 14C or 14A, as
the case may be, and, after consultation with CGE, to
respond promptly to any comments made by the SEC with
respect to the preliminary information or proxy
statement and shall use its best efforts to cause a
definitive information or proxy statement (the
"Information Statement") to be mailed to AWT's
stockholders as soon as reasonably practicable. AWT
shall provide CGE and the Special Committee and their
respective counsel with a copy of any written comments or
telephonic notification of any oral comments AWT may
receive from the SEC or its staff with respect to the
Information Statement promptly after the receipt thereof.
AWT shall provide CGE and the Special Committee and their
respective counsel with a reasonable opportunity to
participate in all communications with the SEC and its
staff, including any meetings and telephone conferences,
relating to the Information Statement. AWT will cause
the Charter Amendment to be filed with the Secretary of
State of the State of Delaware the next business day
after all applicable time periods for taking such action
have expired. If at any time prior to the effectiveness
of the Charter Amendment there shall occur any event that
is required to be set forth in an amendment or supplement
to the Information Statement, AWT will prepare and mail
to its stockholders such an amendment or supplement.
Section 5.3 Business Planning Committee. The
Board of AWT will establish a committee (the "Business
Planning Committee") of the Board to review the business
strategies prepared by AWT senior management and, as
appropriate, make recommendations on the formulation and
implementation of those strategies that have as their
objective increasing stockholder value. Among other
things, the Business Planning Committee will identify
areas where CGE's management expertise and AWT's business
may be effectively integrated. The Business Planning
Committee will remain in place through the end of fiscal
1999 and will be comprised of three CGE appointed
directors and two directors who are independent and
unaffiliated with CGE.
Section 5.4 Information Statement Disclosure.
AWT and CGE hereby agree that the Information Statement
and the Registration Statement shall address the subject
of future funding for AWT as follows:
"Following the Recapitalization, AWT will
require additional financial resources to
develop and support each of its businesses at
▇▇▇▇▇▇▇ and ▇▇▇▇ and Professional Services
Group, to undertake related long-term capital
expenditures and to participate in the emerging
privatization market in the wastewater
management industry. CGE intends to work with
AWT to explore various ways to develop such
financial resources for these purposes,
including, among others, the raising by CGE of
an investment fund or other off-balance sheet
vehicle which would invest, on a case-by-case
basis, in various project financings undertaken
by AWT. It is anticipated that any such
vehicle would invest in such project finance
activities of AWT on terms which are
commercially reasonable. As a result, CGE and
AWT and possibly others, investing either
directly or indirectly through such vehicle or
otherwise, would share in the returns on such
projects pro rata in relation to their
respective equity investments."
Section 5.5 Clarification of Investment
Agreement. Section 5.6 of the Investment Agreement is
hereby amended and restated to read as follows:
"5.6 Joint Efforts. (a) CGE agrees on
behalf of itself and its Affiliates that, after
Closing, for so long as CGE and its Affiliates
are the largest stockholder of AWT, AWT shall
be CGE's exclusive vehicle in the United
States, its possessions and its territories for
its water management and waste water management
and air pollution activities; provided that the
foregoing shall not apply to any acquisition or
investment by CGE or any of its Affiliates of a
privately-owned, publicly-traded or publicly-
owned company in the water utility sector whose
primary business is the production,
distribution and/or sale of potable, fire,
bulk, draining or irrigation water ("Water
Utility"), nor to CGE's present or future
investments in Consumers Water Company
("Consumers Water") and Philadelphia Suburban
Corporation ("Philadelphia Suburban") (such
Water Utilities, Consumers Water and
Philadelphia Suburban hereinafter referred to
collectively as the "Water Businesses"). CGE
shall, and shall cause its Affiliates to assist
AWT in developing its water management and
wastewater management and air pollution
activities in both Canada and Mexico, subject
to contractual agreements as of March 30, 1994
and taking into account the respective
interests of AWT on the one hand and CGE and
its Affiliates on the other. CGE shall offer,
and shall cause its Affiliates to offer, AWT
an active participation in any proposed water
management or wastewater management activities
by CGE or any of its Affiliates in the United
States (which shall be deemed to exclude the
Water Businesses), which investment is too
capital intensive for AWT to undertake on a
stand-alone basis. In the event CGE or any of
its Affiliates acquires control of a Water
Business which is also engaged in wastewater
activities similar to those conducted by AWT as
of the date hereof, then CGE or such Affiliate
shall use reasonable efforts to cause, subject
to the fiduciary duties of the board of
directors of such Water Business and other
applicable regulatory standards, that Water
Business to offer to AWT (i) the opportunity to
obtain operating and maintenance contracts
with the wastewater management business of such
Water Business and (ii) the opportunity to
obtain new engineering contracts with such
Water Business, in each case, on terms which
are commercially reasonable in the judgment of
such Water Business; provided that the
foregoing shall not apply to any existing
business of Consumers Water or Philadelphia
Suburban as of the date hereof. In addition,
CGE and its Affiliates, on the one hand, and
AWT on the other, will establish a privileged
commercial relationship for the development of
air pollution activities in Europe.
