EXECUTION COPY
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement"), dated as of April 12,
1999, by and among MVE Holdings, Inc., a Delaware corporation (the "Company"),
Chart Industries, Inc., a Delaware corporation ("Parent"), Chart Acquisition
Company, a Delaware corporation and wholly owned subsidiary of Parent ("Sub"),
ACI Capital I, LLC, a Delaware limited liability company, in its own capacity
("ACI") and, with respect to the Class B Escrow Amount (as defined herein), as
agent and attorney-in-fact for each of the former members of MVE Investors, LLC
listed on Exhibit A hereto (the "Members", and ACI Capital I, LLC, in its
capacity as agent and attorney-in-fact for the Members, the "Member
Representative"), Firstar Bank of Minnesota, N.A. (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Parent, Sub and the Company have entered into an Agreement and
Plan of Merger, dated as of February 16, 1999 (the "Merger Agreement";
capitalized terms used and not otherwise defined herein are used herein as
defined in the Merger Agreement), pursuant to which Sub will be merged with and
into the Company and the Company shall become a wholly owned, direct subsidiary
of Parent (the "Merger");
WHEREAS, pursuant to the Merger Agreement, Parent will deposit with the
Escrow Agent on or prior to the effective time of the Merger (the "Effective
Time") the pro rata share of the Holdback Amount of those holders of common
stock, par value $.01 per share, of the Company (the "Common Stock"), and the
holders of the Public Note Warrants and the Exeter Warrants (to the extent not
put to the Company pursuant to the terms thereof; such holders of the Public
Note Warrants and the Exeter Warrants, together with the holders of the Common
Stock, are referred to collectively herein as the "Stockholders") who do not
execute and deliver prior to the Effective Time a consent and release pursuant
to Section 9.5 of the Merger Agreement (the "Common Escrow Amount"), to be held
in escrow by the Escrow Agent, subject to the terms, provisions and conditions
set forth herein and in the Merger Agreement, as security for certain
indemnification and reimbursement obligations of the Stockholders to the
Indemnitees and their affiliates as described in the Merger Agreement.
WHEREAS, the Company, Chart and the Members shall enter into an
Indemnification and Warrant Purchase Agreement (the "Indemnification
Agreement"), dated as of the date of the Effective Time, providing for the Class
B Escrow Amount (as defined herein) and defining the uses thereof;
WHEREAS, pursuant to the Indemnification Agreement, Chart shall deposit
with the Escrow Agent, on or prior to the Effective Time, an amount in cash
equal to (a) the accrued but unpaid dividends on 576.76 shares of 10% Class B
Cumulative Preferred Stock, par value $100.00 per share, of the Company, plus
(b) any amounts recovered by the Company in respect of the Company assignment of
certain rights to collect indemnification payments in respect of certain tax
issues under that certain Agreement,
dated August 27, 1996 among Robert E. Cieslukowski, Cieslukowski Family Limited
Partnership, C.J. Schoenbauer, H. Michael Lutgen, R. Edwin Powell, Powell Family
Limited Partnership, John J. Pint, Michael Tate, JMS Family Limited Partnership
and O'Halloran Family Limited Partnership, which collection rights have been
assigned to the Company pursuant to a letter agreement, dated February 11, 1999,
among MVE Inc. and Messrs. Clemence J. Schoenbauer and H. Michael Lutgen, minus
(c) $296,035 (the "Class B Escrow Amount"), to be held in escrow by the Escrow
Agent, subject to the terms, provisions and conditions set forth herein and in
the Indemnification Agreement;
WHEREAS, the Escrow Agent shall maintain a single escrow, containing both
the Common Escrow Amount and the Class B Escrow Amount (collectively, the
"Escrow Amount");
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties hereto hereby agree as follows:
1. Appointment of the Escrow Agent.
(a) Upon the joint written agreement by the parties hereto, an
escrow agent shall be appointed as Escrow Agent hereunder.
(b) Upon such appointment, the Escrow Agent will acknowledge to the
parties hereto the receipt of the Escrow Amount.
2. Retention; Investment.
(a) The Escrow Agent shall hold and dispose of the Escrow Amount,
and shall act as Escrow Agent in accordance with the terms and provisions of
this Escrow Agreement, the Indemnification Agreement and the Merger Agreement.
The Escrow Amount shall be held and used solely for the purposes and subject to
the applicable conditions set forth in this Escrow Agreement, the
Indemnification Agreement and the Merger Agreement.