(b) The provisions of this Section 5.6 shall
have no application to Kruger Inc., a distributor of
water treatment plant parts and components and an
indirect subsidiary of Omnium Traitement et de
Valorisation."
Section 5.6 USF&G Guarantees. AWT, hereby
approves for purposes of Section 7.3 of the Investment
Agreement, the proposed arrangements between CGE or one
of its affiliates and U.S. Fidelity & Guaranty (the
"USF&G") whereby, from the later of (i) September 30,
1997 and (ii) the date of this Agreement, and continuing
until the Closing of the Recapitalization, CGE or one of
its affiliates will enter into guarantees of certain
obligations of AWT relating to the bonding of certain
contracts under the Master Surety Agreement, between
USF&G and AWT and its subsidiaries, in consideration of
which CGE or one of its affiliates shall receive
assurances from USF&G that, in the event of a default by
AWT, USF&G shall assign and transfer to CGE or one of its
affiliates any and all of USF&G's resultant rights in
the bonded commercial contract (whether arising under the
Master Surety Agreement, or by operation of law, or
otherwise).
Section 5.7 Analyst Conferences. The Board of
AWT hereby agrees, for as long as shares of Class A
Common Stock are traded on the AMEX or any other national
securities exchange or national quotation system, to
cause management of AWT to hold semi-annual analyst
conferences, conduct conference calls concurrent with
earnings releases, promote analyst coverage of its stock
and initiate a stockholder relations program.
Section 5.8 No Short-Form Merger. CGE hereby
agrees that until the third anniversary of the Closing
Date, CGE agrees to not effect a "short-form" merger in
which the shares of Class A Common Stock are converted
into the right to receive cash pursuant to Section 253 of
the DGCL (or any successor provision thereto) without the
approval of a majority of the Independent Directors.
Section 5.9 Consent Solicitation; Supplemental
Indenture. Prior to or concurrently with the
commencement of the Rights Offering, AWT shall commence a
solicitation (the "Consent Solicitation") of consents to
amendments to the Indenture, dated as of May 15, 1997,
between AWT and Midlantic National Bank, as Trustee,
governing the Convertible Debentures (the "Indenture")
from the holders of not less than a majority in aggregate
principal amount of the Convertible Debentures
outstanding (the consents from such holders, the
"Requisite Consents") in order to delete Section 1501
from the Indenture. Any amount to be offered to holders
of the Convertible Debentures pursuant to the Consent
Solicitation for rendering their consents thereunder
shall be subject to the prior approval of, and timely
notice to, the Special Committee. Promptly following the
receipt of the Requisite Consents, AWT shall execute a
supplemental indenture containing the proposed amendments
(the "Supplemental Indenture").
Section 5.10 Warrant Agreement. Prior to the
effective date of the Registration Statement, CGE shall
negotiate in good faith with the Special Committee the
terms of a definitive agreement governing the Warrants
(the "Warrant Agreement") which Warrant Agreement shall
include the terms set forth in Exhibit A to this
Agreement.