(b) The Common Escrow Amount shall be fully invested by the Escrow
Agent, at the joint written direction of ACI and Parent, signed and delivered to
the Escrow Agent (a "Joint Written Direction"), and the Class B Escrow Amount
shall be fully invested by the Escrow Agent, at the written direction of the
Member Representative, signed and delivered to the Escrow Agent (a "Written
Direction"), solely in one or more of the investments referred to below:
(i) short-term direct obligations of, or obligations
guaranteed by, the United States of America, or short-term
certificates of deposit or interest bearing accounts of any bank or
trust company, incorporated under the laws of the United States of
America, any state or the District of Columbia, which has combined
capital and surplus of not less than $500,000,000; or commercial
paper, maturing not more than 90 days from the date of issue, or
corporate demand notes, in each case rated at least A-l
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by Standard & Poor's Ratings Group or P-l by Moody's Investors
Service, Inc.; or investments in short-term asset management
accounts offered by any bank of the stature described above
investing solely in investments of the types described in this
clause (i); or
(ii) such other "investment grade" investments (the maturities
of which shall not at any time be later than the next anniversary of
the date hereof) which, with respect to the Common Escrow Amount,
may be determined by ACI and approved by Parent, such approval not
to be unreasonably withheld or delayed, and, with respect to the
Class B Escrow Amount, may be determined by the Member
Representative.
(c) In the absence of a Join Written Direction from ACI and Parent
as set forth in paragraph (b) above, the Escrow Agent shall invest the Common
Escrow Amount in the Escrow Agent's money market fund, the portfolio of which is
limited to U.S. government obligations. In the absence of a Written Direction
from the Member Representative as set forth in paragraph (b) above, the Escrow
Agent shall invest the Class B Escrow Amount in the Escrow Agent's money market
fund, the portfolio of which is limited to U.S. government obligations.
(d) Notwithstanding anything to the contrary contained herein, the
Escrow Agent may, without notice to any of the parties hereto, sell or liquidate
any of the foregoing investments at any time if the proceeds thereof are
required for any release of funds permitted or required hereunder, and the
Escrow Agent shall not be liable or responsible for any loss, cost or penalty
resulting from any such sale or liquidation.
(e) All interest accruing to the Common Escrow Amount shall be added
to the Common Escrow Amount. All interest accruing to the Class B Escrow Amount
shall be added to the Class B Escrow Amount.
3. Disbursements of the Escrow Amount. Subject to the terms of the
Indemnification Agreement and Article IX of the Merger Agreement, the Escrow
Agent shall disburse funds from the Escrow Amount in the manner provided below.
(a) Common Escrow Amount.
(i) Except as provided in Sections 3(a)(ii) and 3(a)(iii)
below, the Escrow Agent shall only make disbursements from the
Common Escrow Amount in accordance with a Joint Written Direction.
(ii) If, at any time prior to the sixth anniversary of the
effective time of the Merger Agreement (the "Common Escrow Amount
Termination Date"), a Stockholder executes a Consent and Release
substantially in the form of Exhibit B attached hereto (a
"Release"), releasing the Released Parties (as defined in the
Release) from any and all Liabilities (as defined in the Release),
in consideration for such Release
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the Escrow Agent shall deliver to such Stockholder his pro rata
portion of the Common Escrow Amount.
(iii) On the Common Escrow Amount Termination Date, the Escrow
Agent will assign and deliver, all remaining funds in the Common
Escrow Amount, pro rata, to Stockholders who have not previously
signed a Release.
(b) Class B Escrow Amount.
(i) The Escrow Agent shall only make disbursements from the
Class B Escrow Amount in accordance with a Written Direction.
(ii) The Member Representative, as agent and attorney-in-fact
for the Members, may, at its discretion and subject only to the
oversight of the Members, at any time and from time to time, issue a
Written Direction instructing the Escrow Agent to disburse all or
any portion of the Class B Escrow Amount for any reason authorized
by Article I of the Indemnification Agreement but subject to the
limitations contained therein.
(iii) The Class B Escrow Amount shall terminate upon the
two-year anniversary of the Effective Time. Upon that date, the
Escrow Agent shall distribute the remaining funds in the Class B
Escrow Amount to the Member Representative, who shall have sole use
of and discretion over such funds.
(c) The Escrow Agent is hereby authorized, in the event of any doubt
as to the course of action it should take under this Escrow Agreement, to
petition any United States Federal District Court for the District which
includes the State of Delaware, or any Delaware state court of competent
jurisdiction, for instructions or to interplead the funds or assets so held into
such court. The parties agree to the jurisdiction of either of said courts,
waive personal service of process, and agree that service of process by
certified or registered mail, return receipt requested, to such party's address
set forth herein shall constitute adequate service.