Section 5.11 Listing of Class A Common Stock
and Rights. AWT shall use its commercially reasonable
efforts to (i) meet the continued listing requirements of
the AMEX and to continue to be listed thereon and (ii)
cause the Rights to be listed or admitted to trading, as
appropriate, on the AMEX.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
The respective obligations of each of the
parties to this Agreement to consummate the transactions
which are to be effected at the Closing hereunder shall
be subject to the satisfaction or waiver of the following
conditions; provided that any waiver by AWT must be
approved by a majority of the Special Committee.
Section 6.1 Representations, Warranties and
Covenants.
.
(a) All representations and warranties of AWT
contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date as if
such representations and warranties were made at and as
of the Closing Date, and AWT shall have performed in all
material respects all agreements and covenants required
hereby to be performed by it prior to or at the Closing
Date. There shall be delivered to CGE and Anjou at
Closing a certificate signed by the Chairman of the
Board, the President or an Executive Vice-President of
AWT as to the satisfaction of this condition.
(b) All representations and warranties of CGE
and Anjou contained in this Agreement shall be true and
correct in all material respects at and as of the Closing
Date as if such representations and warranties were made
at and as of the Closing Date, and CGE and Anjou shall
have performed in all material respects all agreements
and covenants required hereby to be performed by it prior
to or at the Closing Date. There shall be delivered to
AWT at Closing a certificate signed by the authorized
officer of CGE and Anjou as to the satisfaction of this
condition.
Section 6.2 Consents. All consents, approvals
and waivers from Governmental Entities and other parties
necessary to effect the transactions contemplated by this
Agreement shall have been obtained.
Section 6.3 No Order. No Governmental Entity
shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of
preventing or prohibiting consummation of the
transactions contemplated by this Agreement or the
effective operation of the business of AWT and the
Subsidiaries after the Closing Date.
Section 6.4 Registration Statement; Rights
Offering. The SEC shall have declared the Registration
Statement effective under the Securities Act and the
Expiration Date shall have occurred.
Section 6.5 Exchange of Series A Preferred
Stock. AWT shall have completed an exchange of the
Series A Preferred Stock held by CGE into Exchange Common
Shares pursuant to Section 1.1, and CGE and Anjou shall
have received duly executed certificates representing the
Exchange Common Shares.
Section 6.6 Stockholder Approval; Restated
Certificate of Incorporation Amendments. The Charter
Amendment and any amendment to the Restated Certificate
of Incorporation of AWT requires as a result of AWT
election to take the actions contemplated by Section
1.2(f) shall have been filed with the Secretary of State
of the State of Delaware and be effective under the DGCL.
Section 6.7 Warrant Agreement. AWT shall have
entered into the Warrant Agreement with the warrant agent
thereunder.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may
be terminated and the Transactions may be abandoned at
any time prior to the Closing Date (i) by mutual written
consent duly authorized by the Boards of Directors of
CGE, Anjou and the Special Committee on behalf of AWT or
(ii) by either CGE or the Special Committee on behalf of
AWT if the Closing shall not have been consummated on or
before March 22, 1998.
Section 7.2 Amendment. This Agreement may be
amended by the parties hereto by action taken by or on
behalf of their respective Boards of Directors (and
approved by the Special Committee) at any time prior to
the Closing Date. Any provision of this Agreement may be
amended or waived prior to the Closing Date if, but only
if, such amendment or waiver is in writing and is signed
by each party against whom or which such amendment or
waiver is to be enforced. Any amendment, supplement or
modification of or to any provision of this Agreement,
and any consent to any departure by any party from the
terms of any provision of this Agreement, shall be
effective only in the specific instance and for the
specific purpose for which made or given.
ARTICLE VIIII
MISCELLANEOUS
Section 8.1 Non-Survival of Representations,
Warranties and Agreements. The representations,
warranties and agreements in this Agreement shall
terminate at the Closing or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be,
except that the agreements set forth in Sections 5.3,
5.5, 5.6, 5.7, 5.8, 5.11 and Article VIII shall survive
the Closing and the termination of this Agreement
indefinitely.
Section 8.2 Notices. All notices, requests,
claims, demands and other communications hereunder shall
be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person,
by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other
address for a party as shall be specified in a notice
given in accordance with this Section 8.2):
if to AWT, to:
Air & Water Technologies Corporation
U.S. Highway 22 West and ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
if to CGE or Anjou, to:
Compagnie Generale des Eaux
▇▇ ▇▇▇ ▇'▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇
Telecopier No.: 011-331-4924-6922
Attention: Directeur General du Pole Eau
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Section 8.3 Certain Definitions. For purposes
of this Agreement, the term:
(a) "affiliate" of a specified person means a
person who directly or indirectly through one or more
intermediaries controls, is controlled by, or is under
common control with, such specified person;
(b) "beneficial owner" shall have the meaning
ascribed thereto in Rule 13d-3 under the Exchange Act.
(c) "business day" means any day on which the
principal offices of the SEC in Washington, D.C. are
open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are
not required or authorized by law or executive order to
close in the City of New York;
(d) "control" (including the terms "controlled
by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction
of the management and policies of a person, whether
through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise
(it being understood and agreed that any person which
beneficially owns more than 50% of the voting equity
capital of the person (in the case of a corporation, the
shares of a corporation's capital stock entitled
generally to elect its board of directors shall be such
corporation's "voting equity capital" for this purpose)
shall be presumed to control the person);
(e) "person" means an individual, corporation,
partnership, limited partnership, limited liability
company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of
the Exchange Act), trust, association or entity or
government, political subdivision, agency or
instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of AWT, CGE
or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more
intermediaries.
Section 8.4 Severability. If any term or
other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party.
Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by
this Agreement be consummated as originally contemplated
to the fullest extent possible.
Section 8.5 Entire Agreement; Assignment.
This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement
shall not be assigned by operation of law or otherwise,
except that CGE and Anjou may assign all or any of their
rights and obligations hereunder to any wholly-owned
subsidiary of CGE provided that no such assignment shall
relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations. To
the extent that any terms of the Investment Agreement and
this Agreement are inconsistent, the terms of this
Agreement shall control.
Section 8.6 Parties in Interest. This
Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this
Agreement.
Section 8.7 Governing Law. Except to the
extent that the DGCL is mandatorily applicable to the
transactions contemplated by this Agreement, this
Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York
(without regard to conflicts of laws principle thereof).
All actions and proceedings arising out of or relating to
this Agreement shall be heard and exclusively determined
in any New York state or federal court sitting in the
County of New York and the parties hereto hereby consent
to the jurisdiction of such courts in any such action or
proceeding.
Section 8.8 Headings. The descriptive
headings contained in this Agreement are included for
convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 8.9 Counterparts. This Agreement may
be executed in one or more counterparts (including by
facsimile transmission), and by the different parties
hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of
which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, CGE, Anjou and AWT have
caused this Agreement to be executed as of the date first
written above by their respective officers hereunto duly
authorized.
COMPAGNIE GENERALE DES EAUX.
By /s/ Francois Jobard
--------------------------------
Name: Francois Jobard
Title: Charge de Mission a la
Direction Financiere
ANJOU INTERNATIONAL COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
AIR & WATER TECHNOLOGIES CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
EXHIBIT A
TERM SHEET FOR WARRANTS
Issuer: Air & Water Technologies Corporation ("AWT
Total Number
of Warrants
Issuable: Set forth in Section 1.2(c) of the
Recapitalization Agreement.
Expiration Date: The Warrants will expire three years
from the date of issuance (the "Warrant
Expiration Date").
Exercise: Each Warrant will entitle the holder to
acquire, at any time from time to time prior
to the Expiration Date, one share of Class A
Common Stock at a price equal to $2.50 per
share, subject to adjustment from time to
time upon the occurrence of certain changes
in Class A Common Stock.