4. Duration. This Escrow Agreement shall continue in full force and effect
until the close of business on the day during which the last of the funds in the
Escrow Amount are distributed in full and all fees and related expenses of the
Escrow Agent hereunder have been paid pursuant to the terms hereof, at which
time this Escrow Agreement shall terminate. Upon termination of this Escrow
Agreement, the Escrow Agent shall be discharged from any further obligation
hereunder.
5. Escrow Provisions.
(a) The Escrow Agent shall keep separate and accurate accounts of
all income earned by each of the Common Escrow Amount and the Class B Escrow
Amount.
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(b) All fees and related expenses of the Escrow Agent for its
services hereunder in relation to the Common Escrow Amount shall be paid out of
the Common Escrow Amount. All fees and related expenses of the Escrow Agent for
its services hereunder in relation to the Class B Escrow Amount shall be paid
out of the Class B Escrow Amount. Such fees and expenses shall be determined in
accordance with the fee schedule attached hereto as Exhibit C.
(c) Within 30 days after the end of each calendar quarter, and at
such other times as ACI, Parent, or any Stockholder may reasonably request, the
Escrow Agent shall provide the requesting party with a full accounting of all
investments of the Common Escrow Amount and a report of all transactions with
respect to the Common Escrow Amount (including receipts, investments and
disbursements) not previously reported. Within 30 days after the end of each
calendar quarter, and at such other times as Parent, the Member Representative
or any Member may reasonably request, the Escrow Agent shall provide the
requesting party with a full accounting of all investments of the Class B Escrow
Amount and a report of all transactions with respect to the Class B Escrow
Amount (including receipts, investments and disbursements) not previously
reported.
6. Liability of the Escrow Agent.
(a) The Escrow Agent shall have no liability or obligation with
respect to the Escrow Amount except with respect to the Escrow Agent's willful
misconduct or gross negligence. The Escrow Agent's sole responsibility shall be
for the safekeeping, investment, and disbursement of the Escrow Amount in
accordance with the applicable terms of this Escrow Agreement, the
Indemnification Agreement and the Merger agreement. The Escrow Agent shall have
no implied duties or obligations and shall not be charged with knowledge or
notice of any fact or circumstance not specifically set forth herein, in the
Indemnification Agreement, in the Merger Agreement, in a Joint Written Direction
or in a Written Direction. In no event shall the Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages. The Escrow
Agent shall not be obligated to take any legal action or commence any proceeding
in connection with the Escrow Amount, any account in which the funds from the
Escrow Amount are deposited, this Escrow Agreement, the Indemnification
Agreement or the Merger Agreement. The Escrow Agent may consult legal counsel
selected by it in the event of any dispute or question as to the construction of
any of the provisions hereof or thereof or of its duties hereunder, and shall
incur no liability and shall be fully indemnified from any liability whatsoever
in acting in good faith in accordance with the opinion of such counsel. Upon
demand by the Escrow Agent to ACI, accompanied by written invoices, ACI shall
authorize disbursements from the Common Escrow Amount to pay the reasonable fees
and expenses of not more than one firm of such legal counsel retained by the
Escrow Agent where such fees and expenses are related to a dispute, question or
liability related to the Common Escrow Amount. Upon demand by the Escrow Agent
to the Member Representative, accompanied by written invoices, the Member
Representative shall authorize disbursements from the Class B Escrow Amount to
pay the reasonable fees and expenses of not more than one firm of such legal
counsel retained by
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the Escrow Agent where such fees and expenses are related to a dispute, question
or liability related to the Class B Escrow Amount.
(b) The Escrow Agent is authorized to comply with orders issued or
process entered by any court with respect to the Escrow Amount. If any portion
of the Escrow Amount is at any time attached, garnished or levied upon under any
court order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court order, or
in case any order, judgment or decree shall be made or entered by any court
affecting such property or any part thereof, then and in any such event, the
Escrow Agent is authorized to rely in good faith upon and comply with any such
order, writ, judgment or decree which it is advised by legal counsel is binding
upon the Escrow Agent; and if the Escrow Agent complies with any such order,
writ judgment or decree, it shall not be liable to any of the parties hereto or
to any other person or entity by reason of such compliance.
7. Indemnification of the Escrow Agent. The Escrow Agent shall be entitled
to reimbursement for all losses, liabilities or expenses, including reasonable
attorneys' fees, incurred or made by it without gross negligence or bad faith
arising out of or in connection with its entering into this Escrow Agreement or
carrying out its duties hereunder, including the costs and expenses of defending
itself against any claim of liability. Any such compensation and reimbursement
in connection with the Common Escrow Amount to which the Escrow Agent is
entitled shall be paid out of the Common Escrow Amount. Any such compensation
and reimbursement in connection with the Class B Escrow Amount to which the
Escrow Agent is entitled shall be paid out of the Common Escrow Amount.
The parties agree that the disbursement of any amounts to the Escrow Agent
and each director, officer, employee, attorney, agent or affiliate of the Escrow
Agent (each an "Indemnified Party") from the Escrow Amount in respect of a claim
by the Escrow Agent or any Indemnified Party for indemnification shall not
impair, limit, modify or affect the respective rights and obligations of ACI,
the Member Representative, Parent, the Company, the Members and the Stockholders
under this Escrow Agreement or the Merger Agreement.
8. Tax Matters. The Escrow Agent shall have no tax reporting duties with
respect to the Escrow Amount or income thereon, such duties being the
responsibility of the party or parties which receive, or have the right to
receive, such funds or any taxable income hereunder.
9. Resignation of the Escrow Agent; Appointment of Successor. The Escrow
Agent acting at any time hereunder may resign at any time by giving 30 days'
prior written notice of resignation to ACI and Parent, such resignation to be
effective on the date specified in such notice, but in no event sooner than 30
days after the date of such notice. ACI and Parent shall appoint a bank or trust
company as successor to the Escrow Agent. Such successor to the Escrow Agent
shall succeed to all of the rights and obligations of the retiring Escrow Agent
as of the effective date of resignation and the retiring Escrow Agent shall duly
transfer and deliver the Escrow Amount (including all
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evidence of investment of the Escrow Amount) to the successor to the Escrow
Agent. If no successor shall have been appointed at the conclusion of such
30-day notice period, all obligations of the Escrow Agent hereunder shall cease
and terminate, and the Escrow Agent's sole responsibility shall be to keep
safely all property then being held by it and to deliver the same to a person
designated by the parties or in accordance with the directions of a final order
or judgment of a court of competent jurisdiction.
10. Governing Law. This Escrow Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without reference to its
conflict of laws provisions.
11. Binding Effect. This Escrow Agreement shall be binding upon and inure
to the benefit of the Stockholders and the Members, and their respective heirs,
executors, administrators, successors and assigns. This Escrow Agreement also
shall be binding upon and inure to the benefit of ACI, Parent, the Member
Representative, the Company and the Escrow Agent and their respective successors
and assigns.
12. Notices. All notices required to permitted hereunder shall be in
writing and shall be deemed duly given when personally delivered or mailed by
registered or certified mail, return receipt requested, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice) or sent by electronic transmission (with answerback confirmation
received) to the facsimile numbers specified below:
If to Parent, to: Chart Industries, Inc.
5885 Landerbrook Drive
Suite 150
Mayfield Heights, Ohio 44124
Attention: Arthur S. Holmes
Facsimile: (440) 753-1451
With a copy to: Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Attention: Thomas F. McKee
Facsimile: (216) 241-0816
If to ACI or to the Member ACI Capital I, LLC
Representative, to: 707 Westchester Avenue
4th Floor
White Plains, New York 10604
Attention: Kevin Penn
Facsimile: (914) 681-9856
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With a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Stephen M. Besen
Facsimile: (212) 310-8007
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If to the Escrow Firstar Bank of Minnesota, N.A.
Agent, to: 101 East 5th Street
St. Paul, Minnesota 55101
Attn: Frank Leslie, Corporate Trust Department
Facsimile: (651)-229-6415
13. Entire Agreement. This Escrow Agreement, the Indemnification Agreement
and the Merger Agreement constitute the entire agreement among the parties
relating to the holding, investment and disbursement of the Escrow Amount and
set forth in their entirety the obligations and duties of the Escrow Agent with
respect to the Escrow Amount.
14. Counterparts. This Escrow Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be duly
executed on the day and year first above written.
MVE HOLDINGS, INC.
By: /s/ John M. Kucharik
---------------------------------
Name: John M. Kucharik
Title: President and CEO
CHART INDUSTRIES, INC.
By: /s/ Arthur S. Holmes
----------------------------------
Name: Arthur S. Holmes
Title: Chairman and Chief Executive Officer
CHART ACQUISITION COMPANY
By: /s/ Arthur S. Holmes
----------------------------------
Name: Arthur S. Holmes
Title: Chairman and Chief Executive Officer
ACI CAPITAL I, LLC
By: /s/ Kevin S. Penn
-----------------------------------
Name: Kevin S. Penn
Title: President
ACI CAPITAL I, LLC, as the
Member Representative
By: /s/ Kevin S. Penn
-----------------------------------
Name: Kevin S. Penn
Title:
FIRSTAR BANK OF MINNESOTA, N.A.,
as Escrow Agent
By: /s/ Frank P. Leslie
-----------------------------------
Name: Frank P. Leslie
Title: Vice President
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Exhibit A
Former Members of MVE Investors, LLC
ACI Capital I, LLC
American Securities Partners, L.P.
MVE Cryogenics LLC
CRM/MVE Capital LLC
Tangent LLC
Fertosa LLC
Fertosa LLC
Burden Direct Investment Fund II
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Exhibit B
FORM OF CONSENT AND RELEASE
Reference is made to the Agreement and Plan of Merger (the "Merger Agreement")
among MVE Holdings, Inc., a Delaware corporation (the "Company"), Chart
Industries, Inc., a Delaware corporation ("Chart") and Chart Acquisition
Company, a Delaware corporation and wholly-owned subsidiary of Chart ("Sub"),
dated as of February 16, 1999, pursuant to which Sub shall be merged with and
into the Company (the "Merger"). According to the terms of the Merger Agreement,
each holder of common stock, par value $.01 per share, of the Company (the
"Common Stock"), will be entitled to receive aggregate merger consideration (the
"Common Stock Merger Consideration") of $45 per share of Common Stock held by
such holder as of the effective time of the Merger (the "Effective Time").
Pursuant to the terms of the Merger Agreement, the Common Stock Merger
Consideration shall be paid to holders of Common Stock as follows: (i) $25 per
share of Common Stock will be paid to the holders of Common Stock at or shortly
after the Effective Time, and (ii) $20 per share of Common Stock will be held in
escrow and will be subject to reduction for certain potential indemnification
claims (the "Escrow Amount"), which escrow will terminate on the sixth
anniversary of the Effective Time.
In consideration of the payment and release, at the Effective Time, of the
portion of the Escrow Amount payable to the undersigned, without reduction for
any future indemnification claims of third parties, the undersigned hereby (i)
consents, as a holder of Common Stock, to the adoption and approval of the
Merger Agreement and to the transactions contemplated thereby, including the
Merger and (ii) on behalf of himself, herself or itself and on behalf of his,
her or its heirs, executors, administrators, legal representatives, successors
and assigns, releases and forever discharges each of the Company and its
subsidiaries, Chart, Sub, MVE Investors, LLC, a Delaware limited liability
company, and each of their respective past, present and future shareholders,
members, directors, officers, employees, controlling persons and affiliates, and
their respective successors and assigns (each, a "Released Party," and
collectively, the "Released Parties"), from any and all claims, actions, causes
of action, awards, judgments, payments, losses, damages, expenses, rights and
liabilities (collectively, "Liabilities"), from the beginning of time through
the Effective Time, of every kind and nature, known and unknown, at law and in
equity, which relate in any way to (x) the Merger Agreement and the transactions
contemplated thereby, including, without limitation, any Liability arising out
of or in connection with any action, suit or proceeding brought by or on behalf
of any holder or former holder of Common Stock challenging or disputing the
allocation of the consideration in the Merger among the holders of Common Stock
and the holder(s) of Class A Cumulative Convertible Participating Preferred
Stock, par value $100 per share; (y) (i) the Recapitalization Agreement, dated
as of July 22, 1996, among the Company, MVE, Inc., MVE Investors, LLC and the
stockholders named therein (the "Recapitalization Agreement") and (ii) the First
Amendment to the Recapitalization Agreement, dated as of August 27, 1996, among
the Company, MVE, Inc., MVE Investors, LLC and the stockholders named therein
(the "Amendment"), and the transactions and agreements contemplated or executed
in connection with either the
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Recapitalization Agreement or the Amendment; and (z) any and all actions,
agreements, documents or instruments taken by or entered into by or on behalf of
any Released Party.
The undersigned hereby acknowledges that the undersigned has been advised to
consult counsel before signing this Consent and Release, and has had ample
opportunity to do so.
This Consent and Release is governed and construed by the laws of the State of
Delaware.
Agreed and Accepted, this
___ day of ___________, 1999.
________________________________
Name:
Address:
Number of shares of
Common Stock Owned: ________
Attest:
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Exhibit C
FEE SCHEDULE
Fees payable annually to the Escrow Agent shall equal $1,000 plus
out-of-pocket-expenses.
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