Rights as Holders of Warrants will not, by virtue
Stockholders: of being such holders, have any rights
as stockholders of AWT. If AWT subdivides its
outstanding shares of Class A Common Stock into a
greater number of shares or combines its
outstanding shares of Class A Common Stock into a
smaller number of shares (a "Change in Common
Stock"), the Exercise Price in effect immediately
prior to such action shall be proportionately
adjusted so that the holder of any Warrant
thereafter exercised may receive the aggregate
number and kind of shares of capital stock of AWT
which he would have owned immediately following
such action if such Warrant had been exercised
immediately prior to such action. The Exercise
Price for the Warrants in effect immediately prior
to such Change in Common Stock shall be changed to
a price (including any applicable fraction of a
cent to the nearest cent) determined by dividing
(i) the sum of (a) the total number of shares of
Class A Common Stock outstanding immediately prior
to such Change in Common Stock, multiplied by the
Exercise Price in effect immediately prior to such
Change of Common Stock and (b) the consideration,
if any, received by AWT upon such subdivision or
combination, by (ii) the total number of shares of
Class A Common Stock outstanding immediately after
such Change in Common Stock. Upon adjustment of
the Exercise Price, the number of shares of Class
A Common Stock issuable upon the exercise of each
Warrant (the "Warrant Shares") shall be the number
derived by multiplying the number of Warrant
Shares issuable immediately prior to such
adjustment by the Exercise Price in effect prior
to such adjustment and dividing the product so
obtained by the applicable Exercise Price. The
Warrants will also contain customary antidilution
provisions in respect of issuances of shares of
Class A Common Stock at prices below the fair
market value thereof, and will also contain
customary antidilution provisions in respect of
stock dividends, reclassifications, exchanges,
split-ups and asset distributions.
Reorganization of
the Company: If AWT consolidates or merges with or into,
or transfers or leases all or substantially
all of its assets to, any person, upon
consummation of such transaction, the
Warrants shall automatically become
exercisable for the kind and amount of
securities, cash or other assets which the
holder of a Warrant would have owned
immediately after the consolidation, merger,
transfer or lease if the holder had exercised
the Warrant immediately before the effective
date of the transaction. No such
consolidation, merger, transfer or lease
shall be effected unless the successor
company, if other than AWT, assumes by
written instrument the obligation to issue
securities, cash or other assets as
aforesaid.
Fractional
Interests: AWT shall not be required to issue
certificates representing fractions of
Warrant Shares but shall pay cash in
lieu of such fractional shares; provided
that holders of Warrants may elect to
purchase full shares of Class A Common
Stock by delivering an appropriate
amount of cash.
Registration
of Warrant Shares: Holders of Warrants shall be able to
exercise their Warrants only if a
registration statement relating to the
Warrant Shares is then in effect, or the
exercise of such Warrants is exempt from
the registration requirements of the
Securities Act and such securities are
qualified for sale or exempt from
qualification under the applicable state
blue sky laws. Subject to Black Out
Periods (as hereinafter defined), at
such time as the average daily Closing
Price of the Class A Common Stock is
greater than or equal to 85% of the
Exercise Price for twenty consecutive
Trading Days, AWT will prepare, file and
use its best efforts to cause to become
effective a registration statement in
respect of all of the Warrant Shares and
AWT shall use its commercially
reasonable efforts to keep such
registration statement continuously
effective under the Securities Act in
order to permit the prospectus included
therein to be lawfully delivered.
Notwithstanding the foregoing, AWT shall
not be required to amend or supplement
the registration statement, any related
prospectus or any document incorporated
therein by reference, for a period (a
"Black Out Period") not to exceed the
shorter of (x) the period ending on the
date the information responsible for the
Black Out Period is disclosed to the
public and (y) 60 days (provided that no
two Black Out Periods shall occur during
any period of 135 consecutive days) in
the event that (i) an event occurs and
is continuing as a result of which the
registration statement, any related
prospectus or any document incorporated
therein by reference as then amended or
supplemented would, in AWT's good faith
judgment, contain an untrue statement of
a material fact or omit to state a
material fact necessary in order to make
the statements therein, in the light of
the circumstances under which they were
made, not misleading, and (ii)(A) AWT
determines in its good faith judgment
that the disclosure of such event at
such time would have a material adverse
effect on the business, operations or
prospects of AWT or (B) the disclosure
otherwise relates to a material business
transaction which has not yet been
publicly disclosed; provided that no
Black Out Period may be in effect during
the six months prior to the Warrant
Expiration Date and there shall be no
more than three Black Out Periods during
the term of the Warrants.
Transfer Restric-
tions/ Listing: The Warrants will be freely
transferrable and freely tradable. AWT
shall use its commercially reasonable
efforts to secure the listing of the
Warrants and the Warrant Shares upon
each national securities exchange or
automated quotation system, if any, upon
which the shares of Class A Common Stock
are then listed and shall use its
commercially reasonable efforts to
maintain such listing, so long as any
other shares of Class A Common Stock
shall be so listed or quoted.
Reservation of
Shares: AWT shall at all times reserve for
issuance such number of shares of Class
A Common Stock as shall be sufficient
for the exercise of all the Warrants
issued.
Use of Proceeds: Proceeds from the exercise of the
Warrants will be retained to fund
working capital requirements and capital
expenditure
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
AIR & WATER TECHNOLOGIES CORPORATION
-------------------------------------------------------------------
Pursuant to Sections 228 and 242 of the General
Corporation Law of the State of Delaware
-------------------------------------------------------------------
Air & Water Technologies Corporation, a Delaware
corporation (the "Corporation"), does hereby certify as
follows:
FIRST: The name of the corporation is Air & Water
Technologies Corporation, a Delaware corporation.
SECOND: Effective immediately upon filing of this
Amendment and without further action on the part of the
Corporation or its stockholders the provisions of Article
FOURTH of the Corporation's Amended and Restated Certificate of
Incorporation shall be amended as described herein.
THIRD: That the Restated Certificate of Incorporation
of the Corporation is hereby amended to increase the number of
shares of Common Stock that the Corporation is authorized to
issued from 100,000,000 shares to 262,500,000 shares and to
amend the conversion rights of the holders of the Corporation's
Class B Common Stock. In order to effect the foregoing
amendments, the current Article FOURTH is hereby amended as
follows:
(i) The first paragraph of Article FOURTH is hereby
deleted in its entirety and the following paragraph is inserted
in lieu thereof:
"FOURTH: The total number of shares of
stock which the Corporation shall have the
authority to issue is 262,500,000 shares, of
which 260,000,000 shares shall be Common Stock,
par value $.001 per share, and 2,500,000 shares
shall be Preferred Stock, par value $.01 per
share."
(ii) The first paragraph of Paragraph B of Article
FOURTH is hereby deleted in its entirety and the following
paragraph is inserted in lieu thereof:
"B. The Common Stock shall consist of
230,000,000 shares of Class A Common Stock ("Class A
Common") and 30,000,000 shares of Class B Common
Stock ("Class B Common"). Except as otherwise
provided herein, all shares of Class A Common Stock
and Class B Common will be identical and will
entitle the holders thereof to the same rights and
privileges."
(iii) Paragraph 3A. of Paragraph B.3 of Article
FOURTH is hereby deleted in its entirety and the following
paragraph is inserted in lieu thereof:
"3. Conversion of Class B Common. Upon the
occurrence of any Conversion Event (as such term is
defined below), each holder's shares of Class B
Common shall automatically convert into the same
number of shares of Class A Common. For purposes of
this Paragraph 3, a "Conversion Event" shall mean
the expiration or earlier termination of the "Right
to Require Repurchase" provided in Section 1501 of
the Indenture governing the Corporation's 8%
Convertible Subordinated Debentures due 2015 (the
"Debentures") which grants holders the right to
require the corporation to repurchase the Debentures
when any person becomes the beneficial owner of 75%
or more of the voting stock of the Corporation."
FOURTH: That this Amendment has been duly adopted in
accordance with the provisions of Sections 228 and 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be executed in its corporate name
this day of , 1997.
AIR & WATER TECHNOLOGIES CORPORATION
By:_____________________________
Name:
Title:
