<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1996
REGISTRATION NO. 333-6967
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 3
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
HALTER MARINE GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3731 75-2656828
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)
JOHN DANE III
13085 INDUSTRIAL SEAWAY ROAD PRESIDENT AND CHIEF EXECUTIVE OFFICER
GULFPORT, MISSISSIPPI 39503 HALTER MARINE GROUP, INC.
(601) 896-0029 13085 INDUSTRIAL SEAWAY ROAD
(Address, including zip code, and telephone GULFPORT, MISSISSIPPI 39503
number, including area code, of Registrant's (601) 896-0029
principal executive offices) (Name, address, including zip code, and
telephone number, including area code, of
agent for service)
</TABLE>
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Copies to:
<TABLE>
<S> <C>
KERRY C. L. NORTH JACK M. LITTLE
BAKER & BOTTS, L.L.P. THOMPSON & KNIGHT, P.C.
2001 ROSS AVENUE 1700 PACIFIC AVENUE, SUITE 3300
DALLAS, TEXAS 75201 DALLAS, TEXAS 75201
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 1996
PROSPECTUS
, 1996
3,000,000 SHARES
HALTER LOGO
COMMON STOCK
All of the shares of Common Stock offered hereby (the "Offering") are being
sold by Halter Marine Group, Inc. (the "Company"). Prior to the Offering, the
Company has operated as a wholly owned subsidiary of Trinity Industries, Inc.
("Trinity"). Upon completion of the Offering, Trinity will continue to own
approximately 83.3% of the outstanding Common Stock (81.3% if the Underwriters
exercise their over-allotment option in full). Trinity has announced its
intention, subject to satisfaction of certain conditions, to divest itself of
its remaining ownership interest in the Company. See "Separation From Trinity."
Prior to the Offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price of the
Common Stock will be between $12.00 and $14.00 per share. See "Underwriting" for
information relating to the factors to be considered in determining the initial
public offering price.
The shares of Common Stock have been approved for listing on the New York
Stock Exchange (the "NYSE"), subject to official notification of issuance.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share........................ $ $ $
Total(3)......................... $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters an over-allotment option,
exercisable for 30 days from the date of this Prospectus, to purchase up to
450,000 additional shares of Common Stock on the same terms as set forth
above solely to cover over-allotments, if any. If such option is exercised
in full, the total Price to the Public, Underwriting Discounts and
Commissions and Proceeds to the Company will be $ , $ and
$ , respectively. See "Underwriting."
The shares of Common Stock are offered by the several Underwriters, when,
as and if delivered to and accepted by the Underwriters, and subject to various
conditions, including their right to reject any order in whole or in part. It is
expected that delivery of share certificates will be made in New York, New York,
on or about , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH & CO.
<PAGE> 3
[HALTER MARINE LOGO]
Halter Marine has built more off-
shore support vessels to service
offshore oil and gas drilling rigs
and production platforms than
any shipbuilder in the United
States. This anchor handling tug
supply boat constructed by the
Company is capable of towing
and positioning offshore drilling
rigs and their anchors as well as
providing supply vessel services.
[Picture of anchor handling
tug supply boat]
[Picture of multi-directional [Picture of double hull tank
tractor tug] barge and tug]
Halter Marine's construction Halter Marine has positioned itself
capabilities have kept pace with to benefit from the expected increase
the expanded role of tug boats in in offshore tank barge construction
servicing offshore and harbor operations. and conversion. Demand for double
The above 156-foot multi-directional hull barges has been created by the
tractor tug constructed by the Company Oil Pollution Act of 1990. The above
is capable of towing and pushing, 467-foot double hull tank barge and
moving and positioning, tanker escort tug constructed by the Company
and other support services. carries a large cargo of petroleum
products.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE, SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information contained in this
Prospectus (i) gives effect to the consolidation of the assets and liabilities
of the Company Businesses (as defined herein) described under "Separation From
Trinity -- Consolidation Transactions" and (ii) assumes that the Underwriters
will not exercise their over-allotment option (the "Over-Allotment Option").
THE COMPANY
The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in the
United States. The Company, which has built more than 2,000 vessels in the past
40 years, specializes in the construction, repair and conversion of a wide
variety of vessels for the commercial and governmental markets. The Company's
principal products include offshore support vessels, offshore double hull tank
barges, offshore tug boats and oil spill recovery vessels for commercial use and
oceanographic survey and research ships, high speed patrol boats and ferries for
government use.
The Company has ten shipyards (including one that currently is idle) which
are strategically located along the Gulf Coast from Louisiana to Florida. The
Company's multiple shipyards employ advanced manufacturing techniques, including
modular construction and zone outfitting methods, and provide the Company
significant flexibility and efficiency in manufacturing a wide variety of
vessels. The Company believes that these factors, together with its large and
experienced engineering team and work force, make the Company one of the most
versatile and cost-efficient shipbuilders in the United States. The United
States, the European Union, Finland, Japan, Korea, Norway and Sweden
collectively control over 75% of the market share for worldwide vessel
construction.
As of July 31, 1996, the Company had firm shipbuilding contracts with an
aggregate remaining value of approximately $417 million (excluding unexercised
options held by customers), covering a total of 115 vessels (including 50 inland
hopper barges). Of this contract value, approximately $181 million was
attributable to contracts to build ships for the U.S. Navy.
The Company's strategy is to enhance its position as a leading manufacturer
of small to medium sized vessels, to respond to anticipated new shipbuilding
construction opportunities and to increase its revenues and profitability. The
following are the key elements of the Company's strategy:
- Wide Variety of Products for Diversified Markets. The Company's
shipbuilding versatility is one of its principal competitive strengths,
not only reducing its dependence on particular types of products, but also
providing engineering and manufacturing benefits across product lines. The
Company intends to continue to serve diversified markets, including a
balance of commercial and governmental shipbuilding projects. In fiscal
1996, the Company delivered 59 vessels, with commercial and governmental
projects accounting for 46.3% and 53.7% of revenues, respectively.
- New Construction Opportunities. The Company believes that it is well
positioned to take advantage of the expected upturn in the market for
offshore support vessels to service oil and gas drilling rigs and
production platforms and the expected increase in offshore tank barge
construction and conversion resulting from the requirements of the Oil
Pollution Act of 1990 ("OPA '90").
- Offshore Support Vessels. The Company has built more offshore support
vessels (including supply boats, anchor handling tug supply boats and
anchor handling tugs) than any shipbuilder in the United States. As a
result of the severe downturn in the oil and gas industry in the
mid-1980's, there has been very limited construction of offshore
support vessels in the United States since 1985. During the period from
1985 through 1995, the Company built eight new 200-foot or longer
offshore support vessels, more than any other U.S. shipbuilder. The
Company's offshore support vessel manufacturing activities during this
period have enabled it to gain a competitive advantage
3
<PAGE> 5
through experience with recent advances in vessel engineering and
construction techniques. The Company expects that substantial orders
for new offshore support vessels may be made in the next several years
due to the demand for larger vessels to support deep water oil and gas
exploration and production activities, as well as the substantial
worldwide fleet attrition over the past ten years and the aging of the
remaining fleet. The Company currently has eight offshore support
vessels under contract, of which six contracts have been entered into
since July 1, 1996. The Company also has outstanding options for eight
additional vessels, including seven from one customer, and is bidding
on a number of substantial potential orders for such vessels.
- Offshore Double Hull Tank Barges. OPA '90 generally requires certain
U.S. and foreign vessels carrying fuel or other hazardous cargos and
entering U.S. ports to have double hulls by 2015. OPA '90 establishes a
phase-out schedule that began January 1, 1995 for all existing single
hull vessels based on the vessel's age and gross tonnage. The Company
estimates that OPA '90 will require approximately 66 barges engaged in
domestic trade to be retrofitted or replaced by 2005 and another
approximately 22 such barges to be retrofitted or replaced by 2010.
During the past three years, the Company has built eight large offshore
double hull tank barges, more than any other U.S. shipbuilder. The
Company currently has three such barges under construction and has an
outstanding option from a customer for one additional barge. In
addition, the Company is bidding on a number of other substantial barge
construction projects.
- Multiple, Strategically Located Shipyards. The Company's multiple
shipyards, which are strategically located along the Gulf Coast, provide
it with significant flexibility and efficiency in manufacturing a wide
variety of vessels. The Company utilizes certain shipyards with
specialized machinery to centrally manufacture various components for its
other shipyards, helping to reduce costs and equipment redundancy. The
Company has spent approximately $46.5 million in the past five years to
acquire, expand and improve its shipyard facilities, which are well
maintained.
- Low Cost Structure. The Company believes it is one of the most
cost-efficient shipbuilders in the United States. The Company's shipyards
employ many advanced manufacturing techniques including modular
construction methods, which the Company was among the first U.S.
shipbuilders to use, zone outfitting methods, advanced welding techniques,
panel line fabrication, computerized plasma arc metal cutting and
automatic sandblasting and painting.
- Additional Capacity at Existing Facilities. The Company has the ability
to significantly increase production at its existing shipyards. As of June
30, 1996, the Company employed 2,597 shipyard workers and estimates that
it could employ a maximum of approximately 3,670 workers without
significant expansion of its plant facilities. While some of its principal
competitors are experiencing a severe shortage of skilled shipyard workers
in southern Louisiana (which has also affected one of the Company's
shipyards), the Company's other shipyards currently have access to
additional shipyard labor in their respective markets along the Gulf
Coast. Significant excess capacity is available at the Company's
Pascagoula, Mississippi yard, which was acquired in late 1995 and at which
production has recently commenced, and its Panama City, Florida yard,
which currently is idle.
- Increased Repair and Conversion Capacity. The Company recently has
significantly increased its capacity for repair and conversion work
through three acquisitions beginning in late 1994. Depending on demand for
such services, the Company may, at some time in the future, relocate a 115
foot wide dry dock from its Gulf Repair shipyard in New Orleans to its
Pascagoula yard in order to undertake large repair and conversion
projects, such as those for large barges, cargo ships and drilling rigs.
- Strategic Acquisitions. The Company has grown substantially through nine
acquisitions since 1972. Although the Company currently has additional
capacity at its existing facilities, the Company expects to consider
strategic acquisitions of additional shipyards in the future depending on
a variety of factors, including demand for new construction, conversion
and repair, the advantages offered by the facilities and the acquisition
terms.
4
<PAGE> 6
OFFERING RELATED TRANSACTIONS
Prior to the Offering, the Company will enter into a new bank credit
facility (the "Credit Facility"). It is anticipated that the Credit Facility
will provide for borrowings of $105.0 million to $125.0 million. Immediately
prior to the consummation of the Offering, the Company will borrow under the
Credit Facility to repay (i) a $25.0 million intercompany note to Trinity and
(ii) $25.0 million of certain indebtedness of Trinity associated with the
Company Businesses and assumed by the Company in connection with the
Consolidation Transactions (as defined herein). See "Separation From
Trinity -- Consolidation Transactions" and "Separation From Trinity -- Offering
Related Transactions."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered.................................... 3,000,000 shares
Common Stock to be outstanding after the Offering....... 18,000,000 shares(1)
Use of proceeds......................................... To repay income taxes payable to
Trinity and a portion of the
indebtedness incurred under the
Credit Facility immediately prior
to the Offering. See "Use of
Proceeds" and "Separation From
Trinity -- Offering Related
Transactions."
Proposed NYSE symbol.................................... "HLX"
</TABLE>
- ---------------
(1) Does not include 1,400,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option and Incentive Plan (the "1996
Stock Option and Incentive Plan"). It is expected that options for an
aggregate of 250,000 shares of Common Stock will be granted under the 1996
Stock Option and Incentive Plan on the date of the Offering. In addition, at
the time of the proposed Separation (as defined herein), the Company expects
to assume certain outstanding stock options exercisable for shares of
Trinity Common Stock (as defined herein) granted to Company employees under
certain Trinity stock compensation plans and such options will become
exercisable for shares of Common Stock. See "Management -- Incentive and
Other Employee Benefit Plans" and Note 7 of Notes to Consolidated Financial
Statements.
PROPOSED SEPARATION FROM TRINITY
Prior to the Offering, the Company has been a wholly owned subsidiary of
Trinity. Upon the consummation of the Offering, Trinity will continue to own
approximately 83.3% of the outstanding Common Stock (81.3% if the Underwriters
exercise the Over-Allotment Option in full).
Trinity has announced its intention to divest itself of its remaining
ownership interest in the Company (the "Separation"). The timing, form and other
terms of the proposed Separation are subject to the approval of the Board of
Directors of Trinity (the "Trinity Board"). The proposed Separation could be
accomplished by means of either a non-taxable or taxable transaction. The
proposed Separation would be subject to various conditions, including the
absence of any events or developments that cause the Trinity Board to determine,
in its sole discretion, that the Separation is not in the best interests of
Trinity or its stockholders. If the proposed Separation is to be accomplished by
means of a non-taxable transaction (which could take the form of either an
exchange offer or a distribution to Trinity's stockholders), such transaction
also will be subject to the receipt of a private letter ruling from the Internal
Revenue Service (the "IRS") to the effect that the Separation will qualify as a
tax-free transaction for federal income tax purposes under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code"). There can be no
assurance that the proposed Separation will occur or, if it occurs, as to its
form or other terms. See "Risk Factors -- Risk of Noncompletion of the
Separation." Prior to the consummation of the Offering, the Company and Trinity
will enter into various agreements with respect to ongoing arrangements and
relationships between the two companies. See "Separation From Trinity" and
"Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity."
5
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth summary consolidated financial data for the
Company for the five fiscal years ended March 31, 1996 and for the three months
ended June 30, 1995 and 1996 and as of June 30, 1996. See "Capitalization,"
"Selected Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1995 1996
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenue earned............. $219,228 $304,385 $275,310 $250,586 $254,294 $ 72,008 $ 85,981
Cost of revenue earned.............. 206,959 259,819 228,833 207,398 214,559 60,876 74,695
Gross profit........................ 12,269 44,566 46,477 43,188 39,735 11,132 11,286
Selling, general and administrative
expenses.......................... 8,242 12,363 12,874 13,471 15,911 4,077 4,832
Operating income.................... 4,027 32,203 33,603 29,717 23,824 7,055 6,454
Interest expense, net............... 5,766 1,937 1,902 3,844 3,268 1,003 896
Income (loss) before income taxes... (1,734) 30,290 31,734 25,878 20,567 6,054 5,561
Provision (benefit) for income
taxes............................. (100) 10,704 12,227 10,170 8,102 2,385 2,219
Net income (loss)(1)................ (1,634) 19,586 19,507 15,708 12,465 3,669 3,342
Pro forma net income per share(2)... $ 0.70 $ 0.19
NET CASH PROVIDED (REQUIRED) BY:
Operating activities................ $ 33,593 $ 51,841 $(28,175) $ 14,803 $ 23,742 $ 22,010 $(10,381)
Investing activities................ (8,250) (8,546) (3,440) (10,443) (15,687) (404) (2,042)
Financing activities................ (25,192) (43,292) 31,300 (4,057) (7,907) (21,581) 12,408
OTHER DATA:
EBITDA(3)........................... $ 7,635 $ 36,762 $ 38,266 $ 35,136 $ 30,579 $ 8,430 $ 8,303
Depreciation and amortization....... 3,603 4,535 4,630 5,414 6,744 1,373 1,846
Capital expenditures(4)............. 2,100 5,064 3,529 6,405 5,568 404 2,623
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................................... $ 39,615 $ 56,053
Total assets............................................................. 157,783 157,783
Long-term debt(6)........................................................ 25,000 31,141
Stockholder's net investment............................................. 70,085 --
Stockholders' equity..................................................... -- 80,382
</TABLE>
- ---------------
(1) Because the Company was a wholly owned subsidiary of Trinity prior to the
Offering, historical earnings per share have been omitted.
(2) Adjusted to give effect to the Consolidation Transactions, the Offering
Related Transactions and the Offering. Pro forma net income per share is
based on the 18,000,000 shares that will be outstanding immediately after
the Offering. Pro forma net income for the year ended March 31, 1996 and the
three months ended June 30, 1996 is $12.6 million and $3.4 million,
respectively, and reflects a reduction in interest expense, net of tax,
resulting from the use of the net proceeds of the Offering to retire
outstanding debt at the beginning of the period.
(3) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but rather
as a measure of the Company's operating performance and ability to service
debt since the Credit Facility contains restrictive covenants which are
based upon EBITDA. EBITDA should not be construed as an alternative to
operating income (determined in accordance with generally accepted
accounting principles ("GAAP")) as an indicator of the Company's operating
performance or as an alternative to cash flows from operating activities
(determined in accordance with GAAP) as a measure of liquidity. EBITDA
measures presented herein may not be comparable to similarly titled measures
of other companies.
(4) Excludes payments for business acquisitions.
(5) Adjusted to give effect to the Consolidation Transactions, the Offering
Related Transactions and the Offering. If the Over-Allotment Option is
exercised in full, pro forma long-term debt and stockholders' equity would
be $25.7 million and $85.8 million, respectively. See "Separation From
Trinity -- Consolidation Transactions", "Separation From Trinity -- Offering
Related Transactions" and "Use of Proceeds."
(6) Long-term debt represents an intercompany note due to Trinity on an actual
basis and borrowings under the Credit Facility on an as adjusted basis. See
"Separation From Trinity -- Offering Related Transactions."
6
<PAGE> 8
RISK FACTORS
Prospective investors should carefully consider and evaluate the following
factors relating to the Company and the Offering, together with the information
and financial data set forth elsewhere in this Prospectus, prior to purchasing
any shares of Common Stock in the Offering.
LACK OF INDEPENDENT OPERATING HISTORY
Prior to the consummation of the Offering, the Company has operated as a
part of a business segment of Trinity, a large publicly traded company. As a
result, the Company has from time to time relied upon Trinity to provide credit
and other financial support, including performance guarantees of shipbuilding
contracts, to provide assistance in purchasing goods and services from third
parties, to provide technological assistance with respect to manufacturing
processes, to provide insurance coverage and to make available certain
administrative and other services. Following the consummation of the Offering,
the Company will not be able to rely on Trinity for such support, services and
assistance or be able to benefit from its relationship with Trinity. See
"-- Certain Financial Requirements; Absence of Trinity Financial Support." If
the Company is unable to obtain such support, services or assistance on its own
or from third parties on terms that it regards as satisfactory, its business,
financial condition and results of operations could be adversely affected.
CERTAIN FINANCIAL REQUIREMENTS; ABSENCE OF TRINITY FINANCIAL SUPPORT
In the past, the Company has relied upon Trinity to provide funding for
working capital, capital expenditures and acquisitions. As of June 30, 1996, the
aggregate amount of the intercompany indebtedness owed by the Company to Trinity
was $71.3 million, consisting of approximately $29.9 million of net current
liabilities, approximately $16.4 million of income taxes payable and a $25.0
million intercompany note. As of such date, Trinity also had an aggregate of
$25.0 million of outstanding indebtedness to third parties that was associated
with the Company Businesses and that will be assumed by the Company in
connection with the Consolidation Transactions. The intercompany note and the
indebtedness relating to the Company Businesses that is assumed by the Company
in connection with the Consolidated Transactions will be repaid immediately
prior to the Offering using the proceeds of borrowings under the Credit
Facility. The net proceeds of the Offering will be used to repay such income
taxes payable to Trinity outstanding as of the consummation of the Offering and
a portion of the amounts borrowed under the Credit Facility. The net current
liabilities to Trinity outstanding as of the consummation of the Offering are
expected to be repaid in the ordinary course of business and in any event no
later than 60 days after the consummation of the Offering. It is a condition to
the consummation of the Offering that the Credit Facility be in place prior to,
and that the Offering Related Transactions (as defined herein) be consummated
concurrently with the consummation of, the Offering. See "Separation From
Trinity -- Consolidation Transactions", "Separation From Trinity -- Offering
Related Transactions" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
In addition, a significant portion of the Company's existing contracts for
the construction, repair or conversion of vessels require that the Company's
performance be guaranteed by Trinity or by a surety company or other third party
pursuant to a contract bid or performance bond, letter of credit or similar
obligation. As of July 31, 1996, Trinity had guaranteed contract bid and
performance obligations of the Company in the aggregate amount of approximately
$66.1 million and the Company had outstanding contract bid and performance
bonds, letters of credit and similar obligations issued by third parties, with
Trinity as the obligor, with an aggregate face amount of approximately $74.9
million. These guarantees, bonds, letters of credit and similar obligations,
totalling approximately $141.0 million, will remain in effect after the Offering
until the obligations expire, and the Company will be obligated to indemnify
Trinity against any liability under such obligations. For the protection of
Trinity in the event that Trinity is called upon to satisfy any such
obligations, Trinity will be granted security interests in certain assets of the
Company which relate to the Company contracts from which such obligations arise
and will possess rights to complete performance of any such contract on behalf
of the Company in the event of nonperformance by the Company. Such rights and
remedies are similar to the rights possessed by surety companies that have
issued performance bonds on behalf of the Company. See "Business -- Bonding and
Guarantee Requirements" and "Certain Transactions and
7
<PAGE> 9
Related Arrangements -- Arrangements Between the Company and
Trinity -- Performance Bond and Guarantee Arrangements."
After the Offering, it is anticipated that Trinity will not provide any
further credit or other financial support to the Company. From time to time
after the Offering, the Company will need to continue to obtain contract bid and
performance bonds, letters of credit and similar obligations in connection with
its business. As a result of the discontinuance by Trinity of financial support
of the Company, customers may increasingly require such bonding and other
arrangements. Although the Company believes that it will be able to obtain bid
and contract performance bonds, letters of credit and similar obligations on
terms it regards as acceptable, there can be no assurance it will be successful
in doing so. In addition, the cost of obtaining such bonds, letters of credit
and similar obligations may increase. The inability of the Company to obtain
such bonds, letters of credit and similar obligations, or the inability of the
Company to obtain such bonds, letters of credit and similar obligations on terms
(including cost) that are as favorable as those historically obtained by the
Company, could have a material adverse effect on the Company's business,
financial condition and results of operations. It is anticipated that the Credit
Facility will provide, subject to certain conditions, for borrowings of $105.0
million to $125.0 million on a revolving basis, with a $50.0 million sublimit
for letters of credit. In general, whether the Company's capital resources after
the Offering, including available borrowings under the Credit Facility, will be
sufficient to satisfy its future working capital, capital expenditure and other
requirements will depend on numerous factors, including general economic and
other conditions, shipbuilding industry conditions and the Company's financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
BENEFITS TO TRINITY IN CONNECTION WITH THE OFFERING
Immediately prior to the consummation of the Offering, the Company will
borrow under the Credit Facility to repay a $25.0 million intercompany note to
Trinity and $25.0 million of indebtedness of Trinity relating to the Company
Businesses that is assumed by the Company in connection with the Consolidation
Transactions. A portion of the net proceeds of the Offering will be used to
repay income taxes payable to Trinity outstanding as of the consummation of the
Offering. Such income taxes payable totalled approximately $16.4 million as of
June 30, 1996. The net current liabilities to Trinity outstanding as of the
consummation of the Offering will be repaid in the ordinary course of business
and in any event no later than 60 days after the consummation of the Offering.
Such net current liabilities totalled approximately $29.9 million as of June 30,
1996. See "Separation From Trinity -- Consolidation Transactions", "Separation
From Trinity -- Offering Related Transactions" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
Prior to the consummation of the Offering, the Company and Trinity will
enter into a Separation Agreement (the "Separation Agreement"), pursuant to
which, among other things, the Company and Trinity will indemnify each other
against certain liabilities specified therein. The Company and Trinity will also
enter into a Tax Sharing and Tax Benefit Reimbursement Agreement (the "Tax
Allocation Agreement"), pursuant to which the Company and Trinity will agree
upon the allocation of certain tax liabilities and related matters.
The terms of the Consolidation Transactions, the Offering Related
Transactions and such intercompany agreements were negotiated between affiliated
parties and do not reflect arms'-length dealings. See "Certain Transactions and
Related Arrangements."
DEPENDENCE ON U.S. NAVY CONTRACTS
Revenues derived from the construction of U.S. Navy vessels accounted for
approximately 30.2%, 38.8%, and 47.3% of the Company's revenues in fiscal 1994,
1995 and 1996, respectively. There can be no assurance that the Company will be
successful in obtaining new U.S. Navy contracts, all of which are subject to
strict competitive bidding requirements. Although the U.S. Navy has options to
purchase 14 additional vessels from the Company under two of the U.S. Navy's
shipbuilding programs, the U.S. Navy is not required to exercise any such
options. Any future purchases of vessels by the U.S. Navy are subject to the
uncertainties inherent in
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the U.S. government's budgeting and appropriations processes, which are affected
by political events over which the Company has no control.
With the end of the Cold War and the pressure of domestic budget
constraints, overall U.S. Navy spending for new vessel construction has declined
significantly since 1991 (from 88 vessels in 1990 to 46 in 1995). U.S. Navy
shipbuilding is expected to continue to decline during the remainder of the
decade. Although the Company believes that the small to medium sized U.S. Navy
vessels for which it competes are less likely to be cut back and, in some cases,
do not require specific Congressional appropriations, the Company generally
expects revenues and gross profit attributable to its current and any future
U.S. Navy contracts to decline over the next several years. Such decreases, if
not offset by increased revenues and profit from contracts with other customers,
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Principal
Products -- Governmental Vessels."
CONTROL BY TRINITY PENDING THE PROPOSED SEPARATION; POTENTIAL CONFLICTS OF
INTEREST
After the consummation of the Offering and prior to the proposed
Separation, Trinity will continue to own approximately 83.3% of the outstanding
shares of Common Stock (81.3% if the Underwriters exercise the Over-Allotment
Option in full). Prior to the proposed Separation, Trinity will be able to elect
all members of the Board of Directors of the Company (the "Company Board") and
determine the outcome of corporate actions requiring stockholder approval.
Furthermore, through its ability to elect the members of the Company Board,
Trinity will be able to control all matters affecting the business and
operations of the Company. See "Principal Stockholder."
Conflicts of interest may arise in the future between the Company and
Trinity in a number of areas relating to their past and ongoing relationships.
For example, conflicts of interest may arise with respect to the acquisition or
disposition of assets, the issuance of shares of capital stock or other
securities, the incurrence of indebtedness and the payment of dividends. The
Company also may from time to time enter into negotiations with Trinity
regarding the construction by the Company of inland barges for Trinity or its
customers. The construction of such inland barges generally constitutes a
Trinity Business (as defined in "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity") which the Company
is precluded from entering for four years after the consummation of the
Offering. See "Certain Transactions and Related Arrangements -- Arrangements
Between the Company and Trinity -- Inland Barge Arrangements." In addition,
because of the possibility that Trinity will accomplish the proposed Separation
by means of a non-taxable transaction and in view of the U.S. Federal income tax
requirement that Trinity own and exchange or distribute 80% or more of the
outstanding voting securities of the Company in order for the proposed
Separation to be tax-free to Trinity and its stockholders, the Separation
Agreement restricts the Company from issuing a significant amount of additional
Common Stock (whether pursuant to an equity financing, acquisition or otherwise)
until the earlier of the Separation Date (as defined herein) or a decision by
the Trinity Board to accomplish the Separation by means of a taxable
transaction. Conflicts of interest may also arise in connection with certain
agreements to be entered into between the Company and Trinity with respect to
ongoing arrangements and relationships between the two companies. These
agreements include (i) the Separation Agreement, which sets forth the terms
governing various arrangements between the parties in connection with the
Offering and the proposed Separation, (ii) the Tax Allocation Agreement, which
relates to the allocation of federal, state and local income tax liabilities and
related matters, (iii) a Trademark License Agreement (the "Trademark License
Agreement") relating to the grant by Trinity to the Company of a long-term
license to continue to use the trademark "Trinity Yachts" in its business and
(iv) a limited term arrangement to produce inland hopper barges for Trinity. See
"Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity."
RISK OF NONCOMPLETION OF THE SEPARATION
Although Trinity has announced its intention to divest itself of its
remaining ownership interest in the Company, the timing, form and other terms of
the proposed Separation are subject to the approval of the Trinity Board. The
proposed Separation will be subject to various conditions, including the absence
of any events or developments that cause the Trinity Board to determine, in its
sole discretion, that the proposed
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Separation is not in the best interests of Trinity or its stockholders. In
addition, if the proposed Separation is to be accomplished by means of a
non-taxable transaction, such transaction also will be subject to the receipt of
a private letter ruling from the IRS to the effect that the Separation will
qualify as a tax-free transaction for federal income tax purposes under Section
355 of the Code. Trinity has informed the Company that, if the Trinity Board
determines to effect the proposed Separation by means of a non-taxable
transaction, it intends to apply for such a ruling as to the tax-free status of
the Separation, although there can be no assurance that such a ruling will be
obtained. There can be no assurance that the proposed Separation will occur or,
if it occurs, as to its form or other terms. If the proposed Separation does not
occur, Trinity will continue to control the Company and the business purposes of
the Separation will not be achieved in the manner currently contemplated by
Trinity and the Company, if at all. See "Separation From Trinity."
DEPENDENCE ON MANAGEMENT
The Company believes that its success to date is attributable to, and its
future performance will depend to a significant extent upon, the efforts and
abilities of John Dane III, the Company's President and Chief Executive Officer
and its other current executive officers. The Company does not have employment
agreements with any of its executive officers. However, John Dane III is
entering into a noncompetition agreement with the Company in connection with the
Offering. See "Management -- Noncompetition Agreements." The loss of the
services of one or more of the Company's executive officers could have a
material adverse effect on the Company. See "Management."
HIGHLY COMPETITIVE INDUSTRY
The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity because of the significant decline in U.S. Navy
shipbuilding spending and the difficulties experienced by U.S. shipbuilders in
competing successfully for international commercial projects against foreign
shipyards, many of which are heavily subsidized by their governments. As a
result of these factors, competition by U.S. shipbuilders for domestic
commercial projects has increased significantly. Such increased competition has
resulted in substantial pressure on pricing and profit margins.
Contracts for the construction of vessels are usually awarded on a
competitive bid basis. Although the Company believes customers consider, among
other things, the availability and technical capabilities of equipment and
personnel, efficiency, condition of equipment, safety record and reputation,
price competition is currently a primary factor in determining which qualified
shipbuilder is awarded a contract.
Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. The Company does not compete for U.S.
Navy large vessel construction projects. The Company competes for U.S.
government shipbuilding contracts on small to medium sized vessels principally
with approximately six to 12 U.S. shipbuilders, which may include one or more of
the six largest shipbuilders. The Company competes for domestic commercial
shipbuilding contracts principally with approximately ten to 15 U.S.
shipbuilders. The number and identity of competitors on particular projects vary
greatly, depending on the type of vessel and size of project. See
"Business -- Competition."
Pursuant to the provisions of the Separation Agreement, the Company will be
prohibited, for four years after the consummation of the Offering, from engaging
in the Trinity Businesses, which include the construction and repair of inland
hopper barges and inland tank barges. Because the Company Businesses (as defined
in "Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity") do not include the construction and repair of inland
hopper barges and inland tank barges, the Company's historical results of
operations do not include any revenues from the construction or repair of inland
hopper barges and include only the following revenues from the construction or
repair of inland tank barges: $7.6 million, $13.3 million and $26.2 million for
fiscal years 1994, 1995 and 1996, respectively. The Company's gross profit
(loss) from such activities was ($0.6) million, ($0.9) million and $3.1 million
for
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fiscal years 1994, 1995 and 1996, respectively. See "Certain Transactions and
Related Arrangements -- Arrangements Between the Company and
Trinity -- Separation Agreement -- Non-Competition Covenants."
RISKS ASSOCIATED WITH CONTRACTUAL PRICING IN THE SHIPBUILDING INDUSTRY
Because of the nature of the shipbuilding industry, all of the Company's
commercial contracts and a substantial majority of the Company's government
contracts are currently performed on a fixed-priced basis. The Company attempts
to cover anticipated increased costs of labor and materials through an
estimation of such costs, which is reflected in the original price. Despite
these attempts, however, the revenue, cost and gross profit realized on a
fixed-price contract will often vary from the estimated amounts because of
changes in job conditions and variations in labor and equipment productivity
over the term of the contract. These variations and the risks generally inherent
in the shipbuilding industry may result in gross profits realized by the Company
being different from those originally estimated and may result in the Company
experiencing reduced profitability or losses on projects. Depending on the size
of the project, these variations from estimated contract performance could have
a significant effect on the Company's operating results for any particular
fiscal quarter or year.
In addition, the Company's contract revenues are recognized on a percentage
of completion basis. Accordingly, contract price and cost estimates are reviewed
periodically as the work progresses, and adjustments proportionate to the
percentage of completion are reflected in income in the period when such
estimates are revised. To the extent that these adjustments result in a loss or
a reduction or elimination of previously reported profits with respect to a
project, the Company would recognize a charge against current earnings, which
could be material. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General."
LEGISLATIVE PROPOSALS TO RESCIND PROVISIONS OF JONES ACT
Pursuant to the requirements of the Merchant Marine Act of 1920 (the "Jones
Act"), all vessels transporting products between U.S. ports must be constructed
in U.S. shipyards, owned and crewed by U.S. citizens and registered under U.S.
law. Many customers elect to have vessels constructed at U.S. shipyards, even if
such vessels are intended for international use, in order to maintain
flexibility to use such vessels in the U.S. coastwise trade in the future. The
Company believes that substantially all of its revenues from U.S. commercial
contracts (which represented 40.9% of the Company's total revenues for fiscal
1996) result from the sale of vessels capable of being used for U.S. coastwise
trade. In 1996, proposed legislation was introduced in Congress to substantially
modify the provisions of the Jones Act mandating the use of ships constructed in
the United States for U.S. coastwise trade. Similar bills seeking to rescind or
substantially modify the Jones Act and eliminate or adversely affect the
competitive advantages it affords to U.S. shipbuilders have been introduced in
Congress from time to time and are expected to be introduced in the future.
Although management believes it is unlikely that the Jones Act requirements will
be rescinded or materially modified in the foreseeable future, there can be no
assurance that this will not occur. Many foreign shipyards are heavily
subsidized by their governments and, as a result, there can be no assurance that
the Company would be able to effectively compete with such shipyards if they
were permitted to construct vessels for use in the U.S. coastwise trade. The
repeal of the Jones Act or any amendment of the Jones Act that would eliminate
or adversely affect the competitive advantages provided to U.S. shipbuilders
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Regulation -- Jones Act"
and "Business -- Regulation -- Title XI Loan Guarantee Amendments and OECD."
SHORTAGE OF TRAINED SHIPYARD WORKERS
Shipyards located in certain portions of Louisiana, including the Company's
Lockport, Louisiana facility, are experiencing severe shortages of skilled
shipyard labor as a result of recent labor demands brought about by increases in
offshore drilling activities, the construction of offshore rig platforms and
crewing of offshore vessels. This labor shortage has resulted in increased costs
of labor, and limitations on production capacity, for shipyards in such portions
of southern Louisiana. However, of the Company's ten shipyards, only its
Lockport shipyard is located within the affected areas of southern Louisiana.
Accordingly, the labor shortage has not
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impacted the Company to the same degree that it has affected many of the
Company's competitors. The areas in which the Company's other shipyards are
located are not currently experiencing any such labor shortages, although no
assurances can be given regarding whether shortages will be experienced at other
shipyards in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations" and
"Business -- Operations."
DEPENDENCE OF OFFSHORE SUPPORT VESSEL MARKET ON OFFSHORE EXPLORATION ACTIVITY
Offshore support vessels have accounted for a significant portion of the
Company's production in the past, and are expected to again in the future.
Customer demand for offshore support vessels is dependent on, among other
things, the levels of activity in offshore oil and gas exploration, development
and production, particularly in the Gulf of Mexico where many of the offshore
support vessels manufactured by the Company have been put into service. The
level of activity in offshore oil and gas exploration, development and
production is affected by such factors as prevailing oil and gas prices,
expectations about future prices, the cost of exploring for, producing and
delivering oil and gas, the sale and expiration dates of available offshore
leases, the discovery rate of new oil and gas reserves in offshore areas, local
and international political and economic conditions, technological advances and
the ability of oil and gas companies to generate or otherwise obtain funds for
capital expenditures. Although the Company believes there will be an increase in
demand for offshore support vessels, the Company cannot predict future levels of
activity in offshore oil and gas exploration, development and production.
UNCERTAINTY REGARDING CONSTRUCTION STANDARDS FOR OFFSHORE SUPPORT VESSELS
As currently in force, OPA '90 generally requires certain U.S. and foreign
vessels carrying fuel or other hazardous cargos and entering U.S. ports to have
double hulls by 2015. OPA '90, which establishes a phase-out schedule that began
January 1, 1995 for all existing single hull vessels based on the vessel's age
and gross tonnage, applies to oil and gas industry supply vessels over 500 gross
tons operated in U.S. waters. All offshore support vessels presently in
operation in U.S. waters either are less than 500 gross tons or have received a
Congressional waiver exempting such vessels from the OPA '90 double hull
requirements. However, as offshore oil and gas exploration and production enter
deeper waters, the Company anticipates that it will be necessary to construct a
significant number of new offshore support vessels in excess of 500 gross tons
to support such exploration and production activities. Proposed legislation is
pending in Congress which would impose, in lieu of the OPA '90 double hull
requirements, certain less onerous standards for the construction of these new
offshore support vessels (the "New Offshore Support Vessel Legislation").
Although management believes that the New Offshore Support Vessel Legislation is
likely to be enacted in its current form, there can be no assurance as to when
the New Offshore Support Vessel Legislation will be enacted or that such
legislation, if enacted, will not differ materially from its current form.
Management believes that the current uncertainty regarding construction
standards has caused certain operators to postpone placing new orders for
offshore support vessels in excess of 500 gross tons. See
"Business -- Regulation -- OPA '90."
IMPACT OF ENVIRONMENTAL LAWS
The Company is subject to extensive and changing federal, state and local
laws (including common law) and regulations designed to protect the environment
("Environmental Laws"). The Company from time to time is involved in
administrative and other proceedings under Environmental Laws involving its
operations and facilities. Environmental Laws could impose liability for
remediation costs or result in civil or criminal penalties in cases of
non-compliance. Compliance with Environmental Laws increases the Company's costs
of doing business. Additionally, Environmental Laws have been subject to
frequent change; therefore, the Company is unable to predict the future costs or
other future impact of Environmental Laws on its operations. There can be no
assurance that the Company will not incur material liability related to the
Company's operations and properties under Environmental Laws. See
"Business -- Regulation -- Environmental Regulation."
POSSIBILITY OF SUBSTANTIAL SALES OF COMMON STOCK
In general, if Trinity completes the proposed Separation by any means other
than a private sale to a third party, substantially all of the 15,000,000 shares
of Common Stock currently held by Trinity will be eligible for
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immediate resale in the public market. The Company is unable to predict whether
substantial amounts of Common Stock will be sold in the open market in
anticipation of, or following, the proposed Separation. Any sales of substantial
amounts of Common Stock in the public market, or the perception that such sales
might occur, whether as a result of the proposed Separation or otherwise, could
have a material adverse effect on the market price of the Common Stock. Trinity
has agreed that, except in connection with the proposed Separation, it will not
offer or sell any shares of Common Stock for a period of 180 days after the date
of this Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. See "Shares Eligible for Future Sale" and
"Underwriting."
CERTAIN ANTI-TAKEOVER EFFECTS
The Restated Certificate of Incorporation of the Company (the
"Certificate"), the By-Laws of the Company (the "By-Laws"), the Rights (as
defined herein) and applicable provisions of the Delaware General Corporation
Law (the "DGCL"), contain various provisions that may hinder, delay or prevent
the acquisition of control of the Company without the approval of the Company
Board. Certain provisions of the Certificate and the By-Laws, among other
things, will (i) authorize the issuance of "blank check" preferred stock, (ii)
divide the Company Board into three classes, the members of which (after an
initial transition period) will serve for three-year terms, (iii) establish
advance notice requirements for director nominations and stockholder proposals
to be considered at annual meetings and (iv) prohibit stockholder action by
written consent. In addition, the Company has entered into a Rights Agreement
(as defined herein), pursuant to which each share of Common Stock has attached
one Right which will initially trade together with such share. The Rights would
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved in advance by the Company Board. The provisions
pertaining to a classified board and to the prohibition of stockholder action by
written consent referred to above will not become effective until the
consummation of the proposed Separation. Furthermore, the provisions
establishing the advance notice requirements for director nominations and
stockholder proposals to be considered at annual meetings do not apply to
Trinity and its affiliates prior to the Separation Date. In addition, Section
203 of the DGCL imposes certain restrictions on mergers and other business
combinations between the Company and any holder of 15% or more of the Common
Stock (other than Trinity). See "Description of Capital Stock -- Anti-takeover
Provisions of the Certificate and By-Laws," "Description of Capital
Stock -- Stockholder Rights Plan" and "Description of Capital Stock -- Delaware
Business Combination Statute."
DIVIDEND POLICY
The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. In addition, the Company anticipates that the
Credit Facility will restrict the payment of dividends. See "Dividend Policy."
IMMEDIATE AND SUBSTANTIAL DILUTION TO INVESTORS
Investors purchasing shares of Common Stock in the Offering will experience
immediate and substantial dilution in net tangible book value of approximately
$8.53 per share of Common Stock. See "Dilution."
ABSENCE OF A PRIOR PUBLIC MARKET FOR THE COMMON STOCK
Prior to the Offering, there has been no public market for the Common
Stock. Although the shares of Common Stock have been approved for listing on the
NYSE, subject to official notification of issuance, there can be no assurance
that an active public market for the Common Stock will develop or be sustained
or that the price at which the Common Stock will trade after the Offering will
not be lower than the initial public offering price. The initial public offering
price of the Common Stock in the Offering will be determined through
negotiations between the Company and the managing Underwriters. See
"Underwriting." Market prices for the Common Stock following the Offering will
be influenced by a number of factors, including the depth and liquidity of the
market for the Common Stock, investor perceptions of the Company and general
economic and other conditions.
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THE COMPANY
The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in the
United States. The Company, which has built more than 2,000 vessels in the past
40 years, specializes in the construction, repair and conversion of a wide
variety of vessels for the commercial and governmental markets. The Company's
principal products include offshore support vessels, offshore double hull tank
barges, offshore tug boats and oil spill recovery vessels for commercial use and
oceanographic survey and research ships, high speed patrol boats and ferries for
government use.
The Company has ten shipyards (including one that currently is idle) which
are strategically located along the Gulf Coast from Louisiana to Florida. The
Company's multiple shipyards employ advanced manufacturing techniques, including
modular construction and zone outfitting methods, and provide the Company
significant flexibility and efficiency in manufacturing a wide variety of
vessels. The Company believes that these factors, together with its large and
experienced engineering team and work force, make the Company one of the most
versatile and cost-efficient shipbuilders in the United States.
Prior to the consummation of the Offering, the Company has operated as a
part of a business segment of Trinity, whose common stock is traded on the NYSE.
The principal offices of the Company are located at 13085 Industrial Seaway
Road, Gulfport, Mississippi 39503, and its telephone number at such offices is
(601) 896-0029.
SEPARATION FROM TRINITY
BACKGROUND
Trinity entered the business of constructing and repairing ocean-going
vessels in 1972 when it acquired the Equitable New Orleans shipyard. Since 1972,
Trinity has acquired 20 additional shipyards. The acquisition by Trinity of the
marine facilities and the decision to diversify into the marine products line of
business was a strategic undertaking to use similar metal fabrication skills and
techniques, purchasing power and general management abilities to serve a broader
customer base. The Company Businesses include the ownership and operation of ten
shipyards (including Equitable and one shipyard that currently is idle) formerly
owned by Trinity.
Trinity is a leading manufacturer of a variety of products with
manufacturing and fabrication operations in six business segments: railcars,
marine products, construction products, pressure and nonpressure containers,
metal components and leasing. Trinity believes that the creation of a separate
public market for the equity of the Company will allow the financial markets to
evaluate more effectively the respective values of Trinity's remaining
manufacturing and fabrication businesses and the Company's shipbuilding
business. Trinity also believes that the Separation should enhance the ability
of Trinity and the Company to maximize the value of their respective operations
for the benefit of their respective stockholders by permitting each company (i)
to focus its managerial and financial resources on the growth of its businesses
and (ii) to implement more focused incentive compensation programs designed to
better attract, retain and motivate its employees by offering economic rewards
that are tied more directly to the results of such employees' efforts. The
Company Businesses and the Trinity Businesses require substantially different
management focuses. While the Trinity Businesses generally involve the
production of standardized products, the Company Businesses generally involve
the production of a more limited number of products that are engineered on an
individual basis to meet the needs of particular customers. The Company
Businesses and the Trinity Businesses also generally involve different customers
and financing arrangements, and, unlike customer contracts in the Trinity
Businesses, customer contracts in the Company Businesses typically are long-term
contracts involving progress billing.
CONSOLIDATION TRANSACTIONS
Halter Marine Group, Inc. is a Delaware corporation incorporated on June
24, 1996. Prior to or concurrently with the Offering, the Company will
consummate the Consolidation Transactions. These
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transactions (the "Consolidation Transactions") include: (i) the transfer to the
Company of the stock of each subsidiary of Trinity that has assets and
liabilities related to the Company Businesses, (ii) the transfer to subsidiaries
of the Company of certain assets and liabilities of Trinity related to the
Company Businesses and (iii) the assumption by the Company of the indebtedness
of Trinity associated with the Company Businesses (which totalled $25.0 million
as of June 30, 1996). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Certain Transactions and Related Arrangements -- Consolidation Transactions."
For purposes of this Prospectus, unless the context otherwise requires, the
term "Company" gives effect to the Consolidation Transactions and includes
Halter Marine Group, Inc. and its subsidiaries and predecessors.
OFFERING RELATED TRANSACTIONS
Prior to or concurrently with the consummation of the Offering, the Company
will engage in certain other transactions (the "Offering Related Transactions").
The Offering Related Transactions include (i) the entering into by the Company
of the new Credit Facility and (ii) the borrowing by the Company under the
Credit Facility to repay (x) a $25.0 million intercompany note to Trinity and
(y) $25.0 million of certain indebtedness of Trinity associated with the Company
Businesses and assumed by the Company in connection with the Consolidation
Transactions. See "Risk Factors -- Benefits to Trinity in Connection with the
Offering," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Certain
Transactions and Related Arrangements -- Offering Related Transactions."
THE OFFERING
The Company is offering an aggregate of 3,000,000 shares of Common Stock
for sale to the public pursuant to this Prospectus. Upon consummation of the
Offering, Trinity will own approximately 83.3% of the outstanding shares of
Common Stock (81.3% if the Underwriters exercise the Over-Allotment Option in
full).
THE PROPOSED SEPARATION
Trinity has announced its intention to divest itself of its remaining
ownership interest in the Company by means of the Separation. The timing, form
and other terms of the proposed Separation are subject to the approval of the
Trinity Board. The Separation will be subject to the fulfillment, or waiver by
the Trinity Board, of certain conditions, including (i) all material
governmental consents, approvals or authorizations necessary to consummate the
Separation shall have been obtained and shall remain in full force and effect;
(ii) no order, injunction or decree issued by any court or governmental agency
or body of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Separation shall be in effect, and no other
event shall have occurred or failed to occur, that prevents the consummation of
the Separation; and (iii) no other events or developments shall have occurred
that cause the Trinity Board to determine, in its sole discretion, that the
Separation is not in the best interests of Trinity or its stockholders.
The proposed Separation could be accomplished by means of either a
non-taxable or taxable transaction. If the proposed Separation is to be
accomplished by means of a non-taxable transaction (which could take the form of
either an exchange offer or distribution to Trinity's stockholders), such
transaction also will be subject to receipt of a private letter ruling from the
IRS to the effect that the proposed Separation will qualify as a tax-free
transaction for federal income tax purposes under Section 355 of the Code and
the Consolidation Transactions will not result in the recognition of any gain or
loss for federal income tax purposes by Trinity, the Company or their respective
stockholders, and such ruling shall be in form and substance satisfactory to
Trinity, in its sole discretion, and shall remain in full force and effect. The
Trinity Board will have the sole discretion to determine the date of
consummation of the proposed Separation (the "Separation Date"). At the present
time, Trinity has not determined what action it would take if it does not obtain
a favorable ruling from the IRS as to a proposed Separation involving a
non-taxable transaction. In such event, the alternatives that would be available
to Trinity would include completing the proposed Separation based upon an
opinion of
15
<PAGE> 17
counsel as to the tax-free nature of the transaction, completing the Separation
as a taxable transaction or not completing the Separation at all.
There can be no assurance that the proposed Separation will occur or, if it
occurs, as to its form or other terms. See "Risk Factors -- Risk of
Noncompletion of the Separation."
ARRANGEMENTS BETWEEN THE COMPANY AND TRINITY
Prior to the consummation of the Offering, the Company and Trinity will
enter into various agreements with respect to ongoing arrangements and
relationships between the two companies, including the Separation Agreement, the
Tax Allocation Agreement and the Trademark License Agreement. The Company also
will build inland hopper barges and may build inland tank barges under a limited
arrangement with Trinity. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity."
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of shares of
Common Stock in the Offering, after deducting underwriting discounts and
commissions and the estimated expenses of the Offering (assuming an initial
public offering price of $13.00 per share, the mid-point of the price range set
forth on the cover page of this Prospectus), are expected to be approximately
$35.3 million ($40.7 million if the Underwriters exercise the Over-Allotment
Option in full).
The Company intends to use the net proceeds of the Offering to repay income
taxes payable to Trinity outstanding as of the consummation of the Offering, and
the balance will be used to reduce indebtedness incurred under the Credit
Facility immediately prior to the Offering. The income taxes payable to Trinity
totalled approximately $16.4 million as of June 30, 1996. The borrowings under
the Credit Facility will be used to repay an intercompany note to Trinity and
indebtedness assumed by the Company in connection with the Consolidation
Transactions. See "Separation From Trinity -- Consolidation Transactions,"
"Separation From Trinity -- Offering Related Transactions," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Certain Transactions and
Related Arrangements -- Offering Related Transactions" and "Certain Transactions
and Related Arrangements -- Arrangements Between the Company and Trinity."
DIVIDEND POLICY
The Company expects that it will retain all available earnings generated by
its operations for the development and growth of its business and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. Any future determination as to dividend policy will be made at the
discretion of the Company Board and will depend on a number of factors,
including future earnings, capital requirements, financial condition and
business prospects of the Company and such other factors as the Company Board
may deem relevant. In addition, it is anticipated that the Credit Facility will
restrict the payment of dividends. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
16
<PAGE> 18
DILUTION
As of June 30, 1996, the net tangible book value attributable to the Common
Stock was $70.1 million, or $4.67 per share (based on 15,000,000 shares of
Common Stock). Net tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the total number of shares of
Common Stock outstanding. After giving effect to the Consolidation Transactions,
the Offering Related Transactions, the Offering and the application of the
estimated net proceeds therefrom, the pro forma net tangible book value
attributable to the Common Stock as of June 30, 1996 would have been $80.4
million, or $4.47 per share. This represents an immediate dilution in net
tangible book value of $8.53 per share to investors purchasing shares of Common
Stock in the Offering. The following table illustrates the dilution to investors
purchasing shares of Common Stock in the Offering:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $13.00(1)
Net tangible book value per share at June 30, 1996......................... $ 4.67
Decrease in net tangible book value per share attributable to the
Consolidation Transactions.............................................. (1.67)
Increase in net tangible book value per share attributable to new
investors............................................................... 1.47
------
Pro forma net tangible book value per share after the Offering............... 4.47
------
Dilution in net tangible book value per share to new investors............... $ 8.53
======
</TABLE>
- ---------------
(1) Represents the mid-point of the price range for the Common Stock set forth
on the cover page of this Prospectus.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996 (i) on an historical basis, (ii) as adjusted to give effect to the
Consolidation Transactions and the Offering Related Transactions and (iii) as
adjusted to give effect to the Offering and the application of the estimated net
proceeds therefrom (assuming an initial public offering price of $13.00 per
share, the mid-point of the price range set forth on the cover page of this
Prospectus). This table should be read in conjunction with "Separation From
Trinity -- Consolidation Transactions," "Separation From Trinity -- Offering
Related Transactions," "Use of Proceeds," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------
AS ADJUSTED FOR
CONSOLIDATION
TRANSACTIONS AND
OFFERING RELATED AS ADJUSTED
ACTUAL TRANSACTIONS FOR OFFERING
------- ---------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-Term Debt:
Due to an affiliate(1)............................. $25,000 $ -- $ --
Credit Facility.................................... -- 50,000 31,141
------- -------- --------
Total long-term debt....................... 25,000 50,000 31,141
------- -------- --------
Stockholder's Equity(2):
Stockholder's net investment....................... 70,085 -- --
Common stock, par value $0.01 per share; 50,000
shares authorized; zero shares, 15,000 shares
and 18,000 shares issued and outstanding,
respectively(3)................................. -- 150 180
Additional paid-in capital......................... -- 44,935 80,202
------- -------- --------
Total stockholder's equity................. 70,085 45,085 80,382
------- -------- --------
Total capitalization....................... $95,085 $ 95,085 $111,523
======= ======== ========
</TABLE>
- ---------------
(1) Excludes (i) $29.9 million of indebtedness to Trinity which is classified as
a current liability and expected to be repaid to Trinity, in the ordinary
course of business, and in any event no later than 60 days after the
consummation of the Offering, as the Company replaces such liabilities with
its own direct trade payables and (ii) $16.4 million of income taxes payable
to Trinity that will be paid from a portion of the net proceeds of the
Offering.
(2) The Company Board has authorized the creation of a series of Preferred Stock
of the Company designated as "Series A Junior Participating Preferred
Stock." An aggregate of 500,000 shares of Preferred Stock have been reserved
for issuance as such series of Preferred Stock. No shares of Preferred Stock
are issued and outstanding. See "Description of Capital Stock -- Preferred
Stock."
(3) Does not include 1,400,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option and Incentive Plan. It is
expected that options for an aggregate of 250,000 shares will be granted
under such plan on the date of the Offering. See "Management -- Incentive
and Other Employee Benefit Plans -- 1996 Stock Option and Incentive Plan."
18
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company as of the dates and for the periods indicated. The selected consolidated
income statement data for the fiscal years ended March 31, 1994, 1995 and 1996
and the selected consolidated balance sheet data as of March 31, 1995 and 1996
have been derived from the audited consolidated financial statements of the
Company. The selected consolidated income statement data for the fiscal years
ended March 31, 1992 and 1993 and for the three months ended June 30, 1995 and
1996, and the selected consolidated balance sheet data as of March 31, 1992,
1993 and 1994 and as of June 30, 1996 have been derived from unaudited financial
information of the Company but in the opinion of management includes all
adjustments necessary for a fair presentation of the financial information. The
results of operations for the three months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the full year.
The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and related
notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
YEAR ENDED MARCH 31, 30,
-------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1995 1996
-------- -------- -------- -------- -------- -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenue earned................. $219,228 $304,385 $275,310 $250,586 $254,294 $ 72,008 $ 85,981
Cost of revenue earned.................. 206,959 259,819 228,833 207,398 214,559 60,876 74,695
-------- -------- -------- -------- -------- -------- ---------
Gross profit............................ 12,269 44,566 46,477 43,188 39,735 11,132 11,286
Selling, general and administrative
expenses.............................. 8,242 12,363 12,874 13,471 15,911 4,077 4,832
-------- -------- -------- -------- -------- -------- ---------
Operating income........................ 4,027 32,203 33,603 29,717 23,824 7,055 6,454
Interest expense, net................... 5,766 1,937 1,902 3,844 3,268 1,003 896
Other, net.............................. (5) (24) (33) (5) (11) (2) (3)
-------- -------- -------- -------- -------- -------- ---------
Income (loss) before income taxes....... (1,734) 30,290 31,734 25,878 20,567 6,054 5,561
Provision (benefit) for income taxes.... (100) 10,704 12,227 10,170 8,102 2,385 2,219
-------- -------- -------- -------- -------- -------- ---------
Net income (loss)(1).................... $ (1,634) $ 19,586 $ 19,507 $ 15,708 $ 12,465 $ 3,669 $ 3,342
======== ======== ======== ======== ======== ======== =========
Pro forma net income per share(2)....... $ 0.70 $ 0.19
NET CASH PROVIDED (REQUIRED) BY:
Operating activities.................... $ 33,593 $ 51,841 $(28,175) $ 14,803 $ 23,742 $ 22,010 $ (10,381)
Investing activities.................... (8,250) (8,546) (3,440) (10,443) (15,687) (404) (2,042)
Financing activities.................... (25,192) (43,292) 31,300 (4,057) (7,907) (21,581) 12,408
OTHER DATA:
EBITDA(3)............................... $ 7,635 $ 36,762 $ 38,266 $ 35,136 $ 30,579 $ 8,430 $ 8,303
Depreciation and amortization........... 3,603 4,535 4,630 5,414 6,744 1,373 1,846
Capital expenditures(4)................. 2,100 5,064 3,529 6,405 5,568 404 2,623
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
------------------------------------------------------------ JUNE 30,
1992 1993 1994 1995 1996 1996
-------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).................... $ (4,761) $ 8,972 $ 31,296 $ 40,855 $ 36,601 $ 39,615
Total assets................................. 109,448 94,056 120,784 124,271 141,374 157,783
Long-term debt(5)............................ 25,000 25,000 25,000 25,000 25,000 25,000
Stockholder's net investment (deficit)....... (523) 19,063 38,570 54,278 66,743 70,085
</TABLE>
- ---------------
(1) Because the Company was a wholly owned subsidiary of Trinity prior to the
Offering, historical earnings per share have been omitted.
(2) Adjusted to give effect to the Consolidation Transactions, the Offering
Related Transactions and the Offering. Pro forma net income per share is
based on the 18,000,000 shares that will be outstanding immediately after
the Offering. Pro forma net income for the year ended March 31, 1996 and the
three months ended June 30, 1996 is $12.6 million and $3.4 million,
respectively, and reflects a reduction in interest expense, net of tax,
resulting from the use of the net proceeds of the Offering to retire
outstanding debt at the beginning of the period.
(3) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but rather
as a measure of the Company's operating performance and ability to service
debt since the Credit Facility contains restrictive covenants which are
based upon EBITDA. EBITDA should not be construed as an alternative to
operating income (determined in accordance GAAP) as an indicator of the
Company's operating performance or as an alternative to cash flows from
operating activities (determined in accordance with GAAP) as a measure of
liquidity. EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(4) Excludes payments for business acquisitions.
(5) Represents intercompany note due to Trinity.
19
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in the
United States. The Company, which has built more than 2,000 vessels in the past
40 years, specializes in the construction, repair and conversion of a wide
variety of vessels for the commercial and governmental markets. The Company's
principal products include offshore support vessels, offshore double hull tank
barges, large offshore tug boats and oil spill recovery vessels for commercial
use and oceanographic survey and research ships, high speed patrol boats and
ferries for government use. The Company has ten shipyards (including one that
currently is idle), which are strategically located along the Gulf Coast from
Louisiana to Florida.
As of July 31, 1996, the Company had firm contracts with an aggregate
remaining value of approximately $417 million (excluding unexercised options
held by customers), covering a total of 115 vessels (including 50 inland hopper
barges). Of this contract value, approximately $181 million was attributable to
contracts to build ships for the U.S. Navy. The Company anticipates that
approximately $245 million of the aggregate remaining value of the firm
contracts as of July 31, 1996 will be filled during fiscal 1997.
The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity, resulting in substantial pressure on pricing and
profit margins. See "Risk Factors -- Highly Competitive Industry."
Revenues derived from the construction of U.S. Navy vessels accounted for
approximately 30.2%, 38.8% and 47.3% of the Company's revenues in fiscal 1994,
1995 and 1996, respectively. There can be no assurance that the Company will be
successful in obtaining new U.S. Navy contracts, all of which are competitively
bid. Overall U.S. Navy spending for new vessel construction has declined
significantly since 1991. Although the Company believes that the small to medium
sized U.S. Navy vessels for which it competes are less likely to be cut back
and, in some cases, do not require specific Congressional appropriations, the
Company generally expects revenues and gross profit attributable to its current
and any future U.S. Navy contracts to decline over the next several years. Such
decreases, if not offset by increased revenues and profit from contracts with
other customers, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors -- Dependence
on U.S. Navy Contracts."
All of the Company's commercial contracts and a substantial majority of its
government contracts to build ships are currently performed on a fixed-price
basis. The Company attempts to cover anticipated increased costs of labor and
materials through an estimation of such costs, which is reflected in the
original contract price. Despite these attempts, however, the revenue, costs and
gross profit realized on a fixed-price contract will often vary from the
estimated amounts because of changes in job conditions and in labor and plant
productivity over the contract term or other unanticipated changes. As a result,
the Company may experience reduced profitability or losses on projects.
The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues from construction contracts
are measured by the percentage of labor hours incurred as compared to estimated
total labor hours for each contract. The timing of recognition of revenues and
expenses for financial reporting purposes may differ materially from the timing
of actual cash flows from contract payments received and expenses paid.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. See "Risk Factors -- Risks Associated with
Contractual Pricing in the Shipbuilding Industry" and Note 2 of Notes to
Consolidated Financial Statements.
The Company believes it is well positioned to take advantage of the
expected upturn in the market for new offshore support vessels. The Company
expects that substantial orders for new offshore support vessels may be made in
the next several years due to the demand for larger vessels to support deep
water oil and gas exploration and production activities, as well as the
substantial worldwide fleet attrition over the past ten years and the aging of
the remaining fleet. The Company currently has eight offshore support vessels
under contract,
20
<PAGE> 22
of which six contracts have been entered into since July 1, 1996. The Company
also has outstanding options for eight additional vessels, including seven from
one customer, and is bidding on a number of substantial potential orders for
such vessels. The timing of the expected upturn in the offshore support market
will depend principally upon conditions in the offshore oil and gas industry,
particularly an increase in drilling activity and dayrates for offshore support
vessels, which in turn depend upon oil and gas prices. No assurances can be
given regarding the timing or magnitude of an upturn in the market for offshore
support vessels. See "Risk Factors -- Dependence of Offshore Support Vessel
Market on Offshore Exploration Activity," "Business -- General" and
"Business -- Principal Products -- Offshore Support Vessels."
The Company also expects to capitalize on the anticipated increase in
offshore tank barge construction and conversion resulting from OPA '90 and the
aging of the worldwide fleet. The Company currently has three offshore double
hull tank barges under construction and has an outstanding option from a
customer for one additional barge. In addition, the Company is bidding on a
number of other substantial barge construction projects. See
"Business -- General" and "Business -- Principal Products -- Offshore Barges."
Pursuant to the provisions of the Separation Agreement, the Company will be
prohibited, for four years after the consummation of the Offering, from engaging
in the Trinity Businesses, which include the construction and repair of inland
hopper barges and inland tank barges. Because the Company Businesses do not
include the construction and repair of inland hopper barges and inland tank
barges, the Company's historical results of operations do not include any
revenues from the construction or repair of inland hopper barges and include
only the following revenues from the construction or repair of inland tank
barges: $7.6 million, $13.3 million and $26.2 million for fiscal years 1994,
1995 and 1996, respectively. The Company's gross profit (loss) from such
activities was ($0.6) million, ($0.9) million and $3.1 million for fiscal years
1994, 1995 and 1996, respectively. The Company's management does not believe
that the restrictions imposed pursuant to the Separation Agreement will have a
material adverse effect on the Company's business, financial condition or
results of operations.
Shipyards in certain portions of southern Louisiana, including the
Company's Lockport yard, are experiencing severe shortages of skilled shipyard
labor. This labor shortage has resulted in increased costs of labor at this
shipyard and may in the future limit the Company's ability to expand operations
at such shipyard. The areas in which the Company's other shipyards are located
are not currently experiencing any such labor shortages, although no assurances
can be given regarding whether shortages will be experienced at other shipyards
in the future. See "Risk Factors -- Shortage of Trained Shipyard Workers."
The principal materials used by the Company in its shipbuilding, conversion
and repair businesses are standard steel shapes, steel plate and paint. Other
materials used in large quantities include aluminum, steel pipe, electrical
cable and fittings. The Company has not engaged, and does not presently intend
to engage, in hedging transactions with respect to its purchase requirements for
materials.
The Company anticipates that selling, general and administrative costs will
be somewhat higher after the Offering than previously as a result of new and
additional costs the Company will incur as a result of becoming a stand-alone
enterprise. Such cost increases will include additional contract bid and
performance bonding fees, administrative personnel costs and third party fees.
In addition, interest expense will increase as a result of higher borrowing
levels and higher interest rates charged by third party lenders. See "Risk
Factors -- Lack of Independent Operating History" and "-- Certain Financial
Requirements; Absence of Trinity Financial Support."
All statements other than statements of historical fact contained in this
Prospectus, including statements in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations" concerning the Company's
financial position and liquidity, results of operations, prospects for U.S. Navy
contracts, ability to take advantage of new vessel construction and conversion
opportunities, labor supply and costs, selling, general and administrative costs
and other matters are forward looking statements. Forward-looking statements in
this Prospectus generally are accompanied by words such as "anticipate,"
"believe," "estimate" or "expect" or similar statements. Although the Company
believes that the expectations reflected in such forward looking statements are
reasonable, no assurance can be given that such expectations will prove correct.
Factors that could cause the Company's results to differ materially from the
results discussed in such forward
21
<PAGE> 23
looking statements include the risks described under "Risk Factors," such as
lack of independent operating history, absence of Trinity support to meet
certain financial requirements, benefits to Trinity of the Offering, dependence
on U.S. Navy contracts, potential conflicts of interest with Trinity both before
and after the proposed Separation, the possible non-completion of the proposed
Separation, intense competition and contractual, labor, regulatory and other
risks in the shipbuilding industry and risks relating to the market for offshore
support vessels and offshore double hull tank barges. All forward looking
statements in this Prospectus are expressly qualified in their entirety by the
cautionary statements in this paragraph.
RESULTS OF OPERATIONS
The following table sets forth certain statement of income information as a
percentage of the Company's revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, THREE MONTHS ENDED JUNE 30,
------------------------------------------------------ -----------------------------------
1994 1995 1996 1995 1996
---------------- ---------------- ---------------- ---------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contract revenue earned:
Government(1).............. $157.0 57.0% $148.1 59.1% $136.6 53.7% $40.0 55.5% $40.1 46.6%
Barges(2).................. 13.2 4.8 38.9 15.5 52.6 20.7 19.6 27.1 29.6 34.5
Offshore Energy(3)......... 61.4 22.3 37.4 14.9 54.3 21.4 11.7 16.3 13.0 15.1
Other(4)................... 43.7 15.9 26.2 10.5 10.8 4.2 0.7 1.1 3.3 3.8
------ ----- ------ ----- ------ ----- ----- ----- ----- -----
Total................ 275.3 100.0% 250.6 100.0% 254.3 100.0% 72.0 100.0% 86.0 100.0%
Cost of revenue earned....... 228.8 83.1 207.4 82.8 214.6 84.4 60.9 84.5 74.7 86.9
------ ----- ------ ----- ------ ----- ----- ----- ----- -----
Gross profit............... 46.5 16.9 43.2 17.2 39.7 15.6 11.1 15.5 11.3 13.1
Selling, general and
administrative expenses.... 12.9 4.7 13.5 5.3 15.9 6.2 4.0 5.7 4.8 5.6
------ ----- ------ ----- ------ ----- ----- ----- ----- -----
Operating income........... $ 33.6 12.2% $ 29.7 11.9% $ 23.8 9.4% $ 7.1 9.8% $ 6.5 7.5%
====== ===== ====== ===== ====== ===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) Consists of revenues from the construction of U.S. Navy, other U.S.
government, state government and foreign government vessels.
(2) Consists of revenues from the construction, repair or conversion of tank
barges, including offshore and inland double hull tank barges, and deck
barges.
(3) Consists of revenues from the construction, repair or conversion of offshore
support vessels and tugboats.
(4) Consists of revenues from the construction of yachts, inland tow boats,
casino vessels and miscellaneous commercial vessels.
Three Months Ended June 30, 1996 Compared with Three Months Ended June 30,
1995
Contract revenue earned increased 19.4% to $86.0 million in the three month
period ended June 30, 1996 compared with $72.0 million in the three month period
ended June 30, 1995. Revenues for the first quarter of fiscal 1997 were
favorably affected principally by (i) a $10.0 million increase in Barges
revenues, resulting principally from the completion of a barge-conversion
contract at the Gulf Coast Fabrication shipyard, (ii) a $2.6 million increase in
Other revenues due primarily to the custom yacht business and (iii) a $1.3
million increase in Offshore Energy revenues.
Gross profit margin declined in the three month period ended June 30, 1996
to 13.1% of contract revenue earned compared to 15.5% in the three month period
ended June 30, 1995. The decline in gross profit margin principally resulted
from the substantial completion in the quarter ended June 30, 1995 of certain
contracts for the construction of large U.S. Navy vessels under which the
Company achieved higher than anticipated profitability that was recognized in
later stages of the contracts.
Selling, general and administrative expenses increased 18.5% to $4.8
million in the first quarter of fiscal 1997 from $4.0 million in the first
quarter of fiscal 1996. The increase was attributable to the addition of new
employees, normal salary increases for existing employees and increased selling
efforts in foreign markets.
Interest expense decreased 10.7% to $0.9 million during the three month
period ended June 30, 1996 from $1.0 million during the three month period ended
June 30, 1995. This decrease was due to lower levels of intercompany borrowings.
22
<PAGE> 24
Taxes decreased approximately 7.0% to $2.2 million in the first quarter of
fiscal 1997 from $2.4 million in the same period in fiscal 1996.
Fiscal 1996 Compared with Fiscal 1995
Contract revenue earned increased 1.5% to $254.3 million in the fiscal year
ended March 31, 1996 compared with $250.6 million in the fiscal year ended March
31, 1995. Fiscal 1996 revenues were favorably affected principally by (i) a
$13.7 million increase in Barges revenues, (ii) a $16.9 million increase in
Offshore Energy revenues and (iii) a $13.5 million increase in foreign
commercial contracts. The increase in Barges revenues was principally
attributable to the inclusion of results of the Gulf Coast Fabrication shipyard
for a full year in fiscal 1996 compared to five months in fiscal 1995 and to new
contracts at the Gulfport yard. The increase in Offshore Energy revenues was
principally attributable to new contracts and higher repair business. These
increases were largely offset by a $24.2 million decrease in revenue from
foreign governmental contracts and a $15.4 million decrease in Other revenues.
The decrease in foreign governmental revenue was principally attributable to
completion in fiscal 1995 of a large portion of the Company's contract with the
U.S. Navy to build patrol vessels for the Philippine government. The decrease in
Other revenues was attributable primarily to reduced casino vessel contracts.
The Company entered the casino vessel construction market in fiscal 1994 after
being awarded contracts for the construction of three large paddle wheel casino
boats. By the end of fiscal 1995, these contracts were substantially completed.
The Company believes that existing demand for casino vessels has largely been
satisfied and that it is unlikely that the Company will continue to construct a
significant number of casino vessels in the foreseeable future.
Gross profit margin declined in fiscal 1996 to 15.6% of contract revenue
earned compared to 17.2% in fiscal 1995. The decrease in the gross profit margin
principally resulted from (i) the substantial completion in fiscal 1995 of
certain contracts for the construction of large U.S. Navy vessels under which
the Company achieved higher than anticipated profitability that was recognized
in later stages of the contracts, (ii) wage increases at the Lockport shipyard
and (iii) reduced margins resulting from the re-entry of certain Company
shipyards into the general commercial market following the completion of casino
vessel construction contracts.
Selling, general and administrative expenses increased 18.1% to $15.9
million during fiscal 1996 from $13.5 million in fiscal 1995. Such increase
resulted principally from the addition of new employees, normal salary increases
for existing employees and increased selling efforts relating to foreign
shipbuilding contracts.
Interest expense decreased 15.0% to $3.3 million during fiscal 1996 from
$3.8 million during fiscal 1995 due to lower levels of intercompany borrowings.
Historically, Trinity charged the Company interest on outstanding intercompany
balances at market rates based on Trinity's borrowing costs.
Taxes decreased approximately 20.3% to $8.1 million in fiscal 1996 from
$10.2 million in fiscal 1995. See Note 9 of Notes to Consolidated Financial
Statements.
Fiscal 1995 Compared with Fiscal 1994
Contract revenue earned decreased 9.0% to $250.6 million in the fiscal year
ended March 31, 1995 compared with $275.3 million in the fiscal year ended March
31, 1994. Fiscal 1995 revenues were adversely affected by (i) a $24.0 million
reduction in Offshore Energy revenues, (ii) a $17.5 million reduction in Other
revenues and (iii) a $8.9 million reduction in Government revenues. The
reduction in Offshore Energy revenues is principally attributable to the
completion in fiscal 1994 of three tugboats and an anchor handling supply vessel
which were not replaced in fiscal 1995. The reduction in Other revenues resulted
from the completion in fiscal 1994 of a substantial portion of three large
paddle wheel casino vessels. The reduction in Government revenues resulted
principally from a decrease of $40.2 million due to the substantial completion
of certain large U.S. Army contracts in fiscal 1994, partially offset by (i) a
$14.0 million increase in U.S. Navy contracts due to increased oceanographic
survey and research ship construction activity, (ii) a $9.5 million increase in
state government contracts due to increased revenues from the construction of an
additional ferry boat and from increased activity under construction contracts
for two other ferry boats and (iii) a $4.7 million increase due to construction
of additional patrol craft. These decreases in revenues for fiscal 1995 were
partially offset by a $25.7 million increase in Barges revenues due to new
contracts and increased revenues
23
<PAGE> 25
from five months of operations of the Company's Gulf Coast Fabrication shipyard
which was acquired in October 1994.
Gross profit margin increased in fiscal 1995 to 17.2% of contract revenue
earned compared to 16.9% in fiscal 1994. The increase in gross profit margin
resulted principally from the completion in fiscal 1995 of a contract for the
construction of a large U.S. Navy vessel under which the Company achieved higher
than anticipated profitability that was recognized in later stages of the
contract.
Selling, general and administrative expenses increased 4.6% to $13.5
million during fiscal 1995 from $12.9 million in fiscal 1994, principally as a
result of normal salary increases for existing employees.
Interest expense increased $1.7 million to $3.8 million during fiscal 1995
from $2.1 million during fiscal 1994 due to higher levels of intercompany
borrowings to support operations as well as higher average interest rates.
Taxes decreased approximately 16.8% to $10.2 million in fiscal 1995 from
$12.2 million in fiscal 1994. See Note 9 of Notes to Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal needs for capital, in addition to the funding of
ongoing shipbuilding operations, have been capital expenditures, acquisitions
and the repayment of intercompany advances. The Company's principal sources of
liquidity have been net cash provided by operating activities and intercompany
advances from Trinity. Cash flows from operating activities were $23.7 million
during fiscal 1996 while intercompany activities resulted in a net repayment by
the Company to Trinity of $7.9 million in advances from Trinity.
Prior to the Offering, the Company has relied upon Trinity to provide
funding for working capital, capital expenditures and acquisitions. In addition,
a significant portion of the Company's existing contracts for the construction,
repair or conversion of vessels require that the Company's performance be
guaranteed by Trinity or by a surety company or other third party pursuant to a
contract bid or performance bond, letter of credit or similar obligation. As of
July 31, 1996, Trinity had guaranteed contract performance obligations of the
Company in the aggregate amount of approximately $66.1 million, and the Company
had outstanding contract bid and performance bonds, letters of credit and
similar obligations issued by third parties, with Trinity as the obligor, with
an aggregate face amount of approximately $74.9 million. These guarantees,
bonds, letters of credit and similar obligations, totalling approximately $141.0
million, will remain in effect after the Offering until the obligations expire,
and the Company will be obligated to indemnify Trinity against any liability
under such obligations. For the protection of Trinity in the event that Trinity
is called upon to satisfy any such obligations, Trinity will be granted security
interests in certain assets of the Company which relate to the Company contracts
from which such obligations arise and will possess rights to complete
performance of any such contract on behalf of the Company in the event of
nonperformance by the Company. Such rights and remedies are similar to the
rights possessed by surety companies that have issued performance bonds on
behalf of the Company. See "Business -- Bonding and Guarantee Requirements" and
"Certain Transactions and Related Arrangements -- Arrangements Between the
Company and Trinity -- Performance Bond and Guarantee Arrangements."
After the Offering, it is anticipated that Trinity will not provide any
further credit or other financial support to the Company. See "Risk
Factors -- Certain Financial Requirements; Absence of Trinity Financial
Support." It is anticipated that the Credit Facility will provide a $105.0
million to $125.0 million revolving line of credit for general corporate
purposes and working capital, with a $50.0 million sublimit for letters of
credit. Immediately prior to the consummation of the Offering, the Company
expects to borrow under the Credit Facility to repay (i) a $25.0 million
intercompany note to Trinity and (ii) $25.0 million of certain indebtedness of
Trinity associated with the Company Businesses and assumed by the Company in
connection with the Consolidation Transactions. The Company intends to use the
net proceeds of the Offering to repay income taxes payable to Trinity and a
portion of the indebtedness incurred under the Credit Facility immediately prior
to the Offering. See "Separation From Trinity -- Consolidation Transactions,"
"Separation From Trinity -- Offering Related Transactions" and "Use of
Proceeds."
24
<PAGE> 26
As of June 30, 1996, the Company had approximately $29.9 million of net
current liabilities to Trinity resulting from Trinity's centralized cash
management system. Such liabilities bear interest at market rates. The Company
expects to repay the net current liabilities to Trinity outstanding as of the
consummation of the Offering, in the ordinary course of business, and in any
event no later than 60 days after the consummation of the Offering, as it
replaces such liabilities with its own direct trade payables and similar
obligations. To the extent that sufficient funds are not available from the
replacement of such liabilities with its own payables within 60 days following
consummation of the Offering, the Company anticipates that it will have
sufficient borrowing capacity under the Credit Facility to repay such amount to
Trinity. See Note 6 of Notes to Consolidated Financial Statements.
As of June 30, 1996, the Company was obligated to reimburse Trinity for
income taxes incurred in connection with the Company Businesses in an aggregate
amount of approximately $16.4 million. Under the Tax Allocation Agreement, the
Company has agreed to pay the amount of the Company's income tax liability to
Trinity as of the consummation of the Offering with a portion of the net
proceeds of the Offering. It is currently estimated that the Company's income
tax liability to Trinity will be approximately $17.4 million upon consummation
of the Offering.
Upon consummation of the Offering, the Company estimates that it will have
approximately $70 million of borrowings available under the Credit Facility,
assuming a Credit Facility of $105.0 million. It is anticipated that borrowings
under the Credit Facility will bear interest at the London Interbank Offered
Rate plus 0.625% to 1.25% per annum, depending on the ratio of the Company's
borrowed debt to EBITDA (as defined in the Credit Facility). Under the Credit
Facility, the Company will be obligated to pay certain fees, including an annual
commitment fee in an amount that is expected to range from 0.175% to 0.5% of the
unused portion of the commitment, depending on the ratio of the Company's
borrowed debt to EBITDA, and a fee of 0.125% of the amount of the Credit
Facility commitment upon the initial funding under the Credit Facility. The
Credit Facility will contain customary restrictive covenants (including
covenants restricting the ability of the Company to pay dividends or encumber
its assets). It is also anticipated that the Credit Facility will require the
Company to maintain certain financial ratios, including an interest coverage
ratio (as defined in the Credit Facility) of at least 4.0 to 1, a debt service
coverage ratio (as defined in the Credit Facility) of at least 1.35 to 1, a
borrowed debt to EBITDA ratio (as defined in the Credit Facility) of not more
than 3.5 to 1 and a current ratio (as defined in the Credit Facility) of at
least 1.25 to 1. The Credit Facility is expected to expire on the third
anniversary of the date of consummation of the Offering, subject to extension at
the option of the lenders. It is a condition to the consummation of the Offering
that the Credit Facility be in place prior to, and that the Offering Related
Transactions be consummated concurrently with the consummation of, the Offering.
The Company made capital expenditures of $6.4 million and $5.6 million in
fiscal 1995 and 1996, respectively, and $2.6 million in the first quarter of
fiscal 1997. The Company currently has budgeted approximately $9 million for
planned capital projects at its current operating facilities for fiscal 1997,
including $4 million to $5 million for projects at its Pascagoula shipyard.
These Pascagoula shipyard expenditures are required to meet existing contractual
commitments. In addition, although not currently budgeted for fiscal 1997, the
Company estimates that additional capital expenditures of approximately $4
million to $5 million may be made to relocate a dry dock to its Pascagoula
shipyard and additional capital expenditures of approximately $8 million to $12
million may be made to make other improvements to enable such yard to do large
vessel and drilling rig construction, conversion and repair projects. The
Mississippi Business Finance Corporation has authorized the issuance of up to
$25 million of revenue bonds for the Company in connection with proposed
improvements at the Pascagoula facility. If the Company decides to reopen its
Panama City yard, which is currently inactive, startup costs are expected to be
approximately $3 million. Expenditures to reopen the Panama City yard are not
currently budgeted for fiscal 1997. However, such reopening could occur in
fiscal 1997 if such action is warranted due to an increase in the number of
shipbuilding or repair orders. See
"Business -- Operations -- Shipbuilding -- Shipyards."
The Company believes that cash flow from operations, together with funds
available under the Credit Facility and the Pascagoula revenue bonds, will be
sufficient to fund its requirements for working capital, capital expenditures
and other capital needs for at least the next 12 months.
25
<PAGE> 27
INFLATION AND CHANGING PRICES
The Company does not believe that general price inflation has had a
significant impact on the Company's results of operations during the periods
presented. To the extent that the effects of inflation are not offset by
improvements in manufacturing and purchasing efficiency and labor productivity,
the Company generally has been able to take such effects into account in pricing
its contracts with customers. There can be no assurance, however, that inflation
will not have a material effect on the Company's business in the future. For
information regarding the effects of increases in labor costs on the Company's
results of operations in recent periods, see "-- General" and "-- Results of
Operations."
26
<PAGE> 28
BUSINESS
GENERAL
The Company is the seventh largest shipbuilder in the United States,
specializing in the construction, repair and conversion of ocean-going and
inland waterway vessels for the commercial and governmental markets. The Company
is the largest U.S. builder of small to medium sized (from 50 to 400 feet)
ocean-going ships and barges and inland tow boats for these markets. The Company
and its predecessors have built more than 2,000 of these vessels in the past 40
years. The Company has ten shipyards (including one that currently is idle), all
of which are strategically located along the Gulf Coast from Louisiana to
Florida. The Company's shipyards employ advanced manufacturing techniques,
including modular construction methods which the Company was among the first
U.S. shipbuilders to use, zone outfitting methods, advanced welding techniques,
panel line fabrication, computerized plasma arc metal cutting and automated
sandblasting and painting. The Company's multiple shipyards provide the Company
significant flexibility and efficiency in manufacturing a wide variety of
vessels. The Company believes that these factors, together with its skilled and
experienced work force, make the Company one of the most versatile and
cost-efficient shipbuilders in the United States.
The Company provides a wide variety of products for diversified markets.
The Company has a large engineering team which has enabled it to build hundreds
of vessels for commercial and governmental customers. The Company's principal
products include offshore support vessels, offshore double hull tank barges,
offshore tug boats and oil spill recovery vessels for commercial use and
oceanographic survey and research ships, high speed patrol boats and ferries for
government use. Other Company products include inland tow boats, specialty
inland barges and private yachts. During fiscal 1994, following the legalization
of casino gambling in Louisiana, the Company was awarded contracts to construct
three large paddle wheel casino boats. These contracts were substantially
completed during fiscal 1995. The Company believes that the existing demand for
casino vessels has largely been satisfied and that it is unlikely that the
Company will continue to construct a significant number of casino vessels in the
foreseeable future. The Company will build inland hopper barges under a limited
arrangement with Trinity. At July 31, 1996, the Company had firm shipbuilding
contracts with an aggregate remaining value of approximately $417 million
(excluding unexercised options held by customers), representing 115 vessels
(including 50 inland hopper barges). Of this value, approximately $181 million
was attributable to contracts to build ships for the U.S. Navy.
The Company has built more offshore support vessels, including supply
boats, anchor handling tug supply boats and anchor handling tugs (collectively,
"offshore support vessels"), to service offshore oil and gas drilling rigs and
production platforms than any shipbuilder in the United States. The Company has
built a total of 534 offshore support vessels from 1965 through 1995, which the
Company believes account for approximately 25% of the world fleet of offshore
support vessels manufactured during such period. Vessels built by the Company
and known to be in service represented approximately 34% of the 395 total
offshore support vessels operated by the two largest worldwide fleet operators
as of March 31, 1996. As a result of the severe downturn in the oil and gas
industry in the mid-1980's, there has been very limited construction of offshore
support vessels in the United States since 1985. During the period from 1985
through 1995, the Company built a total of eight new 200-foot or longer offshore
support vessels, more than any other U.S. shipbuilder. The Company's offshore
support vessel manufacturing activities during this period have enabled it to
gain a competitive advantage through experience with recent advances in vessel
engineering and construction techniques. The Company currently has eight
offshore support vessels under contract, of which six contracts have been
entered into since July 1, 1996. The Company also has outstanding options for
eight additional vessels, including seven from one customer, and is bidding on a
number of substantial potential orders for such vessels.
The Company expects that substantial orders for new offshore support
vessels may be made in the next several years due to the need for larger
offshore support vessels to service deep water oil and gas exploration and
production activities, the significant worldwide fleet attrition over the past
ten years and the aging of the remaining fleet. The Company believes that the
number of offshore support vessels available for service worldwide decreased
substantially during the last ten years. The number of such vessels available
for service in the Gulf of Mexico decreased from a peak of approximately 700 in
1985 to approximately 270 in July 1996. A
27
<PAGE> 29
majority of the offshore support vessels currently in service worldwide are 16
or more years old and a majority of the others are between 11 and 16 years old.
As these vessels age, maintenance, repair and vessel certification costs
increase significantly and eventually require their replacement. New offshore
support vessels incorporating advances in engineering, technology and outfitting
are expected to cost between $6 million and $25 million each, depending on the
vessel's size and capability. The timing of the expected upturn in the offshore
support vessel market will depend principally upon conditions in the offshore
oil and gas industry, particularly an increase in drilling activity and dayrates
for offshore support vessels, which in turn depend upon oil and gas prices.
Because of its extensive experience in manufacturing offshore support vessels
and its ability to expand production at its existing shipyards, the Company
believes it is well positioned to take advantage of the expected upturn in the
offshore support vessel business.
The Company similarly has positioned itself to benefit from the expected
increase in offshore tank barge construction and conversion. Demand for offshore
tank barges has been created by OPA '90, which generally requires U.S. and
foreign vessels carrying fuel and certain other hazardous cargos and entering
U.S. ports to have double hulls by 2015. OPA '90 establishes a phase-out
schedule that began January 1, 1995 for all existing single hull vessels based
on the vessel's age and gross tonnage. The Company estimates that OPA '90 will
require approximately 66 barges engaged in domestic trade to be retrofitted or
replaced by 2005 and another approximately 22 such barges to be retrofitted or
replaced by 2010. Demand for new vessels is also created by the aging of the
worldwide fleet. According to estimates of the United States Maritime
Administration ("MARAD"), by 2000 approximately 40% of the current world
offshore tank barge fleet will be more than 25 years old and more than 20% will
be at least 30 years old. New double hull barges generally range in cost from $6
million to $25 million each (with an estimated average cost of $15 million).
During the past three years, the Company has built eight large offshore double
hull tank barges, more than any other U.S. shipbuilder. The Company currently
has three such barges under construction and has an outstanding option from a
customer for one additional barge. In addition, the Company is bidding on a
number of other substantial barge construction projects.
BACKGROUND
Since 1972, the Company has grown substantially through a series of nine
acquisitions. The Company acquired its first shipyard (Equitable in New Orleans,
Louisiana) in 1972 and another (Gretna Machine & Iron Works in Harvey,
Louisiana) in 1980. From 1972 to 1983, almost all of the Company's shipbuilding
projects were for the commercial market (such as lighter aboard ship (LASH)
container barges, anchor handling tugboats, ocean-going barges, inland hopper
barges and two Staten Island ferries).
In 1983, the Company acquired Halter Marine, Inc., including the Halter
shipyards in Moss Point and Lockport, Louisiana (and several other shipyards
that have been subsequently closed). As a result of this acquisition, the
Company entered the markets for construction of offshore support vessels and of
U.S. government vessels. The Halter Moss Point and Lockport yards were
principally engaged in building a large number of offshore support vessels from
1978 to 1985, when the downturn in the offshore oil and gas industry severely
curtailed demand for these vessels. A large majority of the Company's
shipbuilding business was for the U.S. government from 1983 to 1989, a period
during which the U.S. Navy was engaged in a large shipbuilding program.
In 1987, the Company acquired Moss Point Marine, Inc. in Escatawpa,
Mississippi, which was then owned and operated by the Company's current Chief
Executive Officer, John Dane III, and the Company's shipyards were reorganized
to centralize sales, engineering, production, administrative and other functions
in order to increase their efficiency and reduce costs. In 1990, as U.S. Navy
shipbuilding activities were beginning to decline, the Company began to expand
its commercial business again and obtained a large commercial contract to build
12 oil spill recovery vessels.
In 1991, the Company acquired its Gulfport, Mississippi shipyard, which
initially brought additional governmental projects. In 1992, the Company
acquired its Panama City, Florida yard, which was closed at the time of
acquisition. The Panama City yard was purchased on advantageous terms to provide
additional capacity when needed.
28
<PAGE> 30
From late 1994 to late 1995, the Company purchased three shipyards that
significantly increased its capacity to do repair and conversion work. In late
1994, the Company acquired the Gulf Coast Fabrication shipyard in Pearlington,
Mississippi. This yard, which has the widest graving dock on the Gulf Coast,
specializes in large barge construction and conversion projects, including
construction and retrofitting of barges with double hulls to meet the
requirements of OPA '90. At the time of the acquisition by the Company, the Gulf
Coast Fabrication shipyard also was engaged in the construction of casino
vessels. In mid-1995, the Company acquired the Gulf Repair yard in New Orleans,
which now has five large dry docks for repair of offshore vessels. In late 1995,
the Company acquired its Pascagoula, Mississippi shipyard, which provides deep
water access and currently has the capacity to build large vessels (up to 800
feet in length, 115 feet in width and of an unlimited height).
See "-- Operations" for additional information about the Company's
shipyards and recent shipbuilding, repair and conversion activities.
INDUSTRY OVERVIEW
Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. Included in the second category are ten
shipbuilders, including the Company, that are capable of building vessels of 400
feet or more. This category also includes several hundred companies engaged in
shipbuilding and repair activities in the United States, many of which are
smaller than the Company, having one or two shipyards and specializing in the
construction or repair of one or a small number of types of vessels.
In general, during the 1990's, the U.S. shipbuilding industry has been
characterized by substantial excess capacity because of the significant decline
in U.S. Navy shipbuilding spending and the difficulties experienced by U.S.
shipbuilders in competing successfully for international commercial projects
against foreign shipyards, many of which are heavily subsidized by their
governments. As a result of these factors, competition by U.S. shipbuilders for
domestic commercial projects has increased significantly.
The U.S. shipbuilding industry has two distinct markets: (i) contracts with
domestic and foreign governments, principally the U.S. Navy, and (ii) commercial
contracts for domestic and international customers. See "-- Contract Procedure,
Structure and Pricing" and "-- Competition."
BUSINESS STRATEGY
The Company's strategy is to enhance its position as a leading manufacturer
of small to medium sized vessels, to respond to anticipated new shipbuilding
construction opportunities and to increase its revenues and profitability. In
order to implement this strategy, the Company intends to:
Provide a Wide Variety of Products to Diversified Markets
The Company's shipbuilding versatility is one of its principal competitive
strengths, not only reducing its dependence on particular types of products, but
also providing engineering and manufacturing benefits across product lines. The
Company intends to continue to serve diversified markets, including a balance of
commercial and governmental shipbuilding projects. See "-- Operations" and
"-- Principal Products."
Take Advantage of New Construction Opportunities
The Company intends to anticipate and position itself to take advantage of
significant new vessel construction opportunities, including the following:
Expected Upturn in Market for Offshore Support Vessels. Because of its
extensive experience in manufacturing offshore support vessels (including
those incorporating recent advances in vessel engineering, construction and
outfitting) and its ability to expand its production at its existing
shipyards, the Company believes it is well positioned to take advantage of
the expected upturn in the market for new offshore support vessels. The
Company has built more offshore support vessels than any shipbuilder in the
29
<PAGE> 31
United States. As a result of the severe downturn in the oil and gas
industry in the mid-1980's, there has been very limited construction of
offshore support vessels in the United States since 1985. The Company
expects that substantial orders for new offshore support vessels may be
made in the next several years due to the need for larger vessels to
support deep water oil and gas exploration and production activities, as
well as the substantial worldwide fleet attrition over the past ten years
and the aging of the remaining fleet. The timing of the expected upturn in
the offshore support vessel market will depend principally upon conditions
in the offshore oil and gas industry, particularly an increase in drilling
activity and dayrates for offshore support vessels, which in turn depend
upon oil and gas prices. The Company currently has eight offshore support
vessels under contract, of which six contracts have been entered into since
July 1, 1996. The Company also has outstanding options for eight additional
vessels, including seven from one customer, and is bidding on a number of
substantial potential orders for such vessels. See "Risk
Factors -- Dependence of Offshore Support Vessel Market on Offshore
Exploration Activity," "-- General" and "-- Principal Products -- Offshore
Support Vessels."
Current and Future Demand for Offshore Double Hull Tank Barges. The
Company expects to capitalize on the increase in offshore tank barge
construction and conversion resulting from OPA '90 and the aging of the
worldwide fleet. OPA '90 establishes a phase-out schedule that began
January 1, 1995 for all existing U.S. and foreign single hull vessels
carrying fuel and certain other hazardous cargos and entering U.S. ports.
Operators will be required either to retrofit existing single hull vessels
or construct new double hull vessels in order to comply with the law's
requirement that such vessels have double hulls by 2015. The Company
estimates that OPA '90 will require approximately 66 barges engaged in
domestic trade to be retrofitted or replaced by 2005 and another
approximately 22 such barges to be retrofitted or replaced by 2010.
According to MARAD estimates, by 2000 approximately 40% of the world
offshore tank barge fleet will be more than 25 years old and more than 20%
will be at least 30 years old. During the past three years, the Company has
built eight large offshore double hull tank barges, more than any other
U.S. shipbuilder. The Company currently has three such barges under
construction and has an outstanding option from a customer for one
additional barge. In addition, the Company is bidding on a number of other
substantial barge construction projects. See "-- Principal
Products -- Offshore Barges."
Utilize Multiple, Strategically Located Shipyard Facilities
The Company's multiple shipyards will continue to provide it with
significant flexibility and efficiency in manufacturing a wide variety of
ocean-going vessels. The Company utilizes certain shipyards with specialized
machinery to centrally manufacture various components for its other shipyards,
helping to reduce costs and equipment redundancy. The Company is often able to
enhance its production efficiency and accelerate vessel delivery schedules by
allocating projects among multiple shipyards based on capability and capacity.
The Company's shipyards are strategically located along the Gulf Coast, in close
proximity to many commercial customers and with access to additional
shipbuilding labor as the Company's business expands (except in southern
Louisiana, where shipyards, including the Company's Lockport facility, are
experiencing a severe shortage of skilled shipyard labor). The Company has spent
approximately $46.5 million in the past five years to acquire, expand and
improve its shipyard facilities, which are all well maintained. See
"-- Operations."
Continue To Be a Low Cost Shipbuilder
The Company intends to continue to enhance its position as one of the most
cost-efficient shipbuilders in the United States. The Company's shipyards employ
advanced manufacturing techniques, including modular construction methods which
the Company was among the first U.S. shipbuilders to use, zone outfitting
methods, advanced welding techniques, panel line fabrication, computerized
plasma arc metal cutting and automated sandblasting and painting. The Company
believes that these factors make the Company one of the most versatile and
cost-efficient shipbuilders in the United States. See "-- General" and
"-- Operations -- Shipbuilding."
30
<PAGE> 32
Increase Output at the Company's Existing Facilities
The Company has the ability to significantly increase production at almost
all of its existing shipyards. As of June 30, 1996, the Company employed 2,597
shipyard workers and estimates that it could employ a maximum of approximately
3,670 workers without significant expansion of its plant facilities. While some
of its principal competitors are experiencing a severe shortage of skilled
shipyard workers in southern Louisiana (which has also affected the Company's
Lockport, Louisiana yard), the Company's other shipyards currently have access
to additional shipyard labor in their respective markets along the Gulf Coast.
Significant excess capacity is available at the Company's Pascagoula yard, which
was acquired in late 1995 and at which production has recently commenced, and
its Panama City yard, which currently is idle. See "Risk Factors -- Shortage of
Trained Shipyard Workers" and "-- Operations."
Expand Repair and Conversion Activities
Since October 1994, the Company has acquired the Gulf Coast Fabrication,
Gulf Repair and Pascagoula shipyards in order to increase its capacity for
repair and conversion work. Depending on demand for such services, the Company
also may, at some time in the future, relocate a 115 foot wide dry dock from its
Gulf Repair shipyard in New Orleans to its Pascagoula, Mississippi yard in order
to undertake large repair and conversion projects, such as those for large
barges, cargo ships and drilling rigs. The Pascagoula yard's deep water access
and expandable capacity to handle large vessels will enable the Pascagoula yard
to perform repair and conversion (as well as construction) services for very
large vessels and repair and construct offshore drilling rigs. See
"-- Operations -- Shipyards" and "-- Operations -- Repair and Conversion
Services."
Acquire Additional Shipyards Opportunistically
The Company has grown substantially through nine acquisitions since 1972.
Although the Company currently has additional capacity at its existing
facilities, the Company expects to consider strategic acquisitions of additional
shipyards in the future depending on a variety of factors, including demand for
new construction, conversion and repairs, the advantages offered by the
facilities and the acquisition terms. The Company expects that consolidation
will continue to occur among small to medium sized shipbuilders in light of
increasing costs of meeting environmental and other legal requirements and other
changes in the markets for various types of governmental and commercial vessels.
Increase Foreign Government Shipbuilding Activities
During the past six years, the Company has completed a significant amount
of shipbuilding projects for foreign governments, especially projects requiring
specialized expertise, such as high speed patrol boats. Depending on the project
and other circumstances, factors that can help the Company compete for foreign
government shipbuilding projects include its advanced technology, higher
productivity, vessel delivery schedules and prevailing exchange rates. See
"-- Principal Products -- Governmental Vessels."
Provide Sophisticated Engineering Services
Engineering services are a key part of the complete shipbuilding services
offered by the Company. The Company maintains a large marine engineering
department, consisting of approximately 140 employees, 45 of whom are engineers
or naval architects. The Company has built hundreds of vessels for the
commercial and governmental markets. This capability allows the Company's
customers to select from standard configurations, modify a standard
configuration, or have the Company build a vessel to the customer's
specifications or design. See "-- Engineering."
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<PAGE> 33
OPERATIONS
Shipbuilding
Projects. The Company's shipbuilding projects consisted of 115 vessels
(including 50 inland hopper barges) as of July 31, 1996. The Company had firm
contracts (excluding unexercised options held by customers) with an aggregate
remaining value of approximately $417 million as of July 31, 1996. Of this
contract value, approximately $181 million was attributable to contracts to
build ships for the U.S. Navy. The Company anticipates that approximately $245
million of the aggregate remaining value of the firm contracts as of July 31,
1996 will be filled during fiscal 1997. The following chart includes a
description of the shipbuilding projects as of July 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF TYPE(S) OF
TYPE OF VESSEL SHIPYARD(S) VESSELS CUSTOMER
- ------------------------------- ------------------------------ ----------------- ------------------------------
<S> <C> <C> <C>
GOVERNMENTAL:
Oceanographic Survey and Halter Moss Point; Pascagoula 4 U.S. Government
Research Ships
Patrol Boats Equitable 5 U.S. Government;
Foreign Governments
Ferries Halter Moss Point; Moss Point 3 State Governments;
Marine; Lockport Foreign Governments
Miscellaneous, governmental Equitable; Gulf Coast 23(1) U.S. Government;
Fabrication; Moss Point Marine State Governments
BARGES:
Tank Barges Gretna; Moss Point Marine 3 Private Fleet Operators
Inland Hopper Barges Gulfport 50(2) Private Fleet Operators
Inland Double Hull Tank Gulfport 7 Private Fleet Operators
Barges
Deck Barges Lockport; Gulf Coast 2 Private Fleet Operators
Fabrication
OFFSHORE ENERGY:
Offshore Support Vessels
Anchor Handling Tug Lockport 1 Marine Support Service
Supply Boats Companies
Supply Boats Moss Point Marine; Lockport; 4 Marine Support Service
Pascagoula Companies
Tug Boats Moss Point Marine; Lockport 6 Private Fleet Operators
OTHER:
Yachts Equitable 4 Individuals
Inland Tow Boats Lockport 1 Private Fleet Operators
Miscellaneous, commercial Lockport 2 Foreign Operators
---
Total 115
===
</TABLE>
- ---------------
(1) Certain of these vessels are being constructed by a subcontractor at its
facility in New Orleans.
(2) The Company has a firm contract to construct 50 inland hopper barges under a
limited arrangement with Trinity. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Inland Barge
Arrangements."
Shipyards. The Company conducts its shipbuilding operations at nine active
shipyards. None of the Company's principal U.S. competitors for new construction
of small to medium sized vessels, by contrast, has more than two active
shipyards used for new construction. The Company also owns a shipyard in Panama
City, Florida that was closed when acquired. The Panama City yard is not
currently operational but may be reopened, if justified by customer demand, late
in fiscal 1997.
Management believes that the Company's focus on the operation of a
relatively large number of smaller shipyards and the diversity of location and
function of its various shipyards enable the Company to maintain significant
flexibility and to achieve substantial operating efficiencies. The number and
diversity of function of the Company's shipyards allow the Company to achieve
operating efficiencies by permitting each of its shipyards to focus on
construction of particular types of vessels. Additionally, the Company's
Equitable and Gulfport shipyards manufacture components or modules that are
shipped to the Company's other shipyards for inclusion in vessels, thereby
eliminating the need to maintain certain costly manufacturing equipment at each
shipyard. The Company anticipates that the component manufacturing function
currently performed by its Gulfport shipyard will be shifted to its Pascagoula
shipyard and that the Gulfport facility will be temporarily converted primarily
to the production of inland hopper barges under an arrangement with Trinity.
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<PAGE> 34
The Company has budgeted approximately $4 million to $5 million for fiscal 1997
for improvements at its Pascagoula shipyard necessary to shift such component
manufacturing function to Pascagoula and for other improvements necessary to
meet existing contractual requirements. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Inland Barge
Arrangements."
The location of the Company's shipyards at various sites along the Gulf
Coast generally alleviates problems that can arise from labor shortages in
particular locations. Shipyards located in certain portions of southern
Louisiana currently are experiencing severe shortages of skilled shipyard labor
as a result of labor demands brought about by increases in offshore drilling
activities, the construction of offshore rig platforms and crewing of offshore
vessels. This labor shortage has resulted in increased costs of labor and
limitations on production capacity for shipyards in such portions of southern
Louisiana. However, of the Company's ten shipyards, only Lockport is located
within the affected areas of southern Louisiana. Accordingly, the labor shortage
has not impacted the Company to the same degree that it has affected many of the
Company's competitors.
The Company's shipyards are well maintained facilities. During the past
five years, the Company made, in the aggregate, approximately $46.5 million of
capital expenditures in order to acquire, expand and improve its shipyard
facilities. These expenditures have allowed the Company to solidify its position
as a low cost producer of high quality vessels. In the 1970's, the Company was
one of the first U.S. builders of small to medium sized ships to adopt modular
construction techniques. The Company now employs the latest in modular
construction techniques, zone outfitting, which involves the installation of
pipe, electrical wiring and other systems at the modular stage, thereby reducing
construction time while at the same time simplifying systems integration and
improving quality. The Company also uses panel line fabrication for efficiently
attaching stiffeners to shell and bulkheads, computerized plasma arc metal
cutting for close tolerances and automated sandblasting and painting processes
for efficiency and high quality.
The Company has capacity, with the addition of new employees, to expand
production significantly at almost all of its existing shipyards. In addition,
the Pascagoula shipyard, which was acquired by the Company as a closed facility
in November 1995, is still in the start-up phase. The Pascagoula shipyard
provides deep water access and currently has the capacity to build large vessels
(up to 800 feet in length, 115 feet in width and of an unlimited height). The
Company believes that the Pascagoula area offers a good supply of skilled labor
and that the Pascagoula facility could become the Company's largest shipyard.
The Company estimates that capital expenditures totaling approximately $4
million to $5 million will be required during fiscal 1997 for improvements at
the Pascagoula facility necessary to shift the component manufacturing function
from the Gulfport facility to Pascagoula and for other improvements necessary to
meet existing contractual requirements. However, the Company estimates that,
although not currently budgeted for fiscal 1997, additional capital expenditures
totaling approximately $4 million to $5 million may be made to relocate a 115
foot wide drydock from its Gulf Repair shipyard in New Orleans to the Pascagoula
yard and additional capital expenditures of approximately $8 million to $12
million may be made to permit the Pascagoula facility to offer large vessel
construction, repair and conversion services and drilling rig construction. The
Company also may reopen its shipyard in Panama City, Florida late in fiscal
1997, if justified by customer demand. The Panama City shipyard has been idle
since its acquisition by the Company in October 1992. The Company estimates that
initial capital expenditures totaling approximately $3 million would be
necessary to reopen the Panama City facility.
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<PAGE> 35
The following chart contains certain information, as of June 30, 1996,
regarding each of the Company's shipyards.
<TABLE>
<CAPTION>
PRIMARY PRODUCTS/ CURRENT MAXIMUM
SHIPYARD LOCATION DATE ACQUIRED OPERATIONS(1) EMPLOYEES EMPLOYEES(2)
- ------------------ ---------------- -------------- ---------------------------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Equitable New Orleans, LA December 1972 Patrol Boats; Yachts; 354 500
Crew Boats; Manufacturing of
Components for Other
Company Shipyards
Gretna Harvey, LA December 1980 Offshore Barges; Minor 185 250
Repairs; Gas Freeing and
Cleaning
Halter Moss Point Moss Point, MS October 1983 Oceanographic Survey and 359 450
Research Ships; Other
Specialized Navy Vessels;
Offshore Support Vessels;
Large Ferries
Lockport Lockport, LA October 1983 Tug Boats; Offshore Deck 273 300
Barges; Offshore Support
Vessels; Patrol Boats
Moss Point Marine Escatawpa, MS August 1987 Ferries; Large Offshore Tug 328 400
Boats; Landing Craft;
Offshore Support Vessels
Gulfport Gulfport, MS December 1991 Roll On-Roll Off Ramps for 413 500
U.S. Government; Inland Double
Hull Tank Barges; Inland Hopper
Barges; Manufacturing of
Components for Other Company
Shipyards; Offshore Deck Barges
Panama City Panama City, FL October 1992 Idle; To be Reopened 1 400
(Depending on Market
Conditions)
Gulf Coast Pearlington, MS October 1994 Offshore Container and Deck 232 250
Fabrication Barges; Offshore Double Hull
Tank Barges; Repair and
Conversion
Gulf Repair New Orleans, LA July 1995 Repairs; Offshore Deck Barges 238 220
Pascagoula Pascagoula, MS November 1995 Offshore Support Vessels; 214 400
Oceanographic Survey and Research
Ships; Containerships; Repairs;
Offshore Double Hull Tank Barges
------- -------
Total Number of Employees(3) 2,597 3,670
======= =======
</TABLE>
- ---------------
(1) Includes operations currently conducted and products currently produced or
contemplated to be produced at the applicable shipyard.
(2) Represents management's estimate of the maximum number of persons that could
be employed at the existing plant facilities without significant expansion.
For information regarding related capital expenditures, see discussion
above. Because of a severe labor shortage affecting shipyards in certain
portions of southern Louisiana (including the Lockport shipyard), it is
doubtful that the Company could increase the number of employees at its
Lockport shipyard at the present time. See "Risk Factors -- Shortage of
Trained Shipyard Workers."
(3) Excludes employees at corporate headquarters and engineering employees.
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<PAGE> 36
Repair and Conversion Services
Since October 1994, the Company has acquired two shipyards that currently
provide major vessel repair and conversion services. The Company's Gulf Coast
Fabrication shipyard in Pearlington, Mississippi has the widest graving dock on
the Gulf Coast, capable of accommodating vessels up to 140 feet in width. The
Company's Gulf Repair facility in New Orleans, Louisiana has five floating dry
docks capable of accommodating vessels up to 770 feet in length. Depending on
demand for such services, the Company may, at some time in the future, relocate
a 115 foot wide dry dock from the Gulf Repair shipyard to the Pascagoula yard in
order to undertake large repair and conversion projects, such as those for large
barges, cargo ships and drilling rigs. The Pascagoula shipyard provides deep
water access and currently has the capacity to build large vessels (up to 800
feet in length, 115 feet in width and of an unlimited height). The Company also
performs minor vessel repairs at its Gretna facility in Harvey, Louisiana, where
it has two graving docks.
The enactment of OPA '90 has created a demand for retrofitting existing
offshore barges to double hulls to comply with the law's single hull phase-out
requirements (in addition to the construction of new double hull vessels
complying with OPA '90). Additionally, demand for vessel repair and conversion
services has increased in recent years as vessel owners have attempted to extend
the useful lives of offshore barges and offshore support vessels, as a
significant portion of their fleets approach the end of their useful lives.
Management believes that the Company is well positioned to benefit from these
demand trends and that these trends should continue for at least the next ten
years.
Other Services
The Company offers 24-hour a day vessel parts supply service to its
customers throughout the world and offers crew training services in the
customers' native languages. At its Gretna yard, the Company also offers gas
freeing and cleaning services for vessels that carry fuels or other hazardous
cargos. See "-- Regulation -- Environmental Regulation."
PRINCIPAL PRODUCTS
The Company manufactures a variety of small and medium sized vessels
principally for the commercial and governmental markets. Certain of the
principal types of vessels manufactured by the Company are described below.
Governmental Vessels
The Company builds several types of vessels for the U.S. Navy.
Oceanographic survey and research ships are built by the Company to study and
explore the ocean and its phenomena. These vessels are built to meet demanding
performance and reliability criteria as well as critical noise, vibration and
shock parameters. Oceanographic survey and research ships range in length from
210 feet to 325 feet and range in price from $8 million to $70 million. The
Company also constructs patrol boats for the U.S. Navy, which range in length
from 26 feet to 120 feet and range in price from $300,000 to $10 million. After
head-to-head competition between a Company prototype vessel and vessels from
several competitors, a Company vessel was selected as the new Mark V high speed
special operations craft for the U.S. Navy Seal and Special Operations Forces.
These 45 knot special operations craft are 82 feet in length and sell for
approximately $5 million. As of July 31, 1996, the Company had two patrol craft
under construction for the U.S. Navy.
The U.S. Navy has options to purchase, over a period of years, up to an
additional two oceanographic survey and research ships and 12 Mark V patrol
craft. The continuation of any U.S. Navy shipbuilding program is dependent upon
the continuing availability of Congressional appropriations for that program.
Because Congress usually appropriates funds on a fiscal year basis, funds may
never be appropriated to permit the U.S. Navy to exercise options that have been
awarded. In addition, even if funds are appropriated, the U.S. Navy is not
required to exercise the options. With the end of the Cold War and the pressure
of domestic budget constraints, overall U.S. Navy spending for new vessel
construction has declined significantly since 1991 (from 88 vessels in 1990 to
46 in 1995). Although the Company believes that the small to medium sized U.S.
Navy vessels for which it competes are less likely to be cut back and, in some
cases, do not require
35
<PAGE> 37
specific Congressional appropriations, the Company generally expects revenues
and gross profit attributable to its current and any future U.S. Navy contracts
to decline over the next several years.
The Company believes that its relationship with the U.S. government is
good. Since 1989, the U.S. Navy has chosen the Company to complete construction
on certain vessels pursuant to three contracts that were originally awarded to
other shipyards, and which in the aggregate totaled over $250 million in value.
The Company constructs 78 foot patrol craft fast ("PCFs") for foreign
navies. The Company has delivered 36 of these boats to the Philippine and Saudi
Arabian governments. As of July 31, 1996, the Company had three PCFs under
construction for the government of Sri Lanka and had outstanding options from
such customer for three additional PCFs.
Company-built passenger/vehicle ferries are used by governmental operators
on all three U.S. coasts. These vessels range in length from 90 feet to 383 feet
and range in price from $1 million to $76 million. The Company recently
commenced construction on a 383 foot ferry for the State of Alaska. In 1995, the
Company developed and model-tested an "E-Cat" catamaran ferry to carry
passengers on lakes, bays, sounds and other partially protected waters. When
built, the E-Cat will be a high speed, low wake, fuel efficient vessel that will
carry 150 to 240 passengers at 30 knots and produce only minimal wake.
Offshore Barges
The Company builds a variety of offshore barges, including tank, container
and deck barges. Contract prices for barges range from $1 million to $25
million. The Company's barges are used by operators to carry large cargo such as
liquefied petroleum gas, molten sulfur, propane, butane, propylene, heavy oil,
phenol, jet fuel and other petroleum products as well as commodities including
grain, coal, wood products, containers and rail cars. Other barges function as
pipe laying barges, drilling barges, cement unloaders and split-hull dump scows.
The Company's barges range from 110 feet to 580 feet in length, with as many
cargo tanks, decks and support systems as necessary for the barge to be used for
its intended function.
The Company has positioned itself to benefit from the expected increase in
offshore tank barge construction and conversion. Demand for double hull barges
has been created by OPA '90, which generally requires U.S. and foreign vessels
carrying fuel and certain other hazardous cargos and entering U.S. ports to have
double hulls by 2015. Operators will be required either to retrofit existing
vessels or construct new double hull vessels in order to comply with the law's
single hull phase-out requirements that began January 1, 1995. The Company
estimates that OPA '90 will require approximately 66 barges engaged in domestic
trade to be retrofitted or replaced by 2005 and another approximately 22 such
barges to be retrofitted or replaced by 2010. Demand for new vessels is also
created by the aging of the worldwide fleet. According to MARAD estimates, by
2000 approximately 40% of the current world offshore tank barge fleet will be
more than 25 years old and more than 20% will be at least 30 years old. During
the past three years, the Company has built eight large offshore double hull
tank barges, more than any other U.S. shipbuilder. The Company currently has
three such barges under construction and has an outstanding option from a
customer for one additional barge. In addition, the Company is bidding on a
number of other substantial barge construction projects. See
"-- Regulation -- OPA '90."
Inland Barges
Although the Company generally is restricted under the Separation Agreement
from constructing inland hopper barges and inland tank barges, the Company will
construct inland hopper barges under a limited arrangement with Trinity. The
Company plans to construct these barges at its Gulfport facility. The Company
also will be permitted to complete the construction of eight inland double hull
tank barges for which it has existing contracts. In addition, it is contemplated
that the Company from time to time may construct other inland hopper barges and
inland tank barges under future arrangements with Trinity. Hopper barges
generally are priced at approximately $300,000 each and inland double hull tank
barges generally range in price from approximately $600,000 to $1.8 million
each. Because the Company Businesses do not include the construction and repair
of inland hopper barges and inland tank barges, the Company's historical results
of operations do not include any revenues from the construction or repair of
inland hopper barges and include
36
<PAGE> 38
only the following revenues from the construction or repair of inland tank
barges: $7.6 million, $13.3 million and $26.2 million for fiscal years 1994,
1995 and 1996, respectively. The Company's gross profit (loss) from such
activities was ($0.6) million, ($0.9) million and $3.1 million for fiscal years
1994, 1995 and 1996, respectively. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Inland Barge
Arrangements."
Offshore Support Vessels
The offshore support vessels built by the Company serve oil and gas
drilling and production facilities and support offshore construction and
maintenance work. The Company's supply boats range from 85 feet to 254 feet in
length with conventional or diesel electric power and feature functional pilot
houses with unencumbered visibility and large aft decks with high cargo
capacities. In addition to transporting deck cargo, such as pipe or drummed
materials, supply boats transport liquid mud, potable water, diesel fuel, dry
bulk cement and dry bulk mud. Supply boats constructed by the Company range from
standard supply boats to multi-purpose sophisticated ships with high horsepower
and bollard pull, automated controls, dynamic positioning, controllable pitch
propellers, articulated rudders, Kort nozzles and any type of auxiliary, deck or
towing equipment. Anchor handling tugs and anchor handling tug supply boats
constitute a separate class of offshore support vessels. These vessels have more
powerful engines and deck mounted winches and are capable of towing and
positioning offshore drilling rigs and their anchors as well as providing supply
vessel services.
The Company has built more offshore support vessels to service oil and gas
drilling rigs and production platforms than any shipbuilder in the United
States. The Company has built a total of 534 offshore support vessels from 1965
through 1995, which the Company believes account for approximately 25% of the
world fleet of offshore support vessels manufactured during such period. Vessels
built by the Company and known to be in service represented, as of March 31,
1996, approximately 34% of the 395 total offshore support vessels operated by
the two largest worldwide fleet operators. As a result of the severe downturn in
the oil and gas industry in the mid-1980's, there has been very limited
construction of offshore support vessels in the United States since 1985. During
the period from 1985 through 1995, the Company built eight new 200-foot or
longer offshore support vessels, more than any other U.S. shipbuilder. The
Company's offshore support vessel manufacturing activities during this period
have enabled it to gain a competitive advantage through experience with recent
advances in vessel engineering and construction techniques. The Company
currently has eight offshore support vessels under contract, of which six
contracts have been entered into since July 1, 1996. The Company also has
outstanding options for eight additional vessels, including seven from one
customer, and is bidding on a number of substantial potential orders for such
vessels.
The Company expects that substantial orders for new offshore support
vessels may be made in the next several years due to the need for larger
offshore support vessels to service deep water oil and gas exploration and
production activities, the substantial worldwide fleet attrition over the past
ten years and the aging of the remaining fleet. The demand for deep water
(deeper than 1,000 feet) drilling services has increased substantially in recent
years as a result of large reserve discoveries and technological advances which
have made development and production of reserves in deepwater economically
viable. A number of offshore contract drillers have entered into long-term
agreements to upgrade or convert existing drilling rigs or build new drilling
rigs capable of drilling in deep water. The Company believes that the increase
in drilling activity in deep water will require the construction of larger, more
powerful offshore support vessels. The Company believes that the number of
offshore support vessels available for service worldwide decreased substantially
during the last ten years. The number of such vessels available for service in
the Gulf of Mexico decreased from a peak of approximately 700 in 1985 to
approximately 270 in July 1996. A majority of the offshore support vessels
currently in service worldwide are 16 or more years old and a majority of the
others are between 11 and 16 years old. As these vessels age, maintenance,
repair and vessel certification costs increase significantly and eventually
require their replacement. New offshore support vessels incorporating advances
in engineering, technology and outfitting are expected to cost between $6
million and $25 million each depending on the vessel's size and capabilities.
The timing of the expected upturn in the offshore support vessel market will
depend principally upon conditions in the offshore oil and gas industry,
particularly an increase in drilling
37
<PAGE> 39
activity and dayrates for offshore support vessels, which in turn depend upon
oil and gas prices. Because of its extensive experience in manufacturing
offshore support vessels and its ability to expand its production at its
existing shipyards, the Company believes it is well positioned to take advantage
of the expected upturn in the offshore support vessel business.
Tug Boats
The Company builds tug boats for towing and pushing, anchor handling,
mooring and positioning, dredging assistance, tanker escort, port management,
shipping, piloting, fire fighting and salvage. For each offshore barge that is
built in the United States pursuant to OPA '90, a tug boat is generally added to
the purchaser's fleet. Tug boats are built with two or three engines, standard
propellers, controllable pitch propellers, azimuthing Z-drives, cycloidal
propulsion and with or without steerable or fixed nozzles. Tug boats range from
85 feet to 155 feet in length and range in price from $2 million to $12 million.
The Company has built some of the world's largest, most powerful tug boats
fitted with Voith-Schneider cycloidal propulsion units.
Yachts
In response to increased demand, the Company has begun placing a greater
emphasis on its custom yacht business and has increased its marketing efforts,
added a separate engineering department and improved its yacht construction
facilities. The Company is currently one of three U.S. shipbuilders that
currently build yachts over 150 feet in length. The Company either can custom
build a yacht or construct a yacht in accordance with a customer's
specifications and to the certification and survey requirements of the American
Bureau of Shipping. In building a yacht, the Company uses technology developed
by it in the engineering and construction of high speed military patrol boats
and special purpose vessels. Advanced techniques of acoustic insulation,
noise/vibration reduction and diesel/electric propulsion have all been utilized
in yachts built by the Company. Construction is available in aluminum, steel,
fiberglass, composites and any combination of those materials. Interior
outfitting and finishing are completed by the shipyard and specialized
sub-contractors working under the supervision of the Company. The Company has
built yacht tenders from 30 feet in length and has completed repairs and
conversions of super yachts that are up to 260 feet in length. The Company
recently was awarded contracts for the construction of two 155 foot mega yachts
and one 118 foot mega yacht.
Inland Tow Boats
Inland tow boats are used by waterway operators to push inland barges. The
Company manufactures a full line of tow or push boats. The Company offers the
complete line of the St. Louis Ship designs, including the "Super Hydrodyne"
hull shapes optimized for push towing service on river systems and the Nashville
Bridge, "NABRICO" tow boat design. Seventy-two vessels based on the Company's
Hydrodyne hulls have been delivered to owners since 1959. Inland tow boats range
from 70 feet to 200 feet in length and range in price from $1.3 million to $13
million. The Company recently completed the tow boat "Mississippi" for the U.S.
Army Corp of Engineers, which is the fifth largest tow boat operating in the
United States today.
Miscellaneous
In addition to the vessels described above, the Company has built crew
boats, excursion and casino vessels and barges, fire/rescue, pollution control
and oil recovery vessels, utility boats and fishing trawler processors, and
other small to medium sized vessels. From time to time, the Company has
performed work as a subcontractor.
PRINCIPAL CUSTOMERS
In fiscal 1996, revenues from contracts with the U.S. Navy accounted for
approximately 47.3% of consolidated contract revenue earned. The Company builds
several types of vessels for the U.S. Navy, including oceanographic survey and
research ships and patrol boats. The continuation of any U.S. Navy shipbuilding
program is dependent upon the continuing availability of Congressional
appropriations for that
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<PAGE> 40
program. With the end of the Cold War and the pressure of domestic budget
constraints, overall U.S. Navy spending for new vessel construction has declined
significantly since 1991. See "-- Principal Products -- Governmental Vessels."
No other customer generated revenues that accounted for more than 10% of
consolidated contract revenue earned in fiscal 1996.
In fiscal 1995, revenues from two customers, the U.S. Navy and the
Philippine government, accounted for approximately 38.8% and 10.2%,
respectively, of the consolidated contract revenue earned by the Company.
Revenues from the Philippine government resulted from a contract with the U.S.
Navy for patrol vessels.
CONTRACT PROCEDURE, STRUCTURE AND PRICING
The Company's contracts for vessels generally are obtained through a
competitive bidding process. A potential buyer ordinarily provides
specifications and performance criteria for a proposed vessel and will invite
numerous shipbuilders to place bids for the construction of the vessel. After
being invited to place a vessel bid, the Company generally assigns a team of
specialists from its estimating department and its engineering or research and
development department to project costs of completion. Management then
determines the applicable profit margin and finalizes the bid. All contracts for
the construction and conversion of U.S. Navy vessels are subject to competitive
bidding. As a safeguard to anti-competitive bidding practices, the U.S. Navy has
recently employed the concept of "cost realism," which requires that each bidder
submit information on pricing, estimated costs of completion and anticipated
profit margins. The U.S. Navy uses this and other data to determine an estimated
cost for each bidder. The U.S. Navy then reevaluates the bids by using the
higher of the bidder's and the U.S. Navy's cost estimates.
The Company makes a large number of bids in the commercial market. However,
in the case of U.S. government contracts for which the bidding process is
significantly more detailed and costly, the Company tends to be far more
selective regarding the projects on which it chooses to bid.
Most of the contracts entered into by the Company, whether commercial or
governmental, are fixed-price contracts under which the Company retains all cost
savings on completed contracts but is also liable for the full amount of all
cost overruns. Historically, cost overruns on fixed price contracts have not
been a significant problem for the Company. See "Risk Factors -- Risks
Associated with Contractual Pricing in the Shipbuilding Industry."
A limited number of the Company's contracts with the U.S. Navy are
fixed-price incentive contracts, which provide for sharing between the
government and the Company of cost savings and cost overruns based primarily on
a specified formula that compares the contract target cost with actual cost. In
addition, such fixed-priced incentive contracts generally provide for payment of
escalation of costs based on published indices relating to the shipbuilding
industry. Although all cost savings are shared under fixed-price incentive
contracts, costs overruns in excess of a specified amount must be borne entirely
by the Company. Under government regulations, certain costs, including certain
financing costs, portions of research and development costs and certain
marketing expenses, are not allowable costs under fixed-price incentive
contracts. The only current U.S. Navy fixed-price incentive contracts of the
Company relate to three oceanographic survey and research ships. One of these
vessels is close to completion, and the two others have been launched and are
scheduled for delivery in the third quarter of fiscal 1997.
Contracts with the U.S. Navy are subject to termination by the government
either for its convenience or upon default by the Company. If the termination is
for the government's convenience, the contracts provide for payment upon
termination for items delivered to and accepted by the government, payment of
the Company's costs incurred plus the costs of settling and paying claims by
terminated subcontractors, other settlement expenses and a reasonable profit.
Although varying contract terms may be negotiated on a case-by-case basis,
commercial contracts entered into by the Company ordinarily provide for a down
payment in a negotiated amount, with five or more progress payments at various
stages of construction and a final payment upon delivery, which final payment
may be subject to deductions if the vessel fails to meet certain performance
specifications based on tests
39
<PAGE> 41
conducted by the Company prior to delivery. U.S. Navy contracts typically
provide for bi-weekly progress payments. Some foreign governments have small
warranty reserve holdbacks which are payable at the end of the warranty period.
Under commercial contracts, the Company generally provides either a six
month or one year warranty with respect to workmanship. In the majority of
commercial contracts, the Company does not warrant materials acquired from its
suppliers but, instead, passes through the suppliers' warranties to the
customer. The Company's government contracts typically contain one year
warranties covering both materials and workmanship. Expenses of the Company to
fulfill warranty obligations have not been material in the aggregate.
BONDING AND GUARANTEE REQUIREMENTS
A significant portion of the Company's existing contracts for the
construction, repair or conversion of vessels require that the Company's
performance be guaranteed by Trinity or by a surety company or other third party
pursuant to a contract bid or performance bond, letter of credit or similar
obligation. Generally, contracts with state or local governments require
contract bid or performance bonds and foreign governmental contracts generally
require bank letters of credit or similar obligations. Commercial contracts may
require contract bid and performance bonds if requested by the customer. As of
July 31, 1996, Trinity had guaranteed contract performance obligations of the
Company in the aggregate amount of approximately $66.1 million, and the Company
had outstanding contract bid and performance bonds, letters of credit and
similar obligations issued by third parties, with Trinity as the obligor, with
an aggregate face amount of approximately $74.9 million. These guarantees,
bonds, letters of credit and similar obligations, totalling approximately $141.0
million, will remain in effect after the Offering until the obligations expire,
and the Company will be obligated to indemnify Trinity against any liability
under such obligations. For the protection of Trinity in the event that Trinity
is called upon to satisfy any such obligations, Trinity will be granted security
interests in certain assets of the Company which relate to the Company contracts
from which such obligations arise and will possess rights to complete
performance of any such contract on behalf of the Company in the event of
nonperformance by the Company. Such rights and remedies are similar to the
rights possessed by surety companies that have issued performance bonds on
behalf of the Company. See "Certain Transactions and Related
Arrangements -- Arrangements Between the Company and Trinity -- Performance Bond
and Guarantee Arrangements."
After the Offering, it is anticipated that Trinity will not provide any
further credit or other financial support to the Company. From time to time
after the Offering, the Company will need to continue to obtain contract bid and
performance bonds, letters of credit and similar obligations in connection with
its business. As a result of the discontinuance by Trinity of financial support
of the Company, such bonding and other arrangements may increase. Although the
Company believes that it will be able to obtain contract bid and performance
bonds, letters of credit and similar obligations on terms it regards as
acceptable, there can be no assurance it will be successful in doing so. In
addition, the cost of obtaining such bonds, letters of credit and similar
obligations may increase. See "Risk Factors -- Certain Financial Requirements;
Absence of Trinity Financial Support."
ENGINEERING
Customers can select from standard configurations, modify standard
configurations or have the Company build to the customer's specifications or
design. The Company can utilize, at its customer's request, advanced technology
to create a computer generated model of the vessel that allows the customer to
"walk through" the entire vessel. All major equipment and machinery is in place,
in scale, in the computer model. The Company believes that generating this type
of computer model helps to prevent engineering mistakes and costly re-work or
change orders and helps to ensure the vessel's functionality and ergonomics.
The Company maintains a large marine engineering department, consisting of
approximately 140 employees, 45 of whom are engineers or naval architects. The
Company has developed and produced several innovative vessels. Together with a
joint venture partner, the Company developed and produced the first governmental
and commercial use surface effect ships in the United States. The joint venture
is no longer in existence. The Company also built the first gas turbine and
diesel powered water jet crew boat. The Company
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has built more small and medium sized vessels with diesel electric propulsion
than any other U.S. shipbuilder. MARAD and the U.S. Department of Defense have
teamed with the Company to develop a 23,000 ton container/bulk carrier, a medium
sized multi-purpose ship and a high-speed, low wake, fuel efficient passenger
ferry. Additionally, after head-to-head competition between a Company prototype
vessel and vessels from several competitors, a Company vessel was selected as
the new 82 foot, 45 knot Mark V high speed special operations craft for U.S.
Navy Seal and Special Operations Forces personnel.
MATERIALS AND SUPPLIES
The principal materials used by the Company in its shipbuilding, conversion
and repair businesses are standard steel shapes, steel plate and paint. Other
materials used in large quantities include aluminum, steel pipe, electrical
cable and fittings. The Company also purchases component parts such as
propulsion systems, boilers, generators and other equipment. All these materials
and parts are currently available in adequate supply from domestic and foreign
sources. The Company's Equitable and Gulfport shipyards are located on rail
lines and typically obtain materials and supplies by rail, truck or barge. The
remainder of the Company's shipyards ordinarily obtain materials and supplies by
truck. The Company seeks to obtain favorable pricing and payment terms for its
purchases by coordinating purchases among all of its shipyards and buying in
large quantities. The Company has not engaged, and does not presently intend to
engage, in hedging transactions with respect to its purchase requirements for
materials. In the past, as a result of the Company's relationship with Trinity,
the Company has been able to purchase steel at favorable prices relative to
those available to shipbuilders in general. While management believes that the
Company will continue to be able to obtain steel at relatively favorable prices,
there can be no assurance that this will be the case. See "Risk Factors -- Lack
of Independent Operating History."
MANUFACTURING PROCESS
Once a contract has been awarded to the Company, a project manager is
assigned to supervise all aspects of the project from the date the contract was
signed through delivery of the vessel. The project manager oversees the
engineering department in its completion of the vessel's drawings and supervises
the planning of the vessel's construction. The project manager also oversees the
purchasing of all supplies and equipment needed to construct the vessel, as well
as the actual construction of the vessel.
The Company constructs each vessel from flat steel, which is then
fabricated by yard workers into the necessary shapes to construct the hull and
vessel superstructure. Component parts, such as propulsion systems, boilers and
generators, are purchased separately by the Company and installed in the vessel.
The Company utilizes job scheduling and costing systems to track progress of the
construction of the vessel, which allows the customer and the Company to remain
apprised of the status of the vessel's construction.
For vessels over 150 tons, the Company generally utilizes modular
construction techniques. A vessel is divided into modules of approximately 100
tons each. With the assistance of computers, separate manufacturing drawings and
bills of materials are prepared for each module, and each module is separately
built and fully equipped with the piping, electrical and ventilation systems and
other equipment. Fully fabricated modules are cleaned, painted and transported
to the building ways for erection. After the modules are welded to each other to
form the ship, all piping, ventilation and other systems are connected between
modules, electrical cables are strung and the ship is launched and ready for
final outfitting and delivery.
SALES AND MARKETING
The Company's marketing efforts are geographically centralized at the
Company's headquarters in Gulfport, Mississippi. The Company's Sales and
Marketing Department consists of a commercial marketing section, which employs
six persons, and an international marketing section, which employs four persons.
The Company's Government Department includes 11 persons who engage in marketing
and sales activities.
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COMPETITION
Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. Included in the second category are ten
shipbuilders, including the Company, that are capable of building vessels of 400
feet or more. This category also includes several hundred companies engaged in
shipbuilding and repair activities in the United States, many of which are
smaller than the Company, having one or two shipyards and specializing in the
construction or repair of one or a small number of types of vessels.
In general, during the 1990's, the U.S. shipbuilding industry has been
characterized by substantial excess capacity because of the significant decline
in U.S. Navy shipbuilding spending and the difficulties experienced by U.S.
shipbuilders in competing successfully for international commercial projects
against foreign shipyards, many of which are heavily subsidized by their
governments. As a result of these factors, competition by U.S. shipbuilders for
domestic commercial projects has increased significantly.
Contracts for the construction of vessels are usually awarded on a
competitive bid basis. Although the Company believes customers consider, among
other things, the availability and technical capabilities of equipment and
personnel, efficiency, condition of equipment, safety record and reputation,
price competition is currently a primary factor in determining which qualified
shipbuilder is awarded a contract.
The U.S. shipbuilding industry has two distinct markets: (i) contracts with
domestic and foreign governments, principally the U.S. Navy, and (ii) commercial
contracts for domestic and international customers.
The Company does not compete for U.S. Navy large vessel construction
projects. The Company generally competes for U.S. government shipbuilding
contracts on small to medium sized vessels principally with approximately six to
12 U.S. shipbuilders, which occasionally includes one or more of the six largest
shipbuilders. The number and identity of competitors on particular projects vary
greatly, depending on the type of vessel and size of project. The Company
competes for foreign government shipbuilding contracts principally with numerous
shipyards in several countries, many of which are heavily subsidized by their
governments. Competition for both U.S. and foreign government contracts is
intense.
Most of the commercial ships built in the United States since 1981 have
been constructed principally for domestic customers operating under the Jones
Act requirement that all vessels transporting products between U.S. ports be
constructed by U.S. shipyards. From time to time Congressional proposals have
been introduced in the past, and may be introduced in the future, in order to
repeal the Jones Act and eliminate the competitive advantages it affords to U.S.
shipbuilders. See "Risk Factors -- Legislative Proposals to Rescind Provisions
of Jones Act."
In recent years, U.S. commercial shipbuilding opportunities have been
enhanced by two legislative initiatives. OPA '90 generally requires certain U.S.
and foreign vessels carrying fuel or other hazardous cargos and entering U.S.
ports to have double hulls by 2015. OPA '90 establishes a phase-out schedule
that began January 1, 1995 for all existing single hull vessels based on the
vessel's age and gross tonnage. This law has created a demand for the
retrofitting of existing single hull vessels and the construction of new double
hull vessels as operators upgrade their fleets to comply with the law. See
"-- Regulation -- OPA '90."
In addition, opportunities for U.S. shipyards to build foreign-flagged
vessels for foreign owners were significantly increased in late 1993, when
Congress amended Title XI of the Merchant Marine Act of 1936. As a result of
these amendments, MARAD was authorized to guarantee loan obligations of foreign
owners for foreign-flagged vessels that are built in U.S. shipyards on terms
generally more advantageous than available under guarantee or subsidy programs
of foreign countries. Under a trade accord (the "OECD Accord"), which was
negotiated in December 1994, among the United States and other major
shipbuilding nations, the Title XI guarantee program will be required to be
amended, if the OECD Accord is ratified by the United States, to eliminate the
competitive advantages provided by the 1993 amendments. See "-- Regulation --
Title XI Loan Guarantee Amendments and OECD."
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The OECD Accord would virtually eliminate all direct and indirect
government shipbuilding subsidies, which should significantly improve the
ability of U.S. shipbuilders to compete successfully for international
commercial contracts with foreign shipbuilders, many of which are heavily
subsidized by their governments. Some of the subsidies range as high as 25% of
the vessel construction cost. The ability of U.S. shipbuilders to compete
effectively with subsidized foreign shipbuilders for commercial contracts has
been greatly impaired since the termination in 1981 of the U.S. construction
differential subsidy program, which had provided subsidies to U.S. shipbuilders
with respect to the construction of vessels for international markets. See
"Regulation -- Title XI Loan Guarantee Amendments and OECD."
The Company competes for domestic commercial shipbuilding contracts
principally with approximately ten to 15 U.S. shipbuilders. The number and
identity of competitors on particular projects vary greatly, depending on the
type of vessel and size of project. The Company competes for foreign commercial
shipbuilding contracts principally with numerous shipyards in several countries,
many of which are heavily subsidized by their governments. Competition for both
U.S. and foreign commercial contracts is intense.
INSURANCE
Trinity has maintained, on behalf of the Company, insurance against
property damage caused by fire, explosion and similar catastrophic events that
may result in physical damage or destruction to the Company's premises or
properties. Trinity has also maintained, on behalf of the Company, general
liability and product liability insurance in amounts it deemed appropriate for
the Company's business. It is contemplated that on or prior to the consummation
of the Offering, the Company will secure its own property, general liability and
product liability insurance in replacement of the insurance formerly maintained
by Trinity.
EMPLOYEES
As of June 30, 1996, the Company had 2,769 employees, of which 313 were
salaried and 2,456 were employed on an hourly basis. None of the Company's
employees is represented by any collective bargaining unit. Management believes
that the Company's relationship with its employees is good. Most of the
Company's shipyards have implemented in-house training programs or participate
in training programs through local vocational-technical schools.
REGULATION
Environmental Regulation
The Company is subject to extensive and changing Environmental Laws,
including laws and regulations that relate to air and water quality, impose
limitations on the discharge of pollutants into the environment and establish
standards for the treatment, storage and disposal of toxic and hazardous wastes.
Stringent fines and penalties may be imposed for non-compliance with these
Environmental Laws. Additionally, these laws require the acquisition of permits
or other governmental authorizations before undertaking certain activities,
limit or prohibit other activities because of protected areas or species and
impose substantial liabilities for pollution related to Company operations or
properties.
The Company's operations are potentially affected by the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"). CERCLA (also known as the "Superfund" law) imposes liability
(without regard to fault) on certain categories of persons for particular costs
related to releases of hazardous substances at a facility into the environment
and for liability for natural resource damages. Categories of responsible
persons under CERCLA include certain owners and operators of industrial
facilities and certain other persons who generate or transport hazardous
substances. Liability under CERCLA is strict and generally is joint and several.
Persons potentially liable under CERCLA may also bring a cause of action against
certain other parties for contribution. In addition to CERCLA, similar state or
other Environmental Laws may impose the same or even broader liability for the
discharge, release or the mere presence of certain substances into and in the
environment.
In the 1980's, the Company was identified as a Potentially Responsible
Party or "PRP" under CERCLA at the Dutchtown Oil Treatment site ("Dutchtown
Site") in Dutchtown, Louisiana because it allegedly sent
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hazardous substances from its Gretna shipyard to that site for disposal. The
Dutchtown Site is on the National Priorities List under CERCLA. The Company
signed a consent decree with other PRPs in 1989 to settle its liability and
spent approximately $800,000 remediating the Dutchtown Site. Remediation is
complete at the Dutchtown Site.
Because industrial operations have been conducted at some of the Company's
properties by the Company and previous owners and operators for many years,
various materials from these operations might have been disposed of at such
properties. This could result in obligations under Environmental Laws, such as
requirements to remediate environmental impacts. During the last five years, the
Company has been remediating environmental impacts from historical waste
disposal practices at the Company's Gretna shipyard in Harvey, Louisiana. These
disposal practices (including the alleged shipments to the Dutchtown Site)
relate to practices of previous owners in connection with the Gretna shipyard's
tank cleaning and gas-freeing operations. The Company, which discontinued such
disposal practices shortly after the shipyard's acquisition, has spent
approximately $4 million during the past five years on this remediation under
the direction of the Louisiana Department of Environmental Quality. The Company
believes that it has completed all remediation requirements for this site,
including post-remediation groundwater monitoring requirements. Within the next
few months, the Company will submit the final groundwater sampling and analysis
results to the Louisiana Department of Environmental Quality and will request
that the State of Louisiana provide written confirmation that the Company has
completed all remediation requirements for the site. There could be additional
environmental impact from historical operations at the Company's properties that
require remediation under Environmental Laws in the future. However, the Company
currently is not aware of any such circumstances that are likely to result in
any such impact under Environmental Laws.
The Company performs a tank cleaning and gas-freeing operation at its
Gretna facility that involves removal of residual fumes from vapor spaces in
barges. There are risks associated with the operation, including possible
explosion and emission of hazardous substances to the environment.
An example of an Environmental Law impacting the Company is the federal
Resource Conservation and Recovery Act ("RCRA"). RCRA and similar state laws
regulate the generation, treatment, storage, disposal, and other handling of
solid wastes, with the most stringent regulations applying to solid wastes that
are considered hazardous wastes. RCRA also may impose stringent requirements on
the closure, and the post-closure care, of facilities where hazardous waste was
treated, disposed of or stored. The Company generates solid waste, including
hazardous and non-hazardous waste, in connection with its routine operations.
Management believes that the Company's wastes are handled properly under RCRA.
Another Environmental Law impacting the Company's operations is the federal
Clean Air Act. Amendments in 1990 to this act resulted in numerous changes that
could increase the Company's capital and operational expenses after the
Environmental Protection Agency and similar state agencies fully implement
regulations authorized by the amendments. Although the Company does not expect
these Clean Air Act amendments to result in material expenses at its properties,
the amount of increased expenses, if any, resulting from such amendments is not
presently determinable. There can be no assurance that the Company will not
incur material expenses in connection with these amendments in the future.
Although no assurances can be given, management believes that the Company
and its operations are in compliance in all material respects with all
Environmental Laws. However, stricter interpretation and enforcement of
Environmental Laws (including the Clean Air Act) and compliance with potentially
more stringent future Environmental Laws could materially and adversely affect
the Company's operations.
Health and Safety Matters
The Company's facilities and operations are governed by laws and
regulations, including the federal Occupational Safety and Health Act, relating
to worker health and workplace safety. The Company believes that appropriate
precautions are taken to protect employees and others from workplace injuries
and harmful exposure to materials handled and managed at its facilities. While
it is not anticipated that the Company will be required in the near future to
expend material amounts by reason of such health and safety laws and
regulations, the Company is unable to predict the ultimate cost of compliance
with these changing regulations.
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Jones Act
The Jones Act requires that all vessels transporting products between U.S.
ports must be constructed in U.S. shipyards, owned and crewed by U.S. citizens
and registered under U.S. law, thereby eliminating competition from foreign
shipbuilders with respect to vessels to be constructed for the U.S. coastwise
trade. Many customers elect to have vessels constructed at U.S. shipyards, even
if such vessels are intended for international use, in order to maintain
flexibility to use such vessel in the U.S. coastwise trade in the future. A
legislative bill seeking to substantially modify the provisions of the Jones Act
mandating the use of ships constructed in the United States for U.S. coastwise
trade has been introduced in Congress. Similar bills seeking to rescind or
substantially modify the Jones Act and eliminate or adversely affect the
competitive advantages it affords to U.S. shipbuilders have been introduced in
Congress from time to time and are expected to be introduced in the future.
Although management believes it is unlikely that the Jones Act requirements will
be rescinded or materially modified in the foreseeable future, there can be no
assurance that such will not occur. Many foreign shipyards are heavily
subsidized by their governments and, as a result, there can be no assurance that
the Company would be able to effectively compete with such shipyards if they
were permitted to construct vessels for use in the U.S. coastwise trade.
OPA '90
Demand for double hull carriers has been created by OPA '90, which
generally requires U.S. and foreign vessels carrying fuel and certain other
hazardous cargos and entering U.S. ports to have double hulls by 2015. OPA '90
establishes a phase-out schedule that began January 1, 1995 for all existing
single hull vessels based on the vessel's age and gross tonnage. The Company
estimates that OPA '90 will require approximately 66 barges engaged in domestic
trade to be retrofitted or replaced by 2005 and another approximately 22 such
barges to be retrofitted or replaced by 2010. Demand for new vessels is also
created by the aging of the worldwide fleet. According to MARAD estimates, by
2000 approximately 40% of the current world offshore tank barge fleet will be
more than 25 years old and more than 20% will be at least 30 years old. New
offshore double hull tank barges generally range in cost between $6 million and
$25 million each.
OPA '90's single hull phase-out requirements may be deemed to apply to oil
and gas industry supply vessels over 500 gross tons operated in U.S. waters. All
offshore support vessels presently in operation in U.S. waters either are less
than 500 gross tons or have received a Congressional waiver exempting such
vessels from the OPA '90 double hull requirements. Proposed New Offshore Support
Vessel Legislation, which is currently pending in Congress, would impose, in
lieu of the OPA '90 double hull requirements, certain less onerous standards for
the construction of supply vessels operated in U.S. waters. There can be no
assurance as to when the New Offshore Support Vessel Legislation will be enacted
into law, if at all, or that the New Offshore Support Vessel Legislation, if
enacted, will not differ materially from its current form. Management believes
that the current uncertainty regarding construction standards has caused certain
operators to postpone placing new orders for offshore support vessels in excess
of 500 gross tons.
Title XI Loan Guarantee Amendments and OECD
In late 1993, Congress amended the loan guarantee program under Title XI of
the Merchant Marine Act of 1936, to permit MARAD to guarantee loan obligations
of foreign vessel owners. As a result of these amendments, MARAD was authorized
to guarantee loan obligations of foreign owners for foreign-flagged vessels that
are built in U.S. shipyards on terms generally more advantageous than available
under guarantee or subsidy programs of foreign countries. Under the OECD Accord,
which was negotiated in December 1994, among the United States, the European
Union, Finland, Japan, Korea, Norway and Sweden (which collectively control over
75% of the market share for worldwide vessel construction), the Title XI
guarantee program will be required to be amended, once the OECD Accord is
ratified by the United States, to eliminate the competitive advantages provided
by the 1993 amendments to Title XI. In December 1995, a subcommittee of the Ways
and Means Committee of the U.S. House of Representatives passed a bill providing
for the implementation of the OECD Accord and elimination of the competitive
advantages provided by the 1993 amendments to Title XI. To date, such bill has
not been approved by either the U.S. House of Representatives or the U.S.
Senate.
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If the OECD Accord is ratified by the U.S. and Japan (the only remaining
parties to the OECD Accord that have not yet ratified the OECD Accord), the OECD
Accord would virtually eliminate all direct and indirect governmental
shipbuilding subsidies by the party nations. Despite the fact that the OECD
Accord will require the elimination of the competitive advantages provided to
U.S. shipbuilders by the 1993 amendments to Title XI, management believes that
the OECD Accord should significantly improve the ability of U.S. shipbuilders to
compete successfully for international commercial contracts with foreign
shipbuilders, many of which currently are heavily subsidized by their
governments. Some of the governmental subsidies to foreign shipbuilders
currently range as high as 25% of the vessel construction cost. At this time,
the Company is unable to predict whether the OECD Accord will be ratified by the
U.S. and Japan.
PROPERTIES
Equitable New Orleans Shipyard
The Equitable shipyard is located on the Industrial Canal in New Orleans,
Louisiana. The yard has the capacity to build vessels up to the following
dimensions: 350 foot length; 90 foot beam; 25 foot water depth; and 110 foot
height. The shipyard has over 225,000 square feet of under-cover production
facilities divided between a fabrication shop, mold loft, pipe shop, carpentry
shop, electrical shop and a machine shop. The facility has two crawler cranes,
one barge mounted crane and 12 track mounted overhead cranes. The shipyard is
served by direct rail access. The Company occupies the shipyard under a lease
that expires on December 31, 2016. Generally, either party may terminate the
lease upon one year's advance notice.
Gretna Machine & Iron Works Shipyard
The Gretna shipyard is located in Harvey, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 600 foot length; 95
foot beam; 5.5 foot water depth; and 70 foot height. The shipyard contains over
15,500 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop and electrical shop. The facility
has two graving docks, one with a length of 700 feet and the other with a length
of 300 feet, and has three crawler cranes, two track mounted gantry cranes and
two tower cranes. The Company occupies the shipyard pursuant to two leases,
which are renewable by the Company until 2026.
Halter Moss Point Shipyard
The Halter Moss Point shipyard is located in Moss Point, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 400 foot
length; 85 foot beam; 18 foot water depth; and 85 foot height. The facility
consists of approximately 58 acres of property with 61,500 square feet of shops,
offices and warehouses and 60,165 square feet of outside concrete construction
platforms. The facility has six crawler cranes and six track mounted gantry
cranes.
Lockport Shipyard
The Lockport shipyard is located in Lockport, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 310 foot length; 80
foot beam; 10 foot water depth; and 68 foot height. This facility contains over
35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, pipe shop, carpentry shop, electrical shop and a
machine shop and has 46,000 square feet of outside concrete construction
platforms and a 16,000 square foot warehouse. The yard has four crawler cranes
and six track mounted gantry cranes.
Moss Point Marine Shipyard
The Moss Point Marine shipyard is located in Escatawpa, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 420 foot
length; 85 foot beam; 14 foot water depth; and 44 foot height. The yard contains
over 35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop, electrical shop and warehouse, and
has 40,000 square feet of outside construction platforms. The yard has four
crawler cranes and nine track mounted gantry cranes.
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Gulfport Shipyard
The Gulfport shipyard is located in Gulfport, Mississippi and has the
capacity to build vessels up to the following dimensions: 360 foot length; 80
foot beam; 12 foot water depth; and 90 foot height. The facility consists of 113
acres on Bernard Bayou Industrial Park and includes an environmentally
controlled 38,000 square foot sandblasting and painting facility and 400,000
square feet of under-cover production facilities. The yard has 16,500 square
feet of outside concrete erection ways, two crawler cranes, 15 track mounted
overhead cranes and two truck mounted gantry cranes. The shipyard is served by
direct rail access.
Panama City Shipyard
The Panama City shipyard is located in Panama City, Florida and contains
over 35,000 square feet of under-cover production facilities divided between a
fabrication shop, mold loft, carpentry shop, electrical shop and warehouse. The
yard has the capacity to build vessels up to the following dimensions: 420 foot
length; 75 foot beam; 14 foot water depth; and 44 foot height. The facility has
not been operational since its acquisition by the Company in 1992.
Gulf Coast Fabrication Shipyard
The Gulf Coast Fabrication shipyard is located in Pearlington, Mississippi.
The facility contains over 15,000 square feet of under-cover production
facilities divided between a shear shop, mechanical shop, electrical shop and
warehouse. The facility has a 460 foot graving dock. The yard has the capacity
to build vessels up to the following dimensions: 460 foot length; 140 foot beam;
10 foot water depth; and unlimited height. The yard has two crawler cranes, two
track mounted gantry cranes and one tower crane.
Gulf Repair Shipyard
The Gulf Repair shipyard is located on the Industrial Canal across from the
Company's Equitable New Orleans shipyard. The facility contains 72,000 square
feet of under-cover production facilities divided between a fabrication shop,
pipe shop, carpentry shop, electrical shop and a machine shop. The facility has
a 586 foot dry dock with 20,000 ton capacity, a 200 foot dry dock with 3,750 ton
capacity, a 285 foot drydock with 3,700 ton capacity, a 162 foot drydock with
1,500 ton capacity, and a 240 foot drydock with 5,000 ton capacity. The yard has
the capacity to build vessels up to the following dimensions: 325 foot length;
120 foot beam; 21 foot water depth; and 137 foot height. The yard has one
crawler crane, seven track mounted gantry cranes and two barge mounted cranes.
The Company occupies the shipyard pursuant to a lease that expires on December
31, 2016.
Pascagoula Shipyard
The Pascagoula shipyard was acquired by the Company in 1995 and is located
in Pascagoula, Mississippi. The yard consists of approximately 88 acres of
property and has the capacity to build vessels up to the following dimensions:
800 foot length; 115 foot beam; 20 foot water depth; and unlimited height. The
yard has over 42,000 square feet of under-cover production facilities divided
between a fabrication shop, paint shop, maintenance shop, and warehouse. The
yard has a 900 foot slip for wet dock work and a 300 ton shore mounted crane.
The yard has three crawler cranes and two track mounted gantry cranes.
Corporate Headquarters
The Company's corporate headquarters are located at the same site as the
Company's Gulfport shipyard. The headquarters occupy approximately 39,660 square
feet of such site. The Company's engineering headquarters are located one-half
mile from the corporate headquarters and contains approximately 33,600 square
feet of offices and a separate secure office for classified work.
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LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the aggregate
will not have a material adverse effect on the Company's business, financial
condition or results of operations.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers, including their respective ages.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ----------------------------------- --- ------------------------------------------------
<S> <C> <C>
John Dane III...................... 46 President, Chief Executive Officer and Director
Vincent R. Almerico................ 56 Senior Vice President
Harvey B. Walpert.................. 63 Senior Vice President
Wayne Bourgeois.................... 42 Senior Vice President
Sidney C. Mizell................... 53 Senior Vice President
Anil Raj........................... 46 Senior Vice President
Keith L. Voigts.................... 52 Vice President
Kenneth W. Lewis................... 58 Director
F. Dean Phelps, Jr................. 52 Director
Rick S. Rees....................... 43 Director
John T. Sanford.................... 44 Director
Timothy R. Wallace................. 42 Director
W. Ray Wallace..................... 73 Director
</TABLE>
John Dane III has served as President of the Company since 1987. Mr. Dane
directed the growth of the Company from four active shipyards to nine active
yards and is responsible for the total management of the shipyards. Mr. Dane
graduated from Tulane University with a Ph.D. in civil engineering and began his
22 year career in the marine industry by entering the junior executive training
program of Halter Marine, Inc. ("Halter Marine"). He remained with Halter Marine
for six years and eventually became Assistant Vice President of Production. In
addition, Mr. Dane formed Moss Point Marine, Inc. in 1980, which he sold to
Trinity in 1987.
Vincent R. Almerico joined the Company in 1987 and served as the Senior
Vice President of Development of the Company from 1992 to August 1996. Since
August 1996, Mr. Almerico has served as Senior Vice President of Administration.
Mr. Almerico was employed by Moss Point Marine, Inc. from 1984 to 1987, where he
served as Vice President, Operations until it was acquired by Trinity in 1987.
Harvey B. Walpert joined the Company in 1983 and served as Senior Vice
President of Administration/Corporate Operations of the Company from 1992 to
August 1996. Since August 1996, Mr. Walpert has served as Senior Vice President
of Corporate Affairs. Mr. Walpert served as Project Manager at Halter Marine
from 1978 until it was acquired by Trinity in 1983. From 1957 to 1978, Mr.
Walpert worked in the Electric Boat Division of General Dynamics Corporation,
where he served as Assistant Materials Director. Mr. Walpert graduated from
Columbia University with an M.B.A. in Business and received a B.S. in
Engineering from John Hopkins University. He is Chairman of the American
Waterways Shipyard Conference and President of the New Orleans Chapter Navy
League of the United States.
Wayne Bourgeois joined the Company in 1983 and served as Vice President of
Operations of the Company from 1994 to August 1996. Since August 1996, Mr.
Bourgeois has served as Senior Vice President of Operations. From 1977 to 1987,
Mr. Bourgeois was employed by Halter Marine where he served in various
positions, including Shipyard General Manager.
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Sidney C. Mizell served as Vice President of Sales and Marketing of the
Company from 1988 to August 1996. Since August 1996, Mr. Mizell has served as
Senior Vice President of Sales and Marketing. Mr. Mizell joined Halter Marine in
1972, where he served as its Vice President of Sales from 1978 to 1980. He
resigned from Halter Marine in 1980 to co-found Champion Shipyards in Pass
Christian, Mississippi where he served as Vice President and General Manager.
Mr. Mizell served as a Management Consultant Program Manager for Moss Point
Marine, Inc. from 1982 to 1988.
Anil Raj joined the Company in 1987 and served as Vice President of
Government Projects of the Company from 1994 to August 1996. Since August 1996,
Mr. Raj has served as Senior Vice President of Government Projects. Mr. Raj also
serves as the Company's Small and Disadvantaged Business Liaison officer. Prior
to joining the Company, Mr. Raj was an Engineering Manager for Brown & Root, a
publicly held construction and fabrication company, from 1982 to 1987. Mr. Raj
served as Senior Staff Naval Architect and as area manager from 1977 to 1980 and
from 1980 to 1982, respectively, for Gulf Fleet Marine Corporation.
Keith L. Voigts has served as Vice President of Finance of the Company
since 1995. Mr. Voigts was employed by the accounting firm of KPMG Peat Marwick
from 1965 to 1975 and was a partner of KPMG Peat Marwick from 1975 to 1991. Mr.
Voigts was a director of Healthcare Communications, Inc. from 1991 to 1995 and
was its Chief Financial Officer from 1994 to 1995. From 1991 to 1994, Mr. Voigts
owned and managed the accounting, consulting and investments firm of The KLV
Group. Mr. Voigts was a partial owner and Chairman of the consulting firm
Adelson, Voigts & Associates, Inc. from 1992 to 1993. In addition, from 1992 to
1993, Mr. Voigts was a director and Vice President of Comp-U-Check, Inc., a
publicly held check guarantee company. Mr. Voigts is a member of AICPA, a past
director of National Association of Accountants, Chairman of the Board of Texas
Information Network System and a Board Member and Vice President of Texas
Computer Industry Council.
Kenneth W. Lewis became a director of the Company in September 1996. Mr.
Lewis, who retired from Trinity in January 1996 after 32 years of service, was a
Senior Vice President and Chief Financial Officer of Trinity.
F. Dean Phelps, Jr. has been a director of the Company since August 1996.
Mr. Phelps has served as Vice President of Trinity since 1984. Mr. Phelps joined
Trinity in 1979, where he served as Corporate Controller from 1979 to 1984.
Rick S. Rees became a director of the Company in September 1996. In March
1996, Mr. Rees became President of Maritime Holdings, Inc., a holding company
with operations in the offshore rig repair, modification and construction
business and the industrial real estate business. From November 1990 to June
1992, Mr. Rees served as Chairman of Wm. F. Surgi Equipment Company, a privately
held industrial distribution company. In July 1992, the Wm. F. Surgi Equipment
Company filed a petition for reorganization pursuant to Chapter 11 of the United
States Bankruptcy Code, which petition was subsequently converted into a
petition for liquidation pursuant to Chapter 7 of the United States Bankruptcy
Code, whereby the Wm. F. Surgi Equipment Company was liquidated and dissolved.
From 1989 to 1996, Mr. Rees was President of Maritime Capital Corporation, a
marine finance company.
John T. Sanford has been a director of the Company since August 1996. Mr.
Sanford has served as Senior Vice President of Trinity since 1996. Mr. Sanford
joined Trinity in 1980, where he served as Vice President from 1984 to 1993 and
as Group Vice President from 1993 to 1996.
Timothy R. Wallace has been a director of the Company since August 1996. He
is the son of Mr. W. Ray Wallace, a director of the Company. Mr. Wallace has
been employed by Trinity for at least the past five years in various senior
management capacities, including his current capacity as a Group Vice President
and director of Trinity.
W. Ray Wallace has been a director of the Company since August 1996. Mr.
Wallace has served as President and Chief Executive Officer of Trinity since
1958 and as Chairman of the Board of Directors of Trinity since 1992. Mr.
Wallace is the father of Timothy R. Wallace, a director of the Company.
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<PAGE> 51
It currently is contemplated that F. Dean Phelps, Jr., John T. Sanford and
Timothy R. Wallace will tender their resignations from the Company Board
effective upon completion of the proposed Separation and that their replacements
will be selected by the remaining members of the Company Board. Such
replacements may be employees of the Company, non-employees of the Company or a
combination thereof.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has established two standing committees of the Company Board:
an Audit Committee and a Compensation Committee. Messrs. Lewis and Rees are the
members of the Compensation Committee and the Audit Committee. The Audit
Committee will review the functions of the Company's management and independent
auditors pertaining to the Company's financial statements and perform such other
related duties and functions as are deemed appropriate by the Audit Committee or
the Company Board. The Compensation Committee will recommend to the Company
Board the base salaries and incentive bonuses for the officers of the Company
and will grant stock options and make other awards under the 1996 Stock Option
and Incentive Plan. The Company Board does not have a standing nominating
committee or other committee performing similar functions.
COMPENSATION OF DIRECTORS
Following the consummation of the Offering, each director will receive $750
for each Company Board meeting attended and reimbursement for reasonable
out-of-pocket expenses incurred in connection with attendance at such Company
Board meetings or any meeting of a committee of the Company Board. In addition,
each director who is not a compensated officer or employee of Trinity, the
Company or their respective subsidiaries will receive a fee of $20,000 per year
for serving as a director (and the Chairman of the Audit Committee and the
Chairman of the Compensation Committee will receive an additional $1,000 per
year for serving in those capacities) and $750 for each Audit Committee or
Compensation Committee meeting attended. Directors are eligible to receive
options and other awards under the Company's 1996 Stock Option and Incentive
Plan. See "-- Incentive and Other Employee Benefit Plans -- 1996 Stock Option
and Incentive Plan."
EXECUTIVE COMPENSATION
The following table sets forth the compensation for fiscal 1996 awarded to
or earned by the chief executive officer of the Company and the five other most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 for services rendered in all capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION TRINITY
--------------------------------------- STOCK
OTHER OPTION
NAME AND ANNUAL AWARDS ALL OTHER
PRINCIPAL POSITION(1) SALARY BONUS(2) COMPENSATION(3) (SHARES) COMPENSATION(4)
- -------------------------------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John Dane III................... $450,000 $36,810 $48,681 -- $19,699
President and Chief Executive
Officer
Daniel J. Mortimer(5)........... $337,500 $88,020 -- -- $ 4,833
President, Gulf Coast
Fabrication, Inc.
Vincent R. Almerico............. $143,500 $39,833 -- 800 $ 6,071
Senior Vice President
Sidney C. Mizell................ $120,660 $61,172 -- 750 $ 8,740
Senior Vice President
Anil Raj........................ $117,720 $40,789 -- 750 $ 8,671
Senior Vice President
Harvey B. Walpert............... $106,250 $40,789 -- 800 $ 8,505
Senior Vice President
</TABLE>
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<PAGE> 52
- ---------------
(1) Represents such persons' current titles with the Company, except for Mr.
Mortimer who is no longer employed by the Company.
(2) Annual incentive bonuses are paid by Trinity only upon the achievement of a
predetermined financial goal set for each executive at the beginning of
Trinity's fiscal year. One half (50%) of the incentive bonus is paid within
90 days after the close of Trinity's fiscal year. The remaining 50% of the
incentive bonus is paid in one, two or three equal annual installments in
the succeeding years provided the executive's employment with Trinity has
not been terminated prior to the payment for any reason other than death,
disability, retirement or a change of control of Trinity. The amounts shown
for bonus in the foregoing table include the deferred installments payable
to the executive in the succeeding year if still employed by Trinity at that
time and were $18,405 for Mr. Dane, $0 for Mr. Almerico, $30,586 for Mr.
Mizell, $20,394 for Mr. Raj and $20,394 for Mr. Walpert.
(3) An amount equal to ten percent of the salary and bonus of Mr. Dane is set
aside annually pursuant to a Trinity long-term deferred compensation plan.
(4) All Other Compensation includes matching amounts under certain profit
sharing plans of Trinity, automobile allowance, and in the case of John Dane
III, reimbursement for medical insurance premiums.
(5) Mr. Mortimer resigned from the Company on May 31, 1996. The salary shown was
paid to him between April 1, 1995 and March 31, 1996. The bonus shown
represents amounts paid to him prior to leaving the Company.
The following table sets forth certain information regarding the options
("Trinity Options") to purchase common stock, par value $1.00 per share, of
Trinity ("Trinity Common Stock") granted during fiscal 1996 to the executive
officers named in the Summary Compensation Table.
TRINITY OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL
GRANTS REALIZABLE VALUE
------------ AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
TOTAL PRICE APPRECIATION
OPTIONS FOR OPTION TERM
GRANTED TO EXERCISE MARKET ------------------
OPTIONS TRINITY OR BASE PRICE ON AT 5% AT 10%
GRANTED EMPLOYEES IN PRICE DATE OF EXPIRATION ANNUAL ANNUAL
NAME (SHARES) FISCAL YEAR ($/SH) GRANT DATE GROWTH GROWTH
- ----------------------------- -------- ------------ -------- -------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
John Dane III................ -- -- -- -- -- -- --
Daniel J. Mortimer........... -- -- -- -- -- -- --
Vincent R. Almerico.......... 800 0.7% $32.50 $32.50 08/16/05 $16,000 $41,000
Sidney C. Mizell............. 750 0.6% 32.50 32.50 08/16/05 15,000 39,000
Anil Raj..................... 750 0.6% 32.50 32.50 08/16/05 15,000 39,000
Harvey B. Walpert............ 800 0.7% 32.50 32.50 08/16/05 16,000 41,000
</TABLE>
Most of the option agreements relating to Trinity Options provide that such
options may be surrendered for cash for the difference between the then market
value of the shares and the option exercise price within 30 days after the
acquisition of 50% or more of the outstanding shares of Trinity Common Stock
pursuant to a tender or exchange offer other than one made by Trinity.
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<PAGE> 53
The table below sets forth information concerning each exercise of Trinity
Options during fiscal 1996 by the executive officers named in the Summary
Compensation Table and the number of exercisable and unexercisable Trinity
Options held by them and the fiscal year-end value of such exercisable and
unexercisable options.
AGGREGATED TRINITY OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------ --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John Dane III.................. -- -- 88,030 103,250 $ 922,624 $ 910,841
Daniel J. Mortimer............. -- -- -- -- -- --
Vincent R. Almerico............ -- -- 9,000 5,000 119,100 39,375
Sidney C. Mizell............... -- -- 3,150 2,850 41,963 20,519
Anil Raj....................... -- -- 2,193 2,307 28,738 15,562
Harvey B. Walpert.............. -- -- 2,565 1,010 42,042 5,024
</TABLE>
INCENTIVE AND OTHER EMPLOYEE BENEFIT PLANS
Salary and Annual Incentive Bonus
It is contemplated that the Company will establish initial annual base
salaries for Messrs. Dane, Almerico, Mizell, Raj, Bourgeois and Walpert in the
amounts of $550,000, $170,000, $138,000, $138,000, $138,000 and $115,000,
respectively, effective upon completion of the Offering.
The Company will also establish an annual incentive compensation plan for
key employees under which bonuses will be paid based on the Company's success in
achieving certain significant performance goals that are set each year. An
incentive bonus will be determined for each executive upon the basis of the
achievement of certain financial goals set each year by the Compensation
Committee at the beginning of the year. The Company's performance targets for
its executives are directly related to the Company's earnings before federal
income taxes and may be related to certain other factors. The performance goals
will be predetermined by the Compensation Committee on the basis of the
Company's past performance and anticipated future performance. The total amount
of incentive compensation that may be earned by an executive in any year will be
limited to a predetermined maximum percentage (200%) of base salary. If the
amount of the incentive bonus for the year would exceed a certain percentage of
the base salary, 50% of the incentive compensation amount will be paid currently
and the balance will be deferred and paid within 90 days after the close of the
next succeeding fiscal year. Any unpaid deferred portion will be forfeited if
the executive leaves the employ of the Company for any reason other than death,
disability or retirement or a change in control (except for any change of
control resulting from the proposed Separation) of the Company. In the first
year of the Company's operations, certain executives may be guaranteed a minimum
percentage (75%) of base salary.
1996 Stock Option and Incentive Plan
The description set forth below represents a summary of the principal terms
and conditions of the Company's 1996 Stock Option and Incentive Plan and does
not purport to be complete.
The objectives of the 1996 Stock Option and Incentive Plan are to attract
and retain key employees and directors of the Company, to encourage the sense of
proprietorship of such persons and to stimulate the active interest of such
persons in the development and financial success of the Company. These
objectives are to be accomplished by making awards ("Awards") under the 1996
Stock Option and Incentive Plan and thereby providing participants with a
proprietary interest in the growth and performance of the Company.
Persons eligible for Awards under the 1996 Stock Option and Incentive Plan
("Participants") include directors of the Company and key employees who hold
positions of responsibility and whose performance can have a significant effect
on the success of the Company.
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<PAGE> 54
Awards to Participants under the 1996 Stock Option and Incentive Plan may
be made in the form of grants of stock options ("Options"), stock appreciation
rights ("SARs"), restricted or non-restricted stock or units denominated in
stock ("Stock Awards"), performance awards ("Performance Awards") or any
combination of the foregoing.
The 1996 Stock Option and Incentive Plan provides for Awards to be made in
respect of a maximum of 1,400,000 shares of Common Stock. Shares of Common Stock
which are the subject of Awards that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the shares covered thereby are not issued or are exchanged
for Awards that do not involve Common Stock will again immediately become
available for Awards under the 1996 Stock Option and Incentive Plan.
The 1996 Stock Option and Incentive Plan will be administered by the
Compensation Committee of the Company Board, or such other committee as may in
the future be appointed by the Company Board (the "Committee"). To the extent
required pursuant to Rule 16b-3 under the Securities Exchange Act of 1934 in
order for the grant of Awards to be exempt under Section 16(b) of that act, the
Committee will at all times consist of at least two members of the Company Board
who qualify as Non-Employee Directors, as defined in Rule 16b-3(b)(3)(i). Rule
16b-3 generally provides an exemption from the short-swing profit recovery
provisions of Section 16(b) of the Securities Exchange Act of 1934 for the grant
of Awards to, and exercise of Awards by, "insiders," i.e., officers and
directors of the Company, who are subject to such provision. Under a new Rule
16b-3, generally effective August 15, 1996, the grant and exercise of Options
and SARs and the grant of Stock Awards are exempt from the short-swing profit
recovery provisions if such grants are approved by the Company Board itself or
by the Committee and if all such exercises are made in accordance with the terms
of the original grant. If the requirements of Rule 16b-3 are not satisfied, such
grants or exercises could be matched with other stock transactions made within a
six-month period by officers and directors, resulting in liability under the
short-swing profit provisions of Section 16(b).
The Committee will have the exclusive power to administer the 1996 Stock
Option and Incentive Plan and to take all actions which are specifically
contemplated thereby or are necessary or appropriate in connection with the
administration thereof. The Committee also will have the exclusive power to
interpret the 1996 Stock Option and Incentive Plan and to adopt such rules,
regulations and guidelines for carrying out the purposes of the 1996 Stock
Option and Incentive Plan as it may deem necessary or proper in keeping with the
objectives thereof. The Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of the 1996
Stock Option and Incentive Plan or in any Award or otherwise amend or modify an
Award in any manner that is either (i) not adverse to the Participant holding
the Award or (ii) consented to by such Participant.
The Committee will determine the type or types of Awards made under the
1996 Stock Option and Incentive Plan and will designate the Participants who are
to be recipients of such Awards. Each Award may be embodied in an agreement,
which will contain such terms, conditions and limitations as are determined by
the Committee. Awards may be granted singly or in combination. All or part of an
Award may be subject to conditions established by the Committee, which may
include continuous service with the Company, achievement of specific business
objectives, increases in specified indices, attainment of specified growth rates
and other comparable measurements of performance.
The types of Awards that may be made under the 1996 Stock Option and
Incentive Plan are as follows:
Options. Options are rights to purchase a specified number of shares of
Common Stock at a specified price. An Option granted pursuant to the 1996 Stock
Option and Incentive Plan may consist of either an incentive stock option that
complies with the requirements of Section 422 of the Code or a non-qualified
stock option that does not comply with such requirements. Options must have an
exercise price per share that is not less than the fair market value of Common
Stock on the date of grant. The exercise price must be paid in full at the time
an Option is exercised in cash or, if the Participant so elects, by means of
tendering Common Stock that the Participant already owns. The Committee will
determine acceptable methods for tendering Common Stock by a Participant to
exercise an Option. Subject to the foregoing, the terms, conditions and
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<PAGE> 55
limitations applicable to any Options, including the term of any Options and the
date or dates upon which they become exercisable, will be determined by the
Committee.
SARs. SARs are rights to receive a payment, in cash or Common Stock, equal
to the excess of the fair market value or other specified valuation of a
specified number of shares of Common Stock on the date the rights are exercised
over a specified strike price. An SAR may be granted under the 1996 Stock Option
and Incentive Plan to the holder of an Option with respect to all or a portion
of the shares of Common Stock subject to such Option or may be granted
separately. The terms, conditions and limitations applicable to any SARs,
including the term of any SARs and the date or dates upon which they become
exercisable, will be determined by the Committee.
Stock Awards. Stock Awards consist of restricted and non-restricted grants
of Common Stock or units denominated in Common Stock. The terms, conditions and
limitations applicable to any Stock Awards will be determined by the Committee.
Without limiting the foregoing, rights to dividends or dividend equivalents may
be extended to and made part of any Stock Award in the discretion of the
Committee.
Performance Awards. Performance Awards consist of grants made to a
Participant subject to the attainment of one or more performance goals. A
Performance Award will be paid, vested or otherwise deliverable solely upon the
attainment of one or more pre-established, objective performance goals
established by the Committee prior to the earlier of (i) 90 days after the
commencement of the period of service to which the performance goals relate and
(ii) the lapse of 25% of the period of service, and in any event while the
outcome is substantially uncertain. A performance goal may be based upon one or
more business criteria that apply to a Participant, one or more business units
of the Company or the Company as a whole, and may include any of the following:
increased revenue, net income, stock price, market share, earnings per share,
return on equity, return on assets or decrease in costs. Subject to the
foregoing, the terms, conditions and limitations applicable to any Performance
Awards will be determined by the Committee.
It is expected that the Committee will grant Options on the date of the
Offering to purchase an aggregate of 250,000 shares of Common Stock under the
1996 Stock Option and Incentive Plan. In particular, it is expected that Messrs.
Dane, Almerico, Mizell, Raj and Bourgeois will be granted Options to purchase
110,000, 11,000, 11,000, 11,000 and 11,000 shares of Common Stock, respectively.
The exercise price of these Options will be equal to the initial public offering
price per share of Common Stock set forth on the cover page of this Prospectus.
These Options will become vested and exercisable as to one-fifth of such Options
on each of the first five anniversaries of the date of grant. The Options will
expire ten years after the date of grant. All unvested portions of such Options
will terminate upon termination of the optionee's employment with the Company or
its subsidiaries, unless such termination results from retirement at age 65 or
older, disability or death, in which case the unvested portions of such Options
will vest automatically.
Conversion of Trinity Options
As of August 29, 1996, there were 230,710 shares of Trinity Common Stock
subject to outstanding Trinity Options granted by Trinity to employees of the
Company and its subsidiaries pursuant to certain Trinity stock compensation
plans (the "Trinity Stock Option and Incentive Plans"). If the proposed
Separation is consummated, the Company expects to assume such stock options (the
"Converted Options") held by individuals employed by the Company or its
subsidiaries (the "Company Employees"). Such conversion of Trinity Options into
Converted Options is referred to herein as the "Option Conversion." If the
Option Conversion occurs, each Converted Option will provide for the purchase of
a number of shares of Common Stock equal to the number of shares of Trinity
Common Stock subject to the applicable Trinity Option as of the Separation Date,
multiplied by the Conversion Ratio (as defined herein), rounded down to the
nearest whole share. Furthermore, the per share exercise price of each Converted
Option will equal the per share exercise price of the applicable Trinity Option
as of the Separation Date divided by the Conversion Ratio. The Company will not
issue Converted Options for the purchase of any fractional shares of Common
Stock, but will instead pay the holders of Converted Options cash in lieu of any
such fractional shares. As used herein, the term "Conversion Ratio" means the
amount obtained by dividing (i) the average of the daily high and low per share
prices of Trinity Common Stock as reported on the NYSE during a specified five
day period
54
<PAGE> 56
preceding the Separation Date by (ii) the average of the daily high and low per
share prices of the Common Stock as reported on the NYSE during a specified five
day period preceding the Separation Date.
Prior to the Option Conversion (which will occur, if at all, upon
consummation of the proposed Separation), Trinity Options held by Company
Employees will remain outstanding in accordance with the terms of the Trinity
Stock Option and Incentive Plans. Upon the exercise of a Trinity Option by a
Company Employee at any time prior to the Option Conversion, the Company will
pay to Trinity an amount in cash equal to the excess, if any, of (i) the Market
Value (as defined herein) of the purchased shares on the date of exercise of
such option over (ii) the exercise price paid for such shares. As used herein,
the term "Market Value" means the average of the high and the low per share
price of the Trinity Common Stock as reported on the NYSE on such date, or if
there is no trading on the NYSE on such date, on the most recent previous date
on which such trading took place.
At the present time, it is not possible to determine how many shares of
Common Stock will be subject to Converted Options issued by the Company at the
time of the Option Conversion. This results from the fact that some Trinity
Options may be exercised and other Trinity Options may be granted prior to such
time. In addition, the number of Converted Options will depend upon the
Conversion Ratio, which will not be known until the proposed Separation is
completed. Stockholders of the Company are, however, likely to experience some
dilution from the issuance of Converted Options. For example, assuming that the
Conversion Ratio was 2.54 (calculated based on $33.00, the closing price per
share of Trinity Common Stock on the NYSE on September 19, 1996 and $13.00 per
share, the mid-point of the price range for the Common Stock set forth on the
cover page of this Prospectus) and the number of shares of Trinity Common Stock
subject to Trinity Options held by Company Employees was 230,710 (based on the
number of shares subject thereto as of August 29, 1996), the number of shares of
Common Stock subject to Converted Options upon consummation of the proposed
Separation would be approximately 586,000.
No compensation expense is expected to be recorded by the Company as a
result of the Option Conversion. However, if the Separation is accomplished by
means other than a distribution of Common Stock to Trinity stockholders,
compensation expense may be recorded by the Company based on the excess of the
then current market price of Trinity Common Stock over the exercise price of the
applicable Trinity Options. Such compensation expense would have been
approximately $1.6 million if the Option Conversion had been consummated on
August 29, 1996.
Deferred Compensation
Following the consummation of the Offering, the Company will establish a
deferred compensation plan for certain key officers of the Company. Under the
deferred compensation plan, an amount equal to 10% of the participant's annual
base salary and incentive compensation is accrued on the books of the Company,
together with interest at the prime rate of a specified national bank, to be
paid as determined by the Company Board after consultation with the participant
in annual installments over five years or other periods as determined by the
Company Board. Payment of the deferred compensation commences one year and one
day after termination of the participant's employment with the Company. If the
participant dies, the installments are paid to his or her designated
beneficiary. The installment payments terminate if the participant, without the
prior written consent of the Company, directly or indirectly, becomes or serves
as an officer, employee, owner or partner of any business which competes in a
material manner with the Company.
Pension Plan
The Company is a participating employer in the Trinity Industries, Inc.
Marine Group Pension Plan (the "Pension Plan") maintained by Trinity. The
Pension Plan is a noncontributory, defined benefit plan that provides retirement
and death benefits to persons employed by the Company who are not covered by
another pension plan maintained by Trinity. The Pension Plan is not available to
employees covered by a collective bargaining agreement, unless that agreement
provides that the employees will be eligible, to leased employees, to project
status employees or to certain other designated employees. Benefits under the
Pension Plan are determined based on the participant's years of credited service
and final compensation from the Company.
55
<PAGE> 57
The Pension Plan provides for five-year cliff vesting, or vesting upon the
participant's attainment of age 65 or, if later, the fifth anniversary of the
date the participant's employment commenced. The Company's contributions for
fiscal years 1994, 1995 and 1996 were approximately $850,000, $1,050,000 and
$996,000, respectively.
Benefits that may be provided under the Pension Plan are limited under the
Code. For 1996, under Code Section 401(a)(17), the maximum annual compensation
that can be taken into account under the Pension Plan for all purposes,
including the determination of the benefits payable to a participant, is
$150,000. Under Code Section 415, the maximum annual pension payable to a
participant who retires at age 65 is $120,000. This maximum benefit is reduced
actuarially in the case of retirement at an earlier age and is scheduled to
increase with the cost of living for years after 1996.
The assets of the Pension Plan are currently held in the Trinity
Industries, Inc. Master Retirement Trust. It is contemplated that, following
consummation of the Offering, a separate pension plan will be established for
the Company's employees and the assets attributable to benefits accrued by
employees of the Company under the Pension Plan will be transferred to a
separate trust.
Profit Sharing Plan
The Company is a participating employer in the Profit Sharing Plan for
Employees of Trinity Industries, Inc. and Certain Affiliates (the "Profit
Sharing Plan"). The Profit Sharing Plan permits contributions under Section
401(k) of the Code of at least 2% but no more than 10% of compensation,
determined in whole percentages. For participants with at least five years of
service, 50% of these contributions are matched, up to 6% of the participant's
compensation. For participants with less than five years of service, 25% of
these contributions are matched, up to 6% of compensation. Participants are 100%
vested in salary reduction contributions, and vest in employer contributions
pursuant to a five-year graded schedule or upon normal retirement, death or
disability. The Company's contributions, exclusive of salary reduction
contributions, for fiscal years 1994, 1995 and 1996 were approximately $372,000,
$500,000 and $589,000, respectively.
Contributions that may be made under the Profit Sharing Plan are limited
under the Code. The maximum salary reduction contribution that may be made by a
participant in 1996 is $9,500, which amount can be further reduced under the
Code's 401(k) nondiscrimination rules. Nondiscrimination rules also apply with
respect to the matching contributions. Additionally, for 1996, the maximum
annual compensation that can be taken into account under the Profit Sharing Plan
for all purposes, including the determination of contributions made with respect
to a participant, is $150,000. The maximum allocation for a participant is equal
to the lesser of 25% of the participant's compensation or $30,000. Each of the
three dollar limitations referred to in this paragraph is scheduled to increase
with the cost of living for years after 1996.
It is contemplated that, following consummation of the Offering, the
Company will terminate its participation in the Profit Sharing Plan and
establish a comparable plan. Company employees who are participants in the
Profit Sharing Plan, and assets attributable to their accounts, will be
transferred to the new plan. All Company employees currently participating in
the Profit Sharing Plan who are transferred to the new plan will be
automatically credited under the new plan with years of service credited under
the Profit Sharing Plan.
Supplemental Retirement Plan
The Company is a participating employer in the Trinity Industries, Inc.
Supplemental Retirement Plan (the "Supplemental Retirement Plan"). This is a
nonqualified, deferred compensation plan that provides benefits to a select
group of management or highly compensated employees equal to the amount that the
participants would have received under the qualified retirement plan in which
they participate but for the limitations of Sections 401(a)(17) and 415 of the
Code. A participant is entitled to benefits under the Supplemental Retirement
Plan upon his retirement from the Company. All benefits under the Supplemental
Retirement Plan are paid out of general Trinity assets. It is contemplated that,
following consummation of the Offering, the Company will terminate its
participation in the Supplemental Retirement Plan and establish a comparable
plan, and the obligation to provide benefits under the Supplemental Retirement
Plan attributable to employees of the Company will be transferred to the
Company.
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Supplemental Profit Sharing Plan
The Company is also a participating employer in the Supplemental Profit
Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates
(the "Supplemental Profit Sharing Plan"). Under this nonqualified deferred
compensation plan, certain highly compensated employees are permitted to defer
compensation, and the Company credits amounts to an account established for each
such employee who elects to defer compensation under the Supplemental Profit
Sharing Plan in an amount that is coordinated with contributions on behalf of
such employees to the Profit Sharing Plan and the limitations under Sections
402(g) and 401(a)(17) of the Code. Assets intended by Trinity to be used to pay
benefits under the Supplemental Profit Sharing Plan are maintained in the
Supplemental Profit Sharing Trust for Employees of Trinity Industries, Inc. and
Certain Affiliates. It is contemplated that, following consummation of the
Offering, the Company will terminate its participation in this plan and
establish a comparable plan, and that the assets attributable to benefits
accumulated for Company employees under the Supplemental Profit Sharing Plan
will be transferred from the existing Trinity grantor trust to a separate
grantor trust to be established by the Company.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
No officer or director of the Company currently owns any shares of Common
Stock, all of which are currently owned by Trinity. On the date of the Offering,
certain officers of the Company will receive Options to purchase Common Stock
under the 1996 Stock Option and Incentive Plan. Directors and officers of the
Company may receive shares of Common Stock in the proposed Separation, if it
occurs, in respect of shares of Trinity Common Stock held, if any, by each of
them on the record date for the Separation.
The following table sets forth certain information as of July 31, 1996
regarding the beneficial ownership of Trinity Common Stock by (i) each director
of the Company, (ii) each executive officer named in the Summary Compensation
Table and (iii) all executive officers and directors of the Company as a group.
Unless otherwise noted, the persons named below have sole voting and investment
power with respect to the shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF TRINITY COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS
----------------------------------------------------- ----------------------- ----------
<S> <C> <C>
Vincent R. Almerico.................................. 9,000 *
John Dane III........................................ 211,086 *
Kenneth W. Lewis..................................... 89,019 *
Sidney C. Mizell..................................... 3,386 *
F. Dean Phelps, Jr. ................................. 21,165 *
Anil Raj............................................. 2,331 *
Rick S. Rees......................................... 1,000 *
John T. Sanford...................................... 85,085 *
Timothy R. Wallace................................... 146,309 *
W. Ray Wallace....................................... 1,337,429 3.10%
Harvey B. Walpert.................................... 2,938 *
Directors and Executive Officers as a Group (13
persons)........................................... 1,908,748 4.50%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) All shares are owned directly and the owner has the right to vote the
shares, except that the share amounts listed above include shares issuable
under Trinity Stock Option and Incentive Plans as of July 31, 1996 or within
60 days thereafter in the following amounts: Vincent R. Almerico -- 9,000
shares; John Dane III -- 70,030 shares; Kenneth W. Lewis -- 26,232 shares;
Sidney C. Mizell -- 3,150 shares; F. Dean Phelps, Jr. -- 15,130 shares; Anil
Raj -- 2,193 shares; John T. Sanford -- 46,699 shares; Timothy R.
Wallace -- 142,323 shares; W. Ray Wallace -- 450,000 shares; Harvey B.
Walpert -- 2,565 shares; and directors and executive officers as a
group -- 767,322 shares.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Company had no Compensation Committee or other
committee of the Company Board performing similar functions. Decisions
concerning compensation of executive officers were made by certain executive
officers of Trinity and members of Trinity's Compensation Committee, none of
whom is an executive officer of the Company. The Company Board has established a
Compensation Committee, all of the members of which are nonemployee directors.
See "-- Committees of the Board of Directors."
NONCOMPETITION AGREEMENTS
Prior to the consummation of the Offering, John Dane III, the Chief
Executive Officer of the Company, will enter into an agreement with the Company
under which he will agree not to compete with the Company in its present line of
business in the Gulf Coast region of the United States (which consists of the
States of Mississippi, Louisiana, Florida, Texas and Alabama) for a period of
three years from the date of this Prospectus. In order to enable Mr. Dane to
serve as President and Chief Executive Officer of the Company, to the extent
such covenant relates to the Company Businesses, Trinity has released Mr. Dane
from a noncompetition covenant that Mr. Dane entered into in connection with his
sale of Moss Point Marine, Inc. to Trinity in 1987. Under such agreement as
modified, Mr. Dane will continue to be precluded from competing with Trinity
under the terms of the 1987 agreement for four years from the date of
consummation of the Offering.
CHANGE OF CONTROL AGREEMENTS
The Company intends to enter into agreements (the "Change of Control
Agreements") with each of the current executive officers named in the Summary
Compensation Table and others to provide certain severance benefits to them in
the event of a termination of employment following a change of control (as
defined in the Change of Control Agreements) of the Company. A change of control
resulting from consummation of the proposed Separation would not be included in
the defined term. Each Change of Control Agreement will provide that, following
a change of control of the Company, if the Company terminates the executive's
employment other than as a result of the executive's death, disability or
retirement, or for cause (as defined in the Change of Control Agreements), or if
the executive terminates his employment for good reason (as defined in the
Change of Control Agreements), then the Company will pay to such executive a
lump sum equal to three times the amount of the executive's base salary and
bonus paid by the Company and its subsidiaries to the executive during the 12
months prior to termination or, if higher, the 12 months prior to the change of
control.
The severance benefits to be provided by the Change of Control Agreements
also will include (i) for 36 months following the executive's termination,
certain fringe benefits to which the executive would have been entitled had he
remained in the employment of the Company and (ii) a supplemental benefit based
on the Company's pension plan, which benefit will be payable in a series of cash
payments.
The Change of Control Agreements will further provide that if any payment
to which the executive is entitled is subject to the excise tax imposed by
Section 4999 of the Code, then the Company will pay to the executive an
additional amount so that the net amount retained by the executive is equal to
the amount that otherwise would be payable to the executive if no such excise
tax had been imposed.
INDEMNIFICATION AGREEMENTS
The Company intends to enter into Indemnification Agreements with certain
of its directors and officers pursuant to which it will indemnify such persons
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement incurred as a result of the fact that such person, in his or her
capacity as a director or officer, is made or threatened to be made a party to
any suit or proceeding. Such persons will be indemnified to the fullest extent
now or hereafter permitted by the DGCL. The Indemnification Agreements will also
provide for the advancement of certain expenses to such directors and officers
in connection with any such suit or proceeding.
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CERTAIN TRANSACTIONS AND RELATED ARRANGEMENTS
CONSOLIDATION TRANSACTIONS
Prior to or concurrently with the Offering, the Company will consummate the
Consolidation Transactions. These transactions include: (i) the transfer to the
Company of the stock of each subsidiary of Trinity that has assets and
liabilities related to the Company Businesses, (ii) the transfer to subsidiaries
of the Company of certain assets and liabilities of Trinity related to the
Company Businesses and (iii) the assumption by the Company of the indebtedness
of Trinity associated with the Company Businesses (which totalled $25.0 million
as of June 30, 1996). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
OFFERING RELATED TRANSACTIONS
Prior to or concurrently with the consummation of the Offering, the Company
will engage in the Offering Related Transactions. The Offering Related
Transactions include (i) the entering into by the Company of the new Credit
Facility and (ii) the borrowing by the Company under the Credit Facility to
repay (x) a $25.0 million intercompany note to Trinity and (y) $25.0 million of
certain indebtedness of Trinity associated with the Company Businesses and
assumed by the Company in connection with the Consolidation Transactions. See
"Risk Factors -- Benefits to Trinity in Connection with the Offering" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
THE PROPOSED SEPARATION
Trinity has announced its intention to divest itself through the proposed
Separation of its remaining ownership interest in the Company. The timing, form
and other terms of the Separation are subject to the approval of the Trinity
Board. The Separation will be subject to various conditions, including the
absence of any events or developments that cause the Trinity Board to determine,
in its sole discretion, that the proposed Separation is not in the best
interests of Trinity or its stockholders. If the proposed Separation is to be
accomplished by means of a non-taxable transaction, such transaction also will
be subject to receipt of a private letter ruling from the IRS to the effect that
the Separation will qualify as a tax-free transaction for federal income tax
purposes under Section 355 of the Code. For additional information regarding the
proposed Separation and the conditions thereto, see "Separation From Trinity."
ARRANGEMENTS BETWEEN THE COMPANY AND TRINITY
Prior to the consummation of the Offering, the Company and Trinity will
enter into various agreements for the purpose of establishing the terms
governing their on-going arrangements and relationships. These agreements
include the Separation Agreement, the Tax Allocation Agreement, the Trademark
License Agreement and an Indemnity and Security Agreement (collectively, the
"Separation and Related Agreements"). The terms of such agreements were
negotiated between affiliated parties, do not reflect arms'-length dealings and
may not be as favorable to the Company as terms that would be available in
similar agreements from unrelated third parties. The form of each such agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Although the summary of the terms and provisions of
such agreements set forth below describes the material provisions of each such
agreement, it does not purport to be complete and is qualified in its entirety
by reference to the full text of such agreements. See "Available Information."
Separation Agreement
Releases. The Separation Agreement provides for a full and complete release
and discharge as of the date of consummation of the Offering of all liabilities
and obligations existing or arising from all acts and events occurring or
failing to occur or alleged to have occurred or to have failed to occur and all
conditions existing or alleged to have existed on or before the date of
consummation of the Offering, between or among
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the Company or any other member of the Company Group (as defined herein), on the
one hand, and Trinity or any other member of the Trinity Group (as defined
herein), on the other hand (including any contractual agreements or arrangements
existing or alleged to exist between or among any such members on or before the
consummation of the Offering), except as expressly set forth in the Separation
and Related Agreements.
Indemnification. Trinity generally will agree to indemnify and hold
harmless the Company and each other member of the Company Group, and each of
their respective directors, officers and employees, from and against all
liabilities and obligations relating to, arising out of or resulting from (i)
the failure of Trinity or any member of the Trinity Group to pay, perform or
otherwise promptly discharge any of its liabilities and obligations, other than
Halter Asset Liabilities (as defined herein) and liabilities that relate to,
arise out of or result from any of the Company Businesses, (ii) the Trinity
Businesses, other than Halter Asset Liabilities and liabilities that relate to,
arise out of or result from any of the Company Businesses, or (iii) any breach
by Trinity of the terms of the Separation and Related Agreements or other
agreements entered into between Trinity and the Company in connection with the
Offering. As used in the Separation Agreement, the term "Halter Asset
Liabilities" means (i) all liabilities relating to, arising at any time out of
or resulting at any time from any assets of any member of the Company Group or
any assets that at any time were owned by any of the Specified Entities (as
defined herein), or relating to, arising at any time out of or resulting at any
time from any operations conducted with or on any assets of any member of the
Company Group or any of the assets that at any time were owned by any of the
Specified Entities (excluding, however, any liabilities resulting from the
operation of any item of tangible personal property exclusively in connection
with any of the Trinity Businesses) and (ii) all liabilities of any of the
Specified Entities existing at any time. As used in the Separation Agreement,
the term "Specified Entities" refers to certain specified entities whose assets
historically have been in large part used in connection with the Company
Businesses and which entities have transferred their assets to Trinity or
another member of the Trinity Group.
Except as provided in the Separation Agreement, the Company will agree to
indemnify and hold harmless Trinity and each other member of the Trinity Group,
and each of their respective directors, officers and employees, from and against
all liabilities and obligations relating to, arising out of or resulting from
(i) the failure of the Company or any member of the Company Group to pay,
perform or otherwise promptly discharge any of its liabilities and obligations,
(ii) any of the Halter Asset Liabilities, (iii) the Company Businesses, (iv) any
breach by the Company or any other member of the Company Group of the terms of
the Separation and Related Agreements, (v) any untrue statement or alleged
untrue statement of a material fact in this Prospectus or the Registration
Statement of which it forms a part or any omission or alleged omission to state
a material fact required to be stated herein or therein or necessary to make the
statements herein or therein not misleading (except for any such untrue
statement or alleged untrue statement arising from information regarding Trinity
and supplied in writing by Trinity expressly for inclusion in this Prospectus or
the Registration Statement) and (vi) certain obligations of Trinity under an
agreement to be entered into among Trinity and the Underwriters pursuant to
which, among other things, Trinity will agree to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933. Without limiting the foregoing, the Company will agree to indemnify and
hold harmless each of Trinity and any other member of the Trinity Group from and
against any liability that any of them may have in respect of guarantees by
Trinity or any other member of the Trinity Group of any contract bid and
performance obligations of the Company or any other member of the Company Group.
As of July 31, 1996, Trinity had guaranteed contract performance obligations of
the Company in the aggregate amount of approximately $66.1 million. The Company
also had outstanding contract bid and performance bonds, letters of credit and
similar obligations issued by third parties (for which Trinity is the obligor)
with an aggregate face amount of approximately $74.9 million.
The Separation Agreement provides for different indemnification obligations
in the case of liabilities which arise as a result of actual or alleged
workplace exposure to hazardous substances on the part of persons who have been
employed both by (i) any of the Trinity Businesses and (ii) any of the Company
Businesses or at any facility with respect to which liabilities from operations
are the responsibility of the Company pursuant to the Separation Agreement. The
Separation Agreement generally provides that such liabilities will be allocated
between Trinity and the Company based on the respective number of days that any
such person was employed by any of the Trinity Businesses, on the one hand, and
by any of the Company Businesses (or at any
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<PAGE> 62
facility with respect to which liabilities from operations are the
responsibility of the Company), on the other hand.
The forgoing indemnification provisions will not apply to liabilities and
obligations in respect of federal, state and local taxes, which will be
addressed elsewhere in the Separation Agreement and in the Tax Allocation
Agreement described below.
The Separation Agreement will also set forth certain procedures with
respect to third-party claims for which indemnification is available and related
matters.
Protection of Tax-Free Status of Separation. The Separation Agreement will
also contain covenants on the part of the Company intended to protect the
ability of Trinity to effect the proposed Separation as a tax-free transaction
if it elects to do so. In particular, the Company will agree that, after the
consummation of the Offering, neither it nor any of its affiliates will take any
action which reasonably could be expected to prevent the proposed Separation
from qualifying as a tax-free transaction pursuant to Section 355 of the Code or
which could otherwise be reasonably expected to jeopardize the ability of
Trinity to effect the proposed Separation as a tax-free transaction if it elects
to do so. Without limiting the generality of the foregoing, the Company will
agree that, during the period beginning upon the consummation of the Offering
and ending on the Separation Date, the Company will not issue or grant, and will
not permit any other member of the Company Group to issue or grant, directly or
indirectly, any shares of Common Stock or any rights, warrants, options or other
securities entitling the holder to purchase or acquire any shares of Common
Stock, except for (i) the grant of options for 250,000 shares of Common Stock
pursuant the 1996 Stock Option and Incentive Plan on the date of the Offering
and (ii) the issuance of shares of Common Stock upon exercise of the options
granted on the date of the Offering. The Company will indemnify Trinity and its
affiliates from and against all liabilities and obligations relating to, arising
out of or resulting from the breach of any of the provisions of the Separation
Agreement intended to protect the tax-free status of the proposed Separation.
Non-Competition Covenants. The Separation Agreement will provide that, for
a period of four years after the consummation of the Offering, neither Trinity
nor any other member of the Trinity Group will engage in any of the Company
Businesses; provided, that neither Trinity nor any member of the Trinity Group
will be prohibited from engaging in (i) the construction, conversion or repair
of deck barges (whether ocean-going or inland) or (ii) the production of any
component of or accessory to any ocean-going or inland vessels.
The Separation Agreement also will provide that, for a period of four years
after the consummation of the Offering, neither the Company nor any other member
of the Company Group will engage in any of the Trinity Businesses. In the event
that the Company fails to comply with the foregoing covenant related to
competition with the Trinity Businesses, then Trinity may, in addition to any
other remedies that may be available to it, terminate all or any portion of the
rights granted to the Company under the Trademark License Agreement.
Notwithstanding the foregoing noncompetition provisions, any member of the
Trinity Group or the Company Group will be permitted to complete performance of
any contract of such party existing as of the date of the Offering, and such
performance will not be deemed to violate any noncompetition covenant in the
Separation Agreement.
Auditors. The Separation Agreement will provide that for a period of three
years following the date of the Offering, the Company will not voluntarily cease
to retain Ernst & Young LLP as its auditing firm with respect to its financial
statements; provided, that the Company may voluntarily cease to continue to
retain Ernst & Young LLP as its auditing firm with respect to its financial
statements if (i) Ernst & Young LLP ceases to satisfy any applicable criteria
relating to independence of auditors or (ii) the Company Board determines in
good faith that (x) a disagreement exists between the Company and Ernst & Young
LLP that effectively precludes Ernst & Young LLP from adequately performing its
duties as the Company's independent auditing firm or (y) the performance of
Ernst & Young LLP as the Company's outside auditing firm is materially
deficient.
Fees and Expenses. The Separation Agreement will provide that the Company
will pay all third party costs, fees and expenses relating to the Offering, all
of the reimbursable expenses of the Underwriters pursuant to the Underwriting
Agreement, all of the costs of producing, printing, mailing and otherwise
distributing this
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Prospectus, as well as the Underwriters' discounts and commissions as provided
in the Underwriting Agreement. See "Underwriting." Except as expressly set forth
in the Separation and Related Agreements, all third party fees, costs and
expenses paid or incurred in connection with the proposed Separation will be
paid by Trinity.
Certain Definitions. As used in this Prospectus and in the Separation
Agreement, the terms set forth below have the following respective meanings:
"Company Businesses" means the business and operations conducted prior
to the date hereof by Trinity and certain of its subsidiaries that consist
of (i) the construction, repair and conversion of ocean-going and inland
vessels (other than inland hopper barges and inland tank barges and the
construction of accessories for such barges) and (ii) the production of any
component of or accessory to any ocean-going or inland vessel being
constructed by any member of the Company Group.
"Company Group" means the group consisting of the Company and all of
its subsidiaries.
"Trinity Businesses" means all businesses and operations conducted
prior to the date hereof by Trinity and any other members of the Trinity
Group other than the Company Businesses.
"Trinity Group" means the group consisting of Trinity and all of its
subsidiaries (other than any member of the Company Group).
Tax Sharing and Tax Benefit Reimbursement Agreement
In connection with the Offering, Trinity and the Company will enter into
the Tax Allocation Agreement. The Tax Allocation Agreement (i) will provide for
the termination of any existing tax sharing or allocation arrangements between
the Company and Trinity, (ii) will specify the manner in which certain federal,
state and local income tax liabilities (including any subsequent adjustments to
such federal, state and local income tax liabilities) of the consolidated group
of which Trinity is the common parent (the "Trinity Tax Group") will be
allocated for the final year (the "Final Year") in which the Company is a member
of the Trinity Tax Group and for any prior tax year of the Trinity Tax Group and
(iii) will specify the manner in which audits or administrative or judicial
proceedings relating to federal income taxes and certain state taxes of the
Trinity Tax Group will be controlled. In general, the Company's share of the
federal income tax liabilities, and in some cases state and local tax
liabilities, will be computed as if the Company and its subsidiaries filed a
separate consolidated income tax return. Under the Tax Allocation Agreement,
Trinity will generally control any audit or administrative or judicial
proceeding relating to taxes of the Trinity Tax Group. However, the Company will
be entitled to participate in any audit or administrative or judicial proceeding
relating to the Trinity Tax Group for the Final Year or any prior tax year.
As of June 30, 1996, the Company was obligated to reimburse Trinity for
income taxes incurred in connection with the Company Businesses in an aggregate
amount of approximately $16.4 million. A portion of the net proceeds of the
Offering will be used to repay income taxes payable outstanding as of the
consummation of the Offering. See "Use of Proceeds."
Trademark License Agreement
The Company and Trinity will also enter into the Trademark License
Agreement, pursuant to which Trinity will grant to the Company and the other
members of the Company Group a long-term, limited, royalty-free license to allow
the Company to use the "Trinity Yachts" trademark in connection with its yacht
business.
Inland Barge Arrangements
The Company has a firm contract to construct 50 inland hopper barges for
Trinity. Such barges will be constructed at the Company's Gulfport shipyard over
approximately the next six months. However, the Company anticipates that from
time to time in the future it may enter into discussions with Trinity regarding
manufacturing additional inland hopper barges or inland double hull tank barges,
or both, for Trinity or its customers. The terms of any such future arrangements
will be negotiated by the Company and Trinity at that
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time. Although the Company expects that any such future arrangements will be at
least as favorable to the Company as those it could obtain from unaffiliated
third parties, any such arrangements entered into prior to the proposed
Separation will be negotiated between affiliated parties and will not reflect
arms'-length dealings. See "Risk Factors -- Control by Trinity Pending the
Proposed Separation; Potential Conflicts of Interest." Except for the
arrangement described above, the Separation Agreement precludes the Company,
absent Trinity's consent, from constructing inland hopper barges and inland tank
barges (both of which constitute a portion of the Trinity Businesses) for four
years after the consummation of the Offering.
Performance Bond and Guarantee Arrangements
A significant portion of the Company's contracts for the construction,
repair or conversion of vessels require that the Company's performance be
guaranteed by Trinity or by a surety company or other third party pursuant to a
contract bid or performance bond, letter of credit or similar obligation.
Generally, contracts with state or local governments require contract bid and
performance bonds, and foreign governmental contracts require bank letters of
credit or similar obligations. Commercial contracts may require contract bid and
performance bonds if requested by the customer. As of July 31, 1996, Trinity had
guaranteed contract bid and performance obligations of the Company in the
aggregate amount of approximately $66.1 million and the Company had outstanding
contract bid and performance bonds, letters of credit and similar obligations
issued by third parties (and for which Trinity is the obligor) with an aggregate
face amount of approximately $74.9 million. These guarantees, bonds, letters of
credit and similar obligations, totalling approximately $141.0 million, will
remain in effect after the Offering until the obligations expire, and the
Company will be obligated to indemnify Trinity against any liability under such
obligations. For the protection of Trinity in the event that Trinity is called
upon to satisfy any such obligations, Trinity will be granted security interests
in certain assets of the Company which relate to the Company contracts from
which such obligations arise and will possess rights to complete performance of
any such contract on behalf of the Company in the event of nonperformance by the
Company. Such rights and remedies are similar to the rights possessed by surety
companies that have issued performance bonds on behalf of the Company. See
"Business -- Bonding and Guarantee Requirements."
CERTAIN OTHER TRANSACTIONS
John Dane III, the President, Chief Executive Officer and a director of the
Company, acquired 25% of the stock of United States Marine, Inc. ("USMI") in
June 1996. Mr. Dane has the option to acquire up to an additional 50% of the
stock of USMI over the next five years. USMI performs services for the Company
as a subcontractor with respect to the production of high speed composite
vessels for the U.S. Navy. The Company paid USMI approximately $10.6 million,
$3.9 million and $5.5 million during fiscal 1994, 1995 and 1996, respectively,
and approximately $2.2 million during the three months ended June 30, 1996, for
subcontractor services. The Company believes that the terms on which the Company
is supplied such subcontractor services by USMI are at least as favorable as
those that could be obtained by the Company in arm's-length transactions with
unrelated parties.
Rick S. Rees, who became a director of the Company in September 1996, has
been the President of Maritime Holdings, Inc. ("MHI") since March 1996 and is a
director of Texas Drydock, Inc. ("TDI"), a wholly owned subsidiary of MHI. TDI,
which operates six shipyards and is engaged in the offshore rig repair,
modification and new construction business, entered into two contracts with
Trinity in November 1993 and May 1994, respectively, for the construction by
Trinity of six drilling barges. A total of $12.7 million was paid by TDI to
Trinity under the two contracts.
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PRINCIPAL STOCKHOLDER
Prior to the Offering, all of the outstanding shares of Common Stock will
be owned by Trinity. Upon the consummation of the Offering, Trinity will own
approximately 83.3% (81.3% if the Underwriters exercise the Over-Allotment
Option in full) of the Common Stock then outstanding. Except as described above,
the Company is not aware of any person or group that will beneficially own more
than 5% of the outstanding shares of Common Stock following the Offering.
Prior to the proposed Separation, Trinity will be able to elect all members
of the Company Board and determine the outcome of corporate actions requiring
stockholder approval. Furthermore, through its ability to elect the members of
the Company Board, Trinity will be able to control all matters affecting the
business and operations of the Company.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 50,000,000
shares of Common Stock, par value $0.01 per share, and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share ("Preferred Stock"). Upon the
consummation of the Offering, 18,000,000 shares of Common Stock (18,450,000
shares if the Over-Allotment Option is exercised in full) and no shares of
Preferred Stock will be outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on all
matters submitted to a vote of the stockholders and, except as otherwise
required by law or provided in any resolution adopted by the Company Board with
respect to any series of Preferred Stock, the holders of Common Stock will
possess all voting power. Cumulative voting of shares of Common Stock in the
election of directors is not permitted. The holders of Common Stock are entitled
to receive ratably such dividends, if any, as may be declared from time to time
by the Company Board out of funds legally available therefor, subject to the
payment of any preferential dividends with respect to any series of Preferred
Stock created by the Company Board from time to time. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities, after distribution to the holders of any outstanding Preferred
Stock created by the Company Board from time to time of the amounts to which
they are entitled. The holders of Common Stock have no preemptive or other
subscription rights. All of the shares of Common Stock offered hereby will be,
when issued, validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Certificate authorizes the Company Board to establish one or more
series of Preferred Stock and to determine, with respect to any series of
Preferred Stock, the terms and rights of such series, including (i) the
designation of the series, (ii) the number of shares of the series, which number
the Company Board may thereafter (except where otherwise provided in the
applicable Certificate of Designations) increase or decrease (but not below the
number of shares thereof then outstanding), (iii) whether dividends, if any,
will be cumulative or noncumulative, and, in the case of shares of any series
having cumulative dividend rights, the date or dates or method of determining
the date or dates from which dividends on the shares of such series shall be
cumulative, (iv) the rate of any dividends (or method of determining such
dividends) payable to the holders of the shares of such series, any conditions
upon which such dividends will be paid and the date or dates or the method for
determining the date or dates upon which such dividends will be payable, (v) the
redemption rights and price or prices, if any, for shares of the series, (vi)
the terms and amount of any sinking fund provided for the purchase or redemption
of shares of the series, (vii) the amounts payable on and the preferences, if
any, of shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, (viii)
whether the shares of the series will be convertible or exchangeable into shares
of any other class or series, or any other security, of the Company or any other
corporation, and, if so, the specification of such other class or series or such
other security, the conversion or exchange price or prices or rate or rates, any
adjustments thereof, the date or dates as of which such shares will be
convertible or exchangeable and all other terms and conditions upon which such
conversion or exchange
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may be made, (ix) restrictions on the issuance of shares of the same series or
of any other class or series, (x) the voting rights, if any, of the holders of
the shares of the series and (xi) any other relative rights, preferences and
limitations of such series.
The Company believes that the ability of the Company Board to issue one or
more series of Preferred Stock will provide the Company with flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise from time to time. The authorized shares of
Preferred Stock, as well as shares of Common Stock, will be available for
issuance without further action by the Company's stockholders, unless such
action is required by applicable law or the rules of any stock exchange or
automated quotation system on which the Company's securities may be listed or
traded. If the approval of the Company's stockholders is not required for the
issuance of shares of Preferred Stock or Common Stock, the Company Board may
determine not to seek stockholder approval.
Although the Company Board has no intention at the present time of doing
so, it could issue a series of Preferred Stock that may, depending on the terms
of such series, hinder, delay or prevent the completion of a merger, tender
offer or other takeover attempt. Among other things, the Company Board could
issue a series of Preferred Stock having terms that could discourage an
acquisition attempt through which an acquirer may be able to change the
composition of the Company Board, including a tender offer or other transaction
that some, or a majority, of the Company's stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then current market price of such stock.
For purposes of the Rights Agreement described below, the Company Board has
authorized the creation of a series of Preferred Stock designated as "Series A
Junior Participating Preferred Stock" (the "Series A Preferred Stock"). An
aggregate of 500,000 shares of Preferred Stock have been reserved for issuance
as Series A Preferred Stock. Series A Preferred Stock will rank junior to all
other series of Preferred Stock that have been or may be established by the
Company Board with respect to the payment of dividends and the distribution of
assets upon liquidation. In general, the voting, dividend and liquidation rights
of Series A Preferred Stock are designed in such a way that one one-hundredth of
a share of Series A Preferred Stock will be substantially equivalent from an
economic point of view to one share of Common Stock. For a statement of the
rights and privileges of Series A Preferred Stock, reference is made to the form
of Certificate of Designations which is included as an exhibit to this
Registration Statement.
ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE AND BY-LAWS
Classified Board of Directors
Effective upon the Separation Date, the members of the Company Board, other
than those who may be elected by the holders of Preferred Stock, will be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, one class to be originally
elected for a term expiring at the first annual meeting of stockholders held
following the Separation Date, another class to be originally elected for a term
expiring at the second annual meeting of stockholders held following the
Separation Date and another class to be originally elected for a term expiring
at the third annual meeting of stockholders held following the Separation Date,
with each director to hold office until his or her successor is duly elected and
qualified. Commencing with the first annual meeting of stockholders held
following the Separation Date, directors elected to succeed directors whose
terms then expire will be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election, with each
director to hold office until such person's successor is duly elected and
qualified.
Removal of Directors
Subject to the rights of holders of Preferred Stock, any director may be
removed from office only for cause by the affirmative vote of the holders of at
least a majority of the voting power of all shares of stock of the Company
entitled to vote generally in the election of directors ("Voting Stock") then
outstanding, voting together as a single class; provided, however, that prior to
the Separation Date, any director or directors may be removed from office by the
affirmative vote of the holders of at least 80% of the voting power of all
Voting Stock then outstanding, voting together as a single class.
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No Stockholder Action by Written Consent
The Certificate and By-Laws provide that, after the Separation Date, any
action required or permitted to be taken by the stockholders of the Company must
be taken at a duly called annual or special meeting of such holders and may not
be effected by any consent in writing by such holders.
Special Meetings
Effective as of the Separation Date, except as otherwise required by law
and subject to the rights of the holders of any Preferred Stock, special
meetings of stockholders of the Company for any purpose or purposes may be
called only by the Company Board pursuant to a resolution stating the purpose or
purposes thereof approved by a majority of the whole Company Board or by the
Chairman of the Board and, effective as of the Separation Date, any power of
stockholders to call a special meeting is specifically denied.
Advance Notice Procedures
The By-Laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or to bring other business
before an annual meeting of stockholders of the Company (the "Stockholder Notice
Procedure"). The Stockholder Notice Procedure provides that only persons who are
nominated by, or at the direction of, the Chairman of the Board, or by a
stockholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure also
provides that at an annual meeting only such business may be conducted as has
been brought before the meeting by, or at the direction of, the Chairman of the
Board or the Company Board, or by a stockholder who has given timely written
notice to the Secretary of the Company of such stockholder's intention to bring
such business before such meeting. Under the Stockholder Notice Procedure, for
notice of stockholder nominations to be made at an annual meeting to be timely,
such notice must be received by the Company not later than the close of business
on the 90th calendar day nor earlier than the close of business on the 120th
calendar day prior to the first anniversary of the preceding year's annual
meeting (except that, in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 120th calendar day prior to such
annual meeting and not later than the close of business on the later of the 90th
calendar day prior to such annual meeting or the 10th calendar day following the
day on which public announcement of a meeting date is first made by the
Company).
In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate a person for election as a director must
set forth the following information with respect to each person proposed to be
nominated: the person's name, business address, residence address, principal
occupation and ownership of Company stock along with any other information
required by federal proxy rules. In addition, such notice must set forth the
following information with respect to the stockholder giving notice: such
stockholder's name and record address, along with the number of shares of stock
of the Company owned by such stockholder.
Also, under the Stockholder Notice Procedure, a stockholder's notice to the
Company relating to the conduct of business other than the nomination of
directors must contain, as to each matter the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
the name and record address of such stockholder, the class and number of shares
of the Company that are beneficially owned by the stockholder and any material
interest of the stockholder in such business.
If the chairman of a meeting determines that an individual was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholder Notice Procedure, such individual will not be eligible for
election as a director or such business will not be conducted at such meeting,
as the case may be.
The Stockholder Notice Procedure does not apply to Trinity and its
affiliates prior to the Separation Date.
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Amendment
The Certificate provides that the affirmative vote of the holders of at
least 80% of the voting power of the outstanding shares of Voting Stock, voting
together as a single class, is required to amend certain provisions of the
Certificate, including those relating to (i) stockholder action without a
meeting, (ii) the calling of special meetings and (iii) the number, election and
term of the Company's directors. The Certificate further provides that the
related By-Laws described above (including the Stockholder Notice Procedure) may
be amended only by the Company Board or by the affirmative vote of the holders
of at least 80% of the voting power of the outstanding shares of Voting Stock,
voting together as a single class.
STOCKHOLDER RIGHTS PLAN
Prior to the consummation of the Offering, the Company will adopt a
Stockholder Rights Plan pursuant to which one right ("Right") will be issued
with respect to each outstanding share of Common Stock. Each Right will entitle
the registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Fractional Share") of Series A Preferred Stock, at
a purchase price per Fractional Share to be determined by the Company Board when
the issuance of the Rights is approved, subject to adjustment in certain events
(the "Purchase Price"). The Purchase Price may be paid, at the option of the
holder, in cash or shares of Common Stock having a value at the time of exercise
equal to the Purchase Price. The terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") to be entered into between
the Company and The Bank of New York as rights agent. Although the summary
description of the Rights set forth below briefly describes the material
provisions of the Rights, it does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
Initially, the Rights will be attached to all certificates representing
outstanding shares of Common Stock, including the shares of Common Stock sold in
the Offering, and no separate certificates for the Rights ("Rights
Certificates") will be distributed. The Rights will separate from the Common
Stock and a "Rights Distribution Date" will occur upon the earlier of (i) ten
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock or (ii) ten business days following the commencement of a tender
offer or exchange offer that would result in a person's becoming an Acquiring
Person. In certain circumstances and with the concurrence of a majority of the
Company's Continuing Directors (as described below), the Rights Distribution
Date may be deferred by the Company Board. Certain acquisitions that the Company
Board, with the concurrence of a majority of the Company's Continuing Directors,
determines are inadvertent, will not result in a person's becoming an Acquiring
Person if the person promptly divests itself of sufficient Common Stock. Until
the Rights Distribution Date, (a) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (b) Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference and (c) the surrender for
transfer of any certificate for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
Trinity, which prior to consummation of the Offering will be the Company's
sole stockholder and, immediately after consummation of the Offering, will be
the beneficial owner of approximately 83.3% of the outstanding shares of the
Company's Common Stock, will not be deemed to be an Acquiring Person as a result
of such ownership position unless and until Trinity first ceases to be the
beneficial owner of 15% or more of the outstanding shares of Common Stock and
thereafter again becomes the beneficial owner of 15% or more of the Common
Stock.
The Rights are not exercisable until the Rights Distribution Date and will
expire ten years from the date the Rights are first issued, unless earlier
redeemed or exchanged by the Company as described below.
As soon as practicable after the Rights Distribution Date, Rights
Certificates will be mailed to holders of record of Common Stock as of the close
of business on the Rights Distribution Date and, from and after the Rights
Distribution Date, the separate Rights Certificates alone will represent the
Rights. All shares of Common Stock issued prior to the Rights Distribution Date
will be issued with Rights. Shares of Common
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<PAGE> 69
Stock issued after the Rights Distribution Date in connection with certain
employee benefit plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the Company Board, no other
shares of Common Stock issued after the Rights Distribution Date will be issued
with Rights.
In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the Company's
independent Continuing Directors determines to be fair to and otherwise in the
best interests of the Company and its stockholders (a "Permitted Offer")), each
holder of a Right will thereafter have the right to receive, upon exercise of
such Right, in lieu of Fractional Shares of Series A Preferred Stock, a number
of shares of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a Current Market Price (as defined in the
Rights Agreement) equal to two times the Purchase Price of the Right.
Notwithstanding the foregoing, following the occurrence of any Triggering Event
(as defined below), all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by or transferred to
any Acquiring Person (or by certain related parties) will be null and void in
the circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer) or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise of the Right, a number of shares of common stock of
the acquiring company having a Current Market Price equal to two times the
Purchase Price of the Right. Flip-In Events and Flip-Over Events are
collectively referred to as "Triggering Events."
The number of outstanding Rights associated with a share of Common Stock,
or the number of Fractional Shares of Series A Preferred Stock issuable upon
exercise of a Right and the Purchase Price, are subject to adjustment in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Stock occurring prior to the Distribution Date. The Purchase
Price payable, and the number of Fractional Shares of Series A Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution in the event of
certain transactions affecting the Series A Preferred Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Series A Preferred Stock are required to be
issued and, in lieu thereof, an adjustment in cash may be made based on the
market price of the Series A Preferred Stock on the last trading date prior to
the date of exercise. Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so that only whole shares of
Series A Preferred Stock will be issued.
The term "Continuing Director" means any member of the Company Board, while
such person is a member of the Company Board, who is not an officer or employee
of the Company or any subsidiary of the Company and who is not an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or a nominee or
representative of an Acquiring Person or of any such affiliate or associate, if
(i) such person was a member of the Company Board prior to the time a person
becomes an Acquiring Person or (ii) such person's nomination for election or
election to the Company Board is recommended or approved by a majority of the
then Continuing Directors.
At any time until ten days following the first date of public announcement
of the occurrence of a Flip-In Event, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable, at the option of
the Company, in cash, shares of Common Stock or such other consideration as the
Company Board may determine. Immediately upon the effectiveness of the action of
the Company Board ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
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<PAGE> 70
At any time after the occurrence of a Flip-In Event and prior to a person's
becoming the beneficial owner of 50% or more of the shares of Common Stock then
outstanding, the Company Board (with the concurrence of a majority of the
Continuing Directors) may at its option exchange the Rights (other than Rights
owned by an Acquiring Person or an affiliate or an associate of an Acquiring
Person, which will have become void), in whole or in part, at an exchange ratio
of one share of Common Stock, and/or other equity securities deemed to have the
same value as one share of Common Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Company Board as long as the Rights are
redeemable. Thereafter, the provisions of the Rights Agreement may be amended by
the Company Board (in certain circumstances, with the concurrence of the
Continuing Directors) in order to cure any ambiguity, defect or inconsistency,
to make changes that do not materially adversely affect the interests of holders
of Rights (excluding the interests of any Acquiring Person), or to shorten or
lengthen any time period under the Rights Agreement; provided, however, that no
amendment to lengthen the time period governing redemption shall be made at such
time as the Rights are not redeemable.
The Rights will have certain anti-takeover effects. The Rights may result
in substantial dilution to any person or group that attempts to acquire the
Company without the approval of the Company Board. As a result, the overall
effect of the Rights may be to render more difficult or to discourage any
attempt to acquire the Company even if such acquisition may be on terms
favorable to the Company's stockholders.
DELAWARE BUSINESS COMBINATION STATUTE
Section 203 of the DGCL provides that, subject to certain exceptions
specified therein, an "interested stockholder" of a Delaware corporation shall
not engage in any business combination, including mergers or consolidations or
acquisitions of additional shares of the corporation, with the corporation for a
three-year period following the date that such stockholder becomes an interested
stockholder unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares), or (iii) on or subsequent to such date,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested stockholder. Except as otherwise specified in
Section 203, an interested stockholder is defined to include (x) any person that
is the owner of 15% or more of the outstanding voting stock of the corporation,
or is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time within three
years immediately prior to the date of determination and (y) the affiliates and
associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. The Company has not
elected to be exempt from the restrictions imposed under Section 203. However,
Trinity and its affiliates are excluded from the definition of "interested
stockholder" pursuant to the terms of Section 203. The provisions of Section 203
may encourage persons interested in acquiring the Company to negotiate in
advance with the Company Board, since the stockholder approval requirement would
be avoided if a majority of the directors then in office approves either the
business combination or the transaction which results in any such person
becoming an interested stockholder. Such provisions also may have the effect of
preventing changes in the management of the Company. It is possible that such
provisions could make it more difficult to accomplish transactions which the
Company's stockholders may otherwise deem to be in their best interests.
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LIABILITY OF DIRECTORS; INDEMNIFICATION
The Certificate provides that a director of the Company will not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by the DGCL as
amended from time to time, for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. Neither the amendment
nor repeal of such provision will eliminate or reduce the effect of such
provision in respect of any matter occurring, or any cause of action, suit or
claim that, but for such provision, would accrue or arise prior to such
amendment or repeal. Such limitations on personal liability of directors of the
Company will not reduce or eliminate any monetary liability of directors arising
under federal securities laws.
While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.
The Certificate provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent, will be indemnified and held harmless by the Company
to the fullest extent authorized by the DGCL, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees, judgments,
fines, amounts paid or to be paid in settlement and excise taxes or penalties
arising under the Employee Retirement Income Security Act of 1974, as in effect
from time to time) reasonably incurred or suffered by such person in connection
therewith. Such right to indemnification includes the right to have the Company
pay the expenses incurred in defending any such proceeding in advance of its
final disposition, subject to the provisions of the DGCL. Such rights are not
exclusive of any other right which any person may have or thereafter acquire
under any statute, provision of the Certificate, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or modification
of such provision will in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the Company thereunder in respect of any
occurrence or matter arising prior to any such repeal or modification. The
Certificate also specifically authorizes the Company to maintain insurance and
to grant similar indemnification rights to employees or agents of the Company.
TRANSFER AGENT AND REGISTRAR
The Bank of New York will be the transfer agent and registrar for the
Common Stock.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of the Offering, the Company will have 18,000,000
shares of Common Stock outstanding (18,450,000 shares if the Over-Allotment
Option is exercised in full). Of these shares, the 3,000,000 shares of Common
Stock sold in the Offering will be freely tradeable in the public market without
restriction or limitation under the Securities Act of 1933, as amended (the
"Securities Act"), except for any shares purchased by an "affiliate" (as defined
under the Securities Act) of the Company. The shares of Common Stock that
continue to be held by Trinity after the Offering will constitute "restricted
shares" for purposes of Rule 144 under the Securities Act, and may not be sold
by Trinity other than in compliance with the registration requirements of the
Securities Act or pursuant to an available exemption therefrom. Trinity has
agreed that, except in connection with the proposed Separation, it will not
offer or sell any shares of Common Stock for a period of 180 days after the date
of this Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. See "Underwriting."
Trinity has announced its intention to divest itself through the proposed
Separation of its ownership interest in the Company remaining after the
Offering. In general, if Trinity completes the proposed Separation by any means
other than a private sale to a third party, all of the 15,000,000 shares of
Common Stock currently held by Trinity will be freely tradeable in the public
market without restriction or limitation under the Securities Act, except for
any shares distributed to an "affiliate" of the Company.
Shares of Common Stock that are purchased by "affiliates" of the Company in
the Offering or upon exercise of Options or Converted Options or received by
them in the proposed Separation may not be sold other than in compliance with
the registration requirements of the Securities Act or pursuant to an available
exemption therefrom, including the exemption provided by Rule 144.
In general, under Rule 144 as currently in effect, an "affiliate" of the
Company may sell within any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of such class or
(ii) the average weekly trading volume on the NYSE during the four calendar
weeks preceding the date on which a notice of sale is filed with the Securities
and Exchange Commission (the "Commission") with respect to the proposed sale.
Sales under Rule 144 are subject to certain restrictions relating to the manner
of sale, notice and the availability of current public information about the
issuer. A person who has not been an affiliate of the Company at any time during
the 90 days preceding a sale, and who has beneficially owned shares for at least
three years (including the holding period of any prior owner other than an
affiliate), would be entitled to sell such shares without regard to the volume
limitations, manner of sale provisions, notice or other requirements of Rule
144.
The Company has reserved an aggregate of 1,400,000 shares of Common Stock
for issuance pursuant to the 1996 Stock Option and Incentive Plan. Following the
Offering, such shares will be registered under the Securities Act through the
filing of a registration statement on Form S-8. Accordingly, shares of Common
Stock issued pursuant to the 1996 Stock Option and Incentive Plan will be
available for sale in the public market without restriction or limitation under
the Securities Act, except for any shares acquired by an "affiliate" of the
Company.
The Company is unable to predict whether substantial amounts of Common
Stock will be sold in the open market in anticipation of, or following, the
proposed Separation. Any sales of substantial amounts of Common Stock in the
public market, or the perception that such sales might occur, whether as a
result of the proposed Separation or otherwise, could have a material adverse
effect on the market price of the Common Stock.
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UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement (the
"Underwriting Agreement"), each of the underwriters named below, for whom
Donaldson, Lufkin & Jenrette Securities Corporation, Dean Witter Reynolds Inc.,
Howard, Weil, Labouisse, Friedrichs Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase from the Company the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITERS COMMON STOCK
----------------------------------------------------------------------- ------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation....................
Dean Witter Reynolds Inc. .............................................
Howard, Weil, Labouisse, Friedrichs Incorporated.......................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................................
----------
Total........................................................ 3,000,000
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to the satisfaction of certain conditions, including consummation of the
Consolidation Transactions and the Offering Related Transactions, the execution
and delivery by the Company and Trinity of the Separation and Related
Agreements, the delivery of certain legal opinions and the accuracy of certain
representations and warranties made by the Company and Trinity. The nature of
the Underwriters' obligations under the Underwriting Agreement is such that they
are obligated to purchase all of the shares of Common Stock offered (other than
the shares subject to the Over-Allotment Option described below) if any are
purchased.
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public initially at the Price to the
Public set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share and that the
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share on sales to other dealers. After the initial public
offering of the shares of Common Stock, the offering price and the concessions
and discounts to dealers may be changed by the Representatives.
Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters the Over-Allotment Option, exercisable for 30 days from the date of
this Prospectus, to purchase up to an aggregate of 450,000 additional shares of
Common Stock from the Company at the Price to the Public set forth on the cover
page hereof, less underwriting discounts and commissions. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if any,
made in connection with the sale of the shares of Common Stock in the Offering.
To the extent that such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of additional shares as the number of shares set forth opposite the
name of such Underwriter in the above table bears to 3,000,000 shares, on the
same terms as those on which the 3,000,000 shares are being sold.
The Company and Trinity have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to losses in respect thereof.
The Company and Trinity have agreed that they will not offer or sell any
shares of Common Stock for a period of 180 days from the date of this Prospectus
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation (except, in the case of the Company, for the grant of Awards under
the 1996 Stock Option and Incentive Plan or issuances of stock upon exercise of
or otherwise pursuant to such Awards and upon exercise of Converted Options,
and, in the case of Trinity, in connection with the proposed Separation).
72
<PAGE> 74
The Representatives have advised the Company that the Underwriters will not
confirm sales of shares of Common Stock to accounts over which they exercise
discretionary authority.
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the shares of Common Stock will be
determined by negotiations between the Company and the Representatives. Among
the principal factors to be considered in determining the initial public
offering price will be prevailing economic prospects, the sales, earnings and
financial and operating performance of the Company in recent periods, the
estimates of future business potential and earnings prospects, market valuations
of companies in related businesses and the history and prospects for the
industries in which the Company competes. Additionally, consideration will be
given to the general condition of the securities markets, the market for new
issues of securities and the demand for securities of comparable companies at
the time the Offering is made. There can be no assurance that an active trading
market will develop for the Common Stock or that the Common Stock will trade in
the public market subsequent to the Offering at or above the initial public
offering price.
The shares of Common Stock have been approved for listing on the NYSE under
the symbol "HLX", subject to official notification of issuance.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Baker & Botts, L.L.P., Dallas,
Texas. Certain legal matters in connection with the sale of the Common Stock
offered hereby will be passed upon for the Underwriters by Thompson & Knight, A
Professional Corporation, Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company as of March 31, 1995
and 1996 and for the fiscal years ended March 31, 1994, 1995 and 1996, included
in this Prospectus and the Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein and in the Registration Statement, and are so included in
reliance on such report given upon the authority of such firm as experts in
auditing and accounting.
73
<PAGE> 75
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
shares of Common Stock offered by this Prospectus. This Prospectus constitutes a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted from
this Prospectus as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus regarding the contents of any contract,
agreement or other document are not necessarily complete. The material
provisions of each contract, agreement or other document filed with the
Commission as an exhibit to the Registration Statement are described in the
Prospectus; however, reference is made to the exhibit for further information
regarding the contents thereof, and each such statement is qualified in its
entirety by such reference. For further information regarding the Company and
the shares of Common Stock offered hereby, reference is made to the Registration
Statement, including the exhibits thereto.
The Registration Statement, including the exhibits thereto, are available
for inspection at, and copies of such materials may be obtained at prescribed
rates from, the public reference facilities maintained by the Commission at its
principal offices located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its regional offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60601 and
7 World Trade Center, New York, New York 10048.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934. As a result of the Offering, the Company
will become subject to the informational requirements of such act. The Company
will fulfill its obligations with respect to such requirements by filing
periodic reports and other information with the Commission. In addition, the
Company intends to furnish to its stockholders annual reports containing
consolidated financial statements examined by an independent public accounting
firm.
74
<PAGE> 76
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Income and Stockholder's Net Investment.................... F-4
Consolidated Statements of Cash Flows................................................. F-5
Notes to Consolidated Financial Statements............................................ F-6
</TABLE>
F-1
<PAGE> 77
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholder
Halter Marine Group, Inc.
We have audited the accompanying consolidated balance sheets of Halter
Marine Group, Inc. and subsidiaries as of March 31, 1995 and 1996, and the
related consolidated statements of income and stockholder's net investment and
cash flows for each of the three years in the period ended March 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Halter Marine
Group, Inc. and subsidiaries as of March 31, 1995 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended March 31, 1996, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Dallas, Texas
September 20, 1996
F-2
<PAGE> 78
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31
--------------------- JUNE 30,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash.................................................... $ 524 $ 672 $ 657
Contract receivables.................................... 7,287 8,340 8,674
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 71,025 67,905 85,327
Inventories............................................. 6,518 6,063 6,066
Deferred tax benefit.................................... -- 2,865 1,300
Other current assets.................................... 494 387 289
-------- -------- ---------
Total current assets................................. 85,848 86,232 102,313
Property, plant and equipment, net........................ 38,138 54,857 55,185
Other assets.............................................. 285 285 285
-------- -------- ---------
$124,271 $141,374 $ 157,783
======== ======== =========
LIABILITIES AND STOCKHOLDER'S NET INVESTMENT
Current Liabilities:
Accounts payable and accrued liabilities................ $ 3,379 $ 3,799 $ 4,440
Due to an affiliate..................................... 25,426 17,519 29,927
Income taxes payable to an affiliate.................... 9,836 15,785 16,438
Billings in excess of cost and estimated earnings on
uncompleted contracts................................ 1,534 12,528 11,893
Deferred income taxes................................... 4,818 -- --
-------- -------- ---------
Total current liabilities............................ 44,993 49,631 62,698
Long-term note to an affiliate............................ 25,000 25,000 25,000
Stockholder's net investment.............................. 54,278 66,743 70,085
-------- -------- ---------
$124,271 $141,374 $ 157,783
======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE> 79
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND STOCKHOLDER'S NET INVESTMENT
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31 JUNE 30
---------------------------------- ---------------------
1994 1995 1996 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Contract revenue earned............. $275,310 $250,586 $254,294 $ 72,008 $ 85,981
Cost of revenue earned.............. 228,833 207,398 214,559 60,876 74,695
-------- -------- -------- -------- --------
Gross profit........................ 46,477 43,188 39,735 11,132 11,286
Selling, general and administrative
expenses.......................... 12,874 13,471 15,911 4,077 4,832
-------- -------- -------- -------- --------
Operating income.................... 33,603 29,717 23,824 7,055 6,454
Other (income) expenses:
Interest income................... (246) -- -- -- --
Interest expense.................. 2,148 3,844 3,268 1,003 896
Other, net........................ (33) (5) (11) (2) (3)
-------- -------- -------- -------- --------
1,869 3,839 3,257 1,001 893
-------- -------- -------- -------- --------
Income before income taxes.......... 31,734 25,878 20,567 6,054 5,561
Provision (benefit) for income
taxes:
Current........................... 13,057 9,836 15,785 4,644 654
Deferred.......................... (830) 334 (7,683) (2,259) 1,565
-------- -------- -------- -------- --------
12,227 10,170 8,102 2,385 2,219
-------- -------- -------- -------- --------
Net income.......................... 19,507 15,708 12,465 3,669 3,342
Beginning stockholder's net
investment........................ 19,063 38,570 54,278 54,278 66,743
-------- -------- -------- -------- --------
Ending stockholder's net
investment........................ $ 38,570 $ 54,278 $ 66,743 $ 57,947 $ 70,085
======== ======== ======== ======== ========
Pro forma net income per share...... $ 0.70 $ 0.19
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE> 80
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31 JUNE 30
---------------------------------- ---------------------
1994 1995 1996 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating
activities:
Net income........................ $ 19,507 $ 15,708 $ 12,465 $ 3,669 $ 3,342
Adjustments to reconcile net
income to net cash provided
(required) by operating
activities:
Depreciation................... 4,630 5,414 6,744 1,373 1,846
Deferred provision (benefit)
for income taxes............. (830) 334 (7,683) (2,259) 1,565
Net equipment transfers to/from
affiliates................... 374 (1,120) (7,776) -- (132)
Changes in assets and
liabilities:
(Increase) decrease in
contract receivables...... (21,676) 19,954 (1,053) 951 (334)
(Increase) decrease in costs
and estimated earnings in
excess of billings on
uncompleted contracts..... (10,655) (12,825) 3,120 9,618 (17,422)
(Increase) decrease in
inventories............... (1,089) (3,823) 455 (4,093) (3)
(Increase) decrease in other
current assets............ 1,743 (341) 107 92 98
Decrease in other assets..... 1,253 -- -- -- --
Increase (decrease) in
accounts payable and
accrued liabilities....... (1,574) 1,132 420 8,168 641
Increase (decrease) in income
taxes payable............. 2,713 (3,221) 5,949 4,644 653
Increase (decrease) in
billings in excess of cost
and estimated earnings on
uncompleted contracts..... (22,571) (6,409) 10,994 (153) (635)
-------- -------- -------- -------- --------
Total adjustments....... (47,682) (905) 11,277 18,341 (13,723)
-------- -------- -------- -------- --------
Net cash provided (required) by
operating activities......... (28,175) 14,803 23,742 22,010 (10,381)
Cash flows from investing
activities:
Capital expenditures.............. (3,529) (6,405) (5,568) (404) (2,623)
Disposals of equipment............ 89 68 -- -- 581
Payment for purchase of
acquisitions................... -- (4,106) (10,119) -- --
-------- -------- -------- -------- --------
Net cash required by investing
activities................... (3,440) (10,443) (15,687) (404) (2,042)
Cash flows from financing
activities:
Net borrowings from (repayments
to) parent..................... 31,300 (4,057) (7,907) (21,581) 12,408
-------- -------- -------- -------- --------
Net cash provided (required) by
financing activities......... 31,300 (4,057) (7,907) (21,581) 12,408
-------- -------- -------- -------- --------
Net increase (decrease) in cash..... (315) 303 148 25 (15)
Cash at beginning of period......... 536 221 524 524 672
-------- -------- -------- -------- --------
Cash at end of period............... $ 221 $ 524 $ 672 $ 549 $ 657
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE> 81
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
1. GENERAL INFORMATION
Halter Marine Group, Inc. (the "Company") is a Delaware corporation
incorporated on June 24, 1996. Prior to or concurrently with the initial public
offering (the "Offering") of shares of common stock of the Company (the "Common
Stock"), the Company will consummate the Consolidation Transactions. These
transactions include (i) the transfer to the Company of the stock of each
subsidiary of Trinity Industries, Inc. ("Trinity") that has assets and
liabilities through which Trinity has historically conducted its businesses of
construction, repair, and conversion of primarily ocean-going vessels for the
governmental and commercial markets and (ii) the transfer to subsidiaries of the
Company of certain assets and liabilities of Trinity related to the businesses
of the Company and (iii) the assumption by the Company of the indebtedness of
Trinity associated with the Company Businesses (which totalled $25.0 million as
of June 30, 1996).
Trinity has announced that it currently contemplates divesting itself of
its remaining ownership in the Company (the "Separation"). The form and other
terms of the proposed Separation are subject to the approval of the Board of
Directors of Trinity (the "Trinity Board"). The proposed Separation could be
accomplished by means of either a non-taxable or taxable transaction. The
proposed Separation will be subject to various conditions, including the absence
of any events or developments that cause the Trinity Board to determine, in its
sole discretion, that the proposed Separation is not in the best interests of
Trinity or its stockholders. If the proposed Separation is to be accomplished by
means of a non-taxable transaction (which could take the form of either an
exchange offer or a distribution to Trinity's stockholders), such transaction
also will be subject to the receipt of a favorable private letter ruling from
the Internal Revenue Service (the "IRS") to the effect that the proposed
Separation will qualify as a tax-free transaction for federal income tax
purposes under Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The Consolidated Financial Statements include the accounts of the Company
and its wholly owned subsidiaries, and have been prepared using Trinity's
historical basis in the assets and liabilities of the Company. All significant
intercompany accounts and transactions have been eliminated. The consolidated
financial statements reflect the results of operations, financial condition and
cash flows of the Company as a component of Trinity and may not be indicative of
actual results of operations and financial position of the Company under other
ownership. Management believes that the consolidated income statements include a
reasonable allocation of the administrative costs incurred by Trinity on the
Company's behalf. These costs include payroll services, benefits administration,
and cash management. The allocations of such costs to the Company were
approximately $1.4 million, $1.7 million, and $1.8 million in 1994, 1995 and
1996, respectively, and approximately $0.5 million and $0.6 million for the
three months ended June 30, 1995 and 1996, respectively.
Additionally, the Company provides administrative services for Trinity's
Inland Marine division in the areas of accounting, human resources, marketing
and public relations. The allocation of such costs to the Inland Marine division
were approximately $2.0 million, $2.0 million and $2.6 million in 1994, 1995 and
1996, respectively, and approximately $0.6 million and $0.8 million for the
three months ended June 30, 1995 and 1996, respectively.
The interim consolidated financial statements, marked unaudited, have been
prepared from the books and records of the Company. In the opinion of the
Company, all adjustments, consisting only of normal and recurring adjustments
necessary to a fair presentation of the financial position of the Company as of
June 30, 1996, the results of operations for the three month periods ended June
30, 1995 and 1996, and cash flows for
F-6
<PAGE> 82
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
the three month periods ended June 30, 1995 and 1996, in conformity with
generally accepted accounting principles, have been made.
(b) Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Construction Contracts
The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues of construction contracts are
measured by the percentage of labor hours incurred to date to estimated total
labor hours for each contract. Management considers expended labor hours to be
the best available measure of progress on these contracts. Changes in estimated
profitability may result in revisions to income and costs and are recognized in
the period in which the revisions are determined. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined. Other changes, including those arising from contract penalty
provisions, and final contract settlements are recognized in the period in which
the revisions are determined.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs and depreciation costs. Selling, general, and
administrative costs are charged to expense as incurred.
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in excess of amounts
billed. The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenues recognized.
For income tax purposes, the Company reports contract profits as earned
under the percentage of completion capitalized cost method as originally
prescribed by the Tax Reform Act of 1986 and subsequently modified by the
Revenue Act of 1987 and the Technical and Miscellaneous Revenue Act of 1988.
(d) Inventories
Inventories are valued at the lower of cost or market. Inventory cost is
determined principally on the specific identification method. Market is
replacement cost or net realizable value.
(e) Depreciation
Additions to property, plant and equipment are recorded at cost.
Depreciation and amortization are generally computed by the straight-line method
on the estimated useful lives of the assets which range from 3 to 30 years for
buildings and improvements and 2 to 28 years for machinery and equipment. The
costs of ordinary maintenance and repair are charged to expense, while renewals
and major replacements are capitalized.
(f) New Accounting Standards
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be disposed of," ("SFAS No. 121") was issued. Adoption
F-7
<PAGE> 83
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
is required for the Company beginning in fiscal 1997. The Company does not
believe that the adoption of this Statement will have a significant impact on
the Company.
Effective April 1, 1996 the Company adopted SFAS No. 121 and there was no
impact.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," was issued. The disclosure
requirements of this Statement are effective for the Company's financial
statements beginning in fiscal 1997. The Company intends to continue to apply
the accounting provisions of APB Opinion 25, "Accounting for Stock Issued to
Employees." With the Company's plan of adoption, the impact will be limited to
additional footnote disclosure.
(g) Allocation of Expenses
Indirect manufacturing costs are allocated on the basis of labor hours
incurred on the respective contracts.
(h) Pro Forma Net Income Per Share
Pro forma net income for the year ended March 31, 1996 and the three months
ended June 30, 1996 is $12.6 million and $3.4 million, respectively, and
reflects a reduction in interest expense, net of tax, resulting from the use of
the net proceeds of the Offering to retire outstanding debt at the beginning of
the period.
3. BUSINESS ACQUISITIONS
The Company made certain business acquisitions during fiscal 1995 and 1996.
All have been accounted for by the purchase method. The operations of these
companies have been included in the consolidated financial statements from the
effective dates of the acquisitions.
In fiscal 1995, the Company acquired 100 percent of the common stock of
Gulf Coast Fabrication, Inc., a company engaged in the manufacture and repair of
marine vessels. The purchase price of approximately $4.1 million was allocated
entirely to assets acquired.
In fiscal 1996, the Company acquired the assets of American Marine
Corporation (now known as Gulf Repair) and CBI NA-Con, Inc. (now known as
Pascagoula). The assets of these businesses are utilized in the manufacture and
repair of marine products. The aggregate purchase price of approximately $10.1
million was allocated entirely to the assets acquired. Contribution of these
acquisitions to revenues and operating profit during fiscal 1996 is not
material.
F-8
<PAGE> 84
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
MARCH 31
--------------------- JUNE 30
1995 1996 1996
-------- -------- --------
<S> <C> <C> <C>
(IN THOUSANDS)
Costs incurred on uncompleted contracts............ $364,426 $479,811 $519,510
Estimated earnings................................. 82,275 110,558 119,841
-------- -------- --------
446,701 590,369 639,351
Less billings to date.............................. 377,210 534,992 565,917
-------- -------- --------
$ 69,491 $ 55,377 $ 73,434
======== ======== ========
Included in accompanying balance sheet under the following
captions:
Costs and estimated earnings in excess of
billings on uncompleted contracts............. $ 71,025 $ 67,905 $ 85,327
Billings in excess of costs and estimated
earnings on uncompleted contracts............. 1,534 12,528 11,893
-------- -------- --------
$ 69,491 $ 55,377 $ 73,434
======== ======== ========
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
MARCH 31
-------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land............................................................. $ 3,213 $ 5,686
Buildings and improvements....................................... 17,042 23,660
Machinery and equipment.......................................... 42,891 58,874
Construction in progress......................................... 5,881 3,688
------- -------
69,027 91,908
Less accumulated depreciation.................................... 30,889 37,051
------- -------
Property, plant and equipment, net............................... $38,138 $54,857
======= =======
</TABLE>
6. RELATED PARTY TRANSACTIONS
John Dane III, Chief Executive Officer and a director of the Company,
acquired 25% of the stock of United States Marine, Inc. ("USMI") in June 1996.
Mr. Dane has the option to acquire up to an additional 50% of the stock of USMI
over the next five years. USMI performs services for the Company as a
subcontractor with respect to the production of high speed composite vessels for
the U.S. Navy. During 1994, 1995 and 1996, the Company paid USMI fees of
approximately $10.6 million, $3.9 million and $5.5 million for subcontractor
services. During the three months ended June 30, 1996, the Company paid USMI
fees of approximately $2.2 million.
The aggregate amount of intercompany indebtedness owed by the Company to
Trinity at March 31, 1996 was $42.5 million (excluding income taxes payable) of
which $25 million represents a long-term note due September 30, 1997 at an
interest rate of prime minus 1% (7.25% at March 31, 1996) and approximately
$17.5 million, due upon demand, which represents the net current liability from
Trinity's cash management practices of centralizing payment of accounts payable
and accrued liabilities, and centralizing cash receipts. Trinity charges the
Company interest on the net current liability at prime minus 1%. Subsequent to
the
F-9
<PAGE> 85
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Offering it is anticipated that the Company will repay the net current liability
through cash generated by operations in the ordinary course of business, and in
any event no later than 60 days after the consummation of the Offering, as it
replaces such liability with its own direct trade payables and similar
obligations.
Prior to or concurrently with the consummation of the Offering, the Company
will engage in certain other transactions (the "Offering Related Transactions").
The Offering Related Transactions include (i) the entering into by the Company
of the new $105.0 million to $125.0 million Credit Facility and (ii) the
borrowing by the Company under the Credit Facility to repay (x) a $25.0 million
note to Trinity and (y) $25.0 million of certain indebtedness of Trinity
associated with the Company Businesses and assumed by the Company in connection
with the Consolidation Transactions.
In connection with the Offering, the Company and Trinity will enter into
various agreements for the purpose of establishing the terms governing their
ongoing arrangements and relationships, including a separation agreement, an
income tax allocation agreement and a trademark license agreement. In addition,
the Company will build inland hopper barges under a limited arrangement with
Trinity.
7. STOCK OPTIONS
Trinity has a Stock Option and Incentive Plan (the "Trinity Plan") which
provides that incentive or non-qualified stock options for a maximum of
1,500,000 shares of common stock may be granted to directors, officers and key
employees. Incentive options may be granted over a period not to exceed ten
years at a price not less than fair market value on the date of grant. The
Trinity Plan provides that to the extent options granted are forfeited, expire
or canceled, they may again be granted pursuant to the provisions of the Trinity
Plan. The Trinity Plan provides that if shares already owned by the optionee are
surrendered as full or partial payment of the exercise price of an option, a new
option (the "Reload Option") may be granted equal to the number of shares
surrendered. The exercise price of Reload Options shall be the fair market value
of Trinity common stock on the effective date of the grant.
As of March 31, 1996, there were 86,415 incentive and 162,355 non-incentive
Trinity stock options outstanding to employees of the Company with a total
exercise value of $6,221,948 at exercise prices ranging from $16.00 to $38.38
per share of which 105,392 options were exercisable.
If the proposed Separation is consummated, the Company expects to assume
such Trinity stock options ("Converted Options") held by employees of the
Company. The Converted Options would provide for the purchase of a number of
shares of Common Stock equal to the number of shares of Trinity stock multiplied
by the Conversion Ratio, as defined. Furthermore, the per share exercise price
of each Converted Option would equal the per share exercise price of the
applicable Trinity option as of the date of the Separation divided by the
Conversion Ratio. No compensation expense is expected to result from assumption
of the Converted Options. However, if the Separation is accomplished by means
other than a distribution to Trinity stockholders, compensation expense may be
recorded based on the excess of the then current market price of Trinity stock
over the exercise price of the Trinity stock options. Such compensation expense
at June 30, 1996 would have been $1,963,000.
Pending the proposed Separation, Trinity stock options held by employees of
the Company will remain outstanding in accordance with the terms of the Trinity
Plan. Upon the exercise of a Trinity stock option by an employee of the Company
at any time prior to the proposed Separation, the Company will pay to Trinity an
amount in cash equal to the excess, if any, of (i) the Market Value, as defined,
of the purchased shares on the date of exercise of such option over (ii) the
exercise price paid for such shares.
The Company will establish the 1996 Stock Option and Incentive Plan (the
"1996 Plan") which will provide for awards to employees and directors in the
form of grants of stock options, stock appreciation rights ("SARs"), restricted
or non-restricted stock or units denominated in stock ("Stock Awards"),
collectively
F-10
<PAGE> 86
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
"Awards". The 1996 Plan will provide that shares of Common Stock which are the
subject of Awards granted under the 1996 Plan that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a manner
such that all or some of the shares covered thereby are not issued or are
exchanged for Awards that do not involve Common Stock will again immediately
become available for Awards under the 1996 Plan.
8. EMPLOYEE BENEFIT PLANS
The Company's employees are included in pension plans sponsored by Trinity
which provide income and death benefits for eligible employees. Trinity's policy
is to fund retirement costs accrued to the extent such amounts are deductible
for income tax purposes. Plan assets include cash, short-term debt securities,
and other investments. Benefits are based on years of credited service and
compensation.
The Company's share of net periodic pension expense for fiscal 1996
included the following components:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Service cost-benefits earned during the period....................... $ 598
Interest cost on projected benefit obligation........................ 386
Actual return on assets.............................................. (1,112)
Net amortization and deferral........................................ 699
Accrual of profit sharing contribution............................... 614
--------
Net periodic pension expense......................................... $ 1,185
========
</TABLE>
The Company's share of net periodic pension expense for 1994 and 1995 was
approximately $875 and $1,101, respectively. Included in these amounts is the
accrual of profit sharing contribution.
Amounts recognized in the Company's consolidated balance sheet and included
in due to an affiliate follow:
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation............................................ $3,484
======
Accumulated benefit obligation....................................... $4,452
======
Projected benefit obligation........................................... $6,306
Plan assets at fair value.............................................. 5,931
------
Projected benefit obligation in excess of plan assets.................. (375)
Unrecognized net asset at April 1, 1985................................ (75)
Unrecognized net loss.................................................. 1,741
------
Prepaid pension expense................................................ $1,291
======
</TABLE>
Assumptions used for the valuation of the projected benefit obligation for
1996 were a discount rate of 7.75%, an increase in compensation levels of 4.75%
and an expected long-term rate of return on assets of 9.0%.
It is contemplated that, upon consummation of the Offering, a separate
pension plan will be established for the Company's employees and the assets
attributable to benefits accrued by employees of the Company under the Trinity
pension plans will be transferred to a separate trust.
F-11
<PAGE> 87
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Trinity has a contributory profit sharing plan in which employees of the
Company may participate. Under the plan, eligible employees are allowed to make
voluntary pre-tax contributions. The contribution to this plan, as defined, is
based on consolidated earnings and dividends of Trinity. It is contemplated that
upon consummation of the Offering, a separate contributory profit sharing plan
will be established for the Company's employees and the assets attributable to
benefits accrued by employees of the Company under the Trinity contributory
profit sharing plan will be transferred to a separate trust.
9. INCOME TAXES
Effective April 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." This Statement
requires a change from the deferred to the liability method of computing income
taxes. The cumulative effect of applying FAS 109 at the date of adoption was
insignificant.
The entities comprising the Company are included in the consolidated
federal income tax return of Trinity. Trinity has charged an amount equal to the
income tax payments that the Company would have been obligated to pay if it had
filed a separate tax return. At the time of the consummation of the Offering,
the Company and Trinity will enter into a Tax Allocation Agreement pursuant to
which the Company and Trinity will agree upon the allocation of certain tax
liabilities and related matters. Under the Tax Allocation Agreement the balance
reflected as income tax payable to Trinity will be paid out of the net proceeds
of the Offering.
The significant components of the provision (benefit) for income taxes
follow:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
-----------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal............................................... $11,285 $ 8,174 $13,475
State................................................. 1,772 1,662 2,310
------- ------- -------
13,057 9,836 15,785
Deferred
Federal............................................... (830) 334 (6,692)
State................................................. -- -- (991)
------- ------- -------
(830) 334 (7,683)
------- ------- -------
Total......................................... $12,227 $10,170 $ 8,102
======= ======= =======
</TABLE>
F-12
<PAGE> 88
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Deferred income tax was provided in the financial statements for temporary
differences between financial and taxable income. The components of deferred
liabilities and assets follow:
<TABLE>
<CAPTION>
MARCH 31
-------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Excess of tax depreciation over financial statement
depreciation................................................ $(3,221) $(2,771)
Profits on long-term contracts recorded on the percentage of
completion method for financial purposes and related
items....................................................... (984) --
Pensions and other benefits.................................... (579) (711)
------- ------
Total deferred tax liabilities......................... (4,784) (3,482)
------- ------
Deferred tax assets:
Profits on long-term contracts recorded on the percentage of
completion method for financial purposes and related
items....................................................... -- 5,406
State taxes.................................................... -- 991
Other.......................................................... (34) (50)
------- ------
Total deferred tax assets.............................. (34) 6,347
------- ------
Net deferred tax asset (liability)............................... $(4,818) $ 2,865
======= ======
</TABLE>
The reconciliation between the effective tax rate and the statutory tax
rate is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory rate................................................. 35.0% 35.0% 35.0%
State taxes.................................................... 3.7 4.2 4.2
Other.......................................................... (0.2) 0.1 0.2
---- ---- ----
Effective tax rate............................................. 38.5% 39.3% 39.4%
==== ==== ====
</TABLE>
10. STOCKHOLDER RIGHTS PLAN
Prior to the consummation of the Offering, the Company will adopt a
Stockholder Rights Plan pursuant to which one right will be issued with respect
to each share of Common Stock. Each right entitles the stockholder to purchase
from the Company one one-hundredth of a share of Series A Preferred Stock at an
exercise price to be determined by the Board when the rights are issued. The
rights are not exercisable or detachable from the common stock until ten
business days after a person acquires beneficial ownership of fifteen percent or
more of the Common Stock or if a person or group commences a tender or exchange
offer upon consummation of which that person or group would beneficially own
fifteen percent or more of the common stock.
If any person becomes a beneficial owner of fifteen percent or more of the
Common Stock other than pursuant to an offer, as defined, for all shares
determined by certain directors to be fair to the stockholders and otherwise in
the best interests of both the Company and its stockholders (other than by
reason of share purchases by the Company), each right not owned by that person
or related parties enables its holder to purchase, at the right's then current
exercise price, shares of the Company's common stock having a calculated value
of twice the right's exercise price. Beneficial ownership of Common Stock by
Trinity will not trigger any such purchase rights unless Trinity first ceases to
be the beneficial owner of fifteen percent or more of the Common Stock and
thereafter again becomes the beneficial owner of fifteen percent of the Common
Stock.
F-13
<PAGE> 89
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
The rights which are subject to adjustment, may be redeemed by the Company
at a price of one cent per right at any time prior to their expiration ten years
from issuance or the point at which they become exercisable.
11. SIGNIFICANT CUSTOMERS
In fiscal 1994, contract revenue earned includes revenues from three
customers which accounted for 30.2%, 18.8%, and 14.7%, respectively, of
consolidated contract revenue earned. Also in fiscal 1994, contract revenue
earned includes revenues from foreign governments which accounted for 12.9% of
consolidated contract revenue earned.
In fiscal 1995, contract revenue earned includes revenues from two
customers which accounted for 38.8% and 10.2%, respectively, of consolidated
contract revenue earned. Also in fiscal 1995, contract revenue earned includes
revenues from foreign governments which accounted for 13.6% of consolidated
contract revenue earned.
Contract revenue earned includes revenues from one customer which accounted
for 47.3% of consolidated contract revenue earned in fiscal 1996.
12. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the aggregate
will not have a material adverse affect on the Company's financial statements.
As of July 31, 1996, Trinity has guaranteed contract performance
obligations of the Company in the aggregate amount of approximately $66.1
million and the Company has outstanding contract bid and performance bonds and
similar obligations issued by third parties with Trinity as the obligor with an
aggregate face amount of approximately $74.9 million. After the Offering, the
Company will be obligated to indemnify Trinity against any liability under its
outstanding guarantees and any liability under the bonds, letters of credit and
similar obligations under which Trinity is the obligor of the Company's contract
performance obligations. Trinity will be granted security interests in certain
assets of the Company which relate to the Company contracts from which such
obligations arise and will possess rights to complete performance of any such
contract on behalf of the Company in the event of nonperformance by the Company.
Such rights and remedies are similar to the rights possessed by surety companies
that have issued performance bonds on behalf of the Company.
13. SUPPLEMENTARY UNAUDITED QUARTERLY DATA
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1995:
Contract revenue earned................... $64,871 $49,026 $82,608 $54,081 $250,586
Gross profit.............................. 11,135 10,131 10,604 11,318 43,188
Net income................................ 4,237 3,674 3,805 3,992 15,708
Year ended March 31, 1996:
Contract revenue earned................... $72,008 $53,904 $56,625 $71,757 $254,294
Gross profit.............................. 11,132 7,943 10,848 9,812 39,735
Net income................................ 3,669 2,419 3,757 2,620 12,465
</TABLE>
F-14
<PAGE> 90
[HALTER MARINE LOGO]
[Picture of oceanographic research ship]
Halter Marine builds several types of small to medium sized vessels for the
U.S. Navy. The above 325-foot oceanographic research ship was constructed by
the Company to meet demanding performance and reliability criteria and is used
by the U.S. Navy to study and explore the oceans.
[Picture of logistical [Picture of Mark V
support vessel] patrol craft]
Halter Marine is one of the world's Halter Marine also constructs patrol
most experienced builders of vessels boats for foreign governments and
for government and military use. the U.S. Navy such as the above
The above 273-foot logistical support 82-foot Mark V high speed special
vessel was constructed by the Company operations craft for the Navy
for the U.S. Army. Seals.
<PAGE> 91
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
The Company........................... 14
Separation From Trinity............... 14
Use of Proceeds....................... 16
Dividend Policy....................... 16
Dilution.............................. 17
Capitalization........................ 18
Selected Consolidated Financial
Data................................ 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 27
Management............................ 48
Certain Transactions and Related
Arrangements........................ 59
Principal Stockholder................. 64
Description of Capital Stock.......... 64
Shares Eligible for Future Sale....... 71
Underwriting.......................... 72
Legal Matters......................... 73
Experts............................... 73
Available Information................. 73
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
---------------------
UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,000,000 SHARES
LOGO
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH & CO.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 92
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a statement of estimated expenses to be incurred in
connection with the issuance and distribution of the securities being registered
pursuant to this Registration Statement, other than underwriting discounts and
commissions.
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Securities and Exchange Commission registration fee....................... $ 103,449
National Association of Securities Dealers, Inc. filing fee............... 30,500
Printing and engraving fees and expenses.................................. 300,000
Legal fees and expenses................................................... 300,000
Accounting fees and expenses.............................................. 165,000
Transfer agent and registrar fees and expenses............................ 10,000
Blue sky fees and expenses................................................ 20,000
NYSE listing fee.......................................................... 50,000
Miscellaneous............................................................. 91,051
----------
Total........................................................... $1,070,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Delaware General Corporation Law
Section 145(a) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
II-1
<PAGE> 93
to in subsections (a) and (b) of Section 145, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of Section 145. Such determination shall be
made (1) by the board of directors by a majority vote of directors who were not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Certificate of Incorporation
The Certificate of Incorporation of the Company, a copy of which is filed
as Exhibit 3.1 to the Registration Statement, provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except, if required
by the DGCL as amended from time to time, for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, which concerns
unlawful payments of dividends, stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of such provision will eliminate or reduce the
effect of such provision in respect of any matter occurring, or any cause of
action, suit or claim that, but for such provision, would accrue or arise, prior
to such amendment or repeal.
While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.
The Certificate provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent, will be indemnified and held harmless by the Company
to the fullest extent authorized by the DGCL, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, amounts paid or to be paid in settlement and excise
taxes or penalties arising under ERISA) reasonably incurred or suffered by such
person in connection therewith. Such right to indemnification includes the right
to have the Company pay the expenses incurred in defending any such proceeding
in advance of its final disposition, subject to the provisions of the DGCL. Such
rights are not exclusive of any other right which any
II-2
<PAGE> 94
person may have or thereafter acquire under any statute, provision of the
Certificate, By-Laws, agreement, vote of stockholders or disinterested directors
or otherwise. No repeal or modification of such provision will in any way
diminish or adversely affect the rights of any director, officer, employee or
agent of the Company thereunder in respect of any occurrence or matter arising
prior to any such repeal or modification. The Certificate also specifically
authorizes the Company to maintain insurance and to grant similar
indemnification rights to employees or agents of the Company.
Bylaws
The Bylaws of the Company, a copy of which is filed as Exhibit 3.2 to the
Registration Statement, provide that each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceedings is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent shall be indemnified and held harmless by the Company
to the fullest extent authorized by the DGCL, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability or loss (including attorneys'
fees, judgments, fines, amounts paid or to be paid in settlement and excise
taxes or penalties arising under ERISA) reasonably incurred or suffered by such
person in connection therewith, and such indemnification shall continue as to a
person who has ceased to serve in the capacity which initially entitled such
person to indemnity thereunder and shall inure to the benefit of such person's
heirs, executors and administrators. Such right to indemnification includes the
right to have the Company pay the expenses incurred in defending any such
proceeding in advance of its final disposition, subject to the provisions of the
DGCL. Such rights are not exclusive of any other right which any person may have
or thereafter acquire under any statute, provision of the Certificate, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise. No
repeal or modification of such provision will in any way diminish or adversely
affect the rights of any director, officer, employee or agent of the Company
thereunder in respect of any occurrence or matter arising prior to any such
repeal or modification. The Bylaws also specifically authorize the Company to
maintain insurance to protect itself and any director, officer, employee or
agent of the Company.
Indemnification Agreements
The Company has entered into Indemnification Agreements pursuant to which
it will indemnify certain of its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
incurred as a result of the fact that any director or officer, in his capacity
as such, is made or threatened to be made a party to any suit or proceeding.
Such persons will be indemnified to the fullest extent now or hereafter
permitted by the DGCL. The Indemnification Agreements will also provide for the
advancement of certain expenses to such directors and officers in connection
with any such suit or proceeding.
Underwriting Agreement
The Underwriting Agreement, the form of which is filed as Exhibit 1.1 to
the Registration Statement, provides for the indemnification of the directors
and officers of the Company against certain liabilities, including liabilities
arising under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Prior to the Offering, the Company will issue 15,000,000 shares of Common
Stock to Trinity in consideration for the transfer of assets to the Company in
connection with the Consolidation Transactions. The Company will rely on the
exemption from registration set forth in Section 4(2) of the Securities Act for
this transaction.
II-3
<PAGE> 95
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
1* -- Form of Underwriting Agreement
3.1* -- Form of Restated Certificate of Incorporation of Halter Marine Group,
Inc. (the "Company"), as amended
3.2* -- Form of Amended and Restated Bylaws of the Company
3.3* -- Form of Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company
4.1* -- Form of Certificate evidencing Common Stock
5* -- Opinion of Baker & Botts, L.L.P.
10.1* -- Form of 1996 Stock Option and Incentive Plan of the Company
10.2* -- Form of Separation Agreement between the Company and Trinity
Industries, Inc.
10.3 -- Intentionally Omitted
10.4* -- Form of Tax Sharing and Tax Benefit Reimbursement Agreement between
the Company and Trinity Industries, Inc.
10.5* -- Form of Trademark License Agreement between the Company and Trinity
Industries, Inc.
10.6* -- Form of Rights Agreement between the Company and The Bank of New
York, as Rights Agent
10.7* -- Form of Noncompetition Agreement between the Company and John Dane
III
10.8* -- Form of Credit Agreement among the Company and certain Lenders
10.9* -- Form of Inland Barge Agreement between Halter Marine, Inc. and
Trinity Marine Products, Inc.
10.10* -- Form of Executive Severance Agreement between the Company and John
Dane III
10.11* -- Form of Executive Severance Agreement between the Company and Vincent
R. Almerico
10.12* -- Form of Executive Severance Agreement between the Company and Harvey
B. Walpert
10.13* -- Form of Executive Severance Agreement between the Company and Wayne
Bourgeois
10.14* -- Form of Executive Severance Agreement between the Company and Sidney
C. Mizell
10.15* -- Form of Executive Severance Agreement between the Company and Anil
Raj
10.16* -- Form of Executive Severance Agreement between the Company and Keith
L. Voigts
10.17* -- Form of Indemnification Agreement between the Company and John Dane
III
10.18* -- Form of Indemnification Agreement between the Company and Vincent R.
Almerico
10.19* -- Form of Indemnification Agreement between the Company and Harvey B.
Walpert
10.20* -- Form of Indemnification Agreement between the Company and Wayne
Bourgeois
10.21* -- Form of Indemnification Agreement between the Company and Sidney C.
Mizell
10.22* -- Form of Indemnification Agreement between the Company and Anil Raj
10.23* -- Form of Indemnification Agreement between the Company and Keith L.
Voigts
10.24* -- Form of Indemnification Agreement between the Company and F. Dean
Phelps, Jr.
10.25* -- Form of Indemnification Agreement between the Company and Kenneth W.
Lewis
10.26* -- Form of Indemnification Agreement between the Company and Rick S.
Rees
</TABLE>
II-4
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<S> <S>
10.27* -- Form of Indemnification Agreement between the Company and John T.
Sanford
10.28* -- Form of Indemnification Agreement between the Company and Timothy R.
Wallace
10.29* -- Form of Indemnification Agreement between the Company and W. Ray
Wallace
10.30* -- Form of Indemnity and Security Agreement between Trinity Industries,
Inc. and the Company
10.31* -- Exchange Agreement between Trinity Industries, Inc. and the Company
10.32* -- Assumption Agreement between Trinity Industries, Inc. and the Company
21* -- Subsidiaries of the Company
23.1* -- Consent of Ernst & Young LLP
23.2* -- Consent of Baker & Botts, L.L.P. (contained in the opinion filed as
Exhibit 5 to this Registration Statement)
24*** -- Powers of Attorney (contained on the signature page of Amendment No.
1 to this Registration Statement)
27*** -- Financial Data Schedule
99.1** -- Consent of Rick S. Rees as Director Nominee
99.2** -- Consent of Kenneth W. Lewis as Director Nominee
99.3* -- Form of Agreement between Trinity Industries, Inc. and the
Underwriters
</TABLE>
- ---------------
* Filed herewith
** Previously filed as an exhibit to Amendment No. 2 to the Registration
Statement filed on September 5, 1996 with the Securities and Exchange
Commission
*** Previously filed as an exhibit to Amendment No. 1 to the Registration
Statement filed on August 19, 1996 with the Securities and Exchange
Commission
(b) Financial Statement Schedules
NONE
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 97
The undersigned Registrant also undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 98
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on September 23, 1996.
HALTER MARINE GROUP, INC.
By: /s/ JOHN DANE III
------------------------------
John Dane III
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------- -------------------
<C> <S> <C>
/s/ JOHN DANE III President, Chief Executive September 23, 1996
- --------------------------------------------- Officer (Principal
John Dane III Executive Officer) and a
Director
* Vice President (Principal September 23, 1996
- --------------------------------------------- Financial and
Keith L. Voigts Accounting Officer)
/s/ KENNETH W. LEWIS Director September 23, 1996
- ---------------------------------------------
Kenneth W. Lewis
* Director September 23, 1996
- ---------------------------------------------
F. Dean Phelps, Jr.
/s/ RICK S. REES Director September 23, 1996
- ---------------------------------------------
Rick S. Rees
* Director September 23, 1996
- ---------------------------------------------
John T. Sanford
* Director September 23, 1996
- ---------------------------------------------
Timothy R. Wallace
* Director September 23, 1996
- ---------------------------------------------
W. Ray Wallace
*By: /s/ JOHN DANE III
--------------------------------
John Dane III
Attorney-in-fact
</TABLE>
<PAGE> 99
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
1* -- Form of Underwriting Agreement
3.1* -- Form of Restated Certificate of Incorporation of Halter Marine Group,
Inc., (the "Company") as amended
3.2* -- Form of Amended and Restated Bylaws of the Company
3.3* -- Form of Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company
4.1* -- Form of Certificate evidencing Common Stock
5* -- Opinion of Baker & Botts, L.L.P.
10.1* -- Form of 1996 Stock Option and Incentive Plan of the Company
10.2* -- Form of Separation Agreement between the Company and Trinity
Industries, Inc.
10.3 -- Intentionally Omitted
10.4* -- Form of Tax Sharing and Tax Benefit Reimbursement Agreement between
the Company and Trinity Industries, Inc.
10.5* -- Form of Trademark License Agreement between the Company and Trinity
Industries, Inc.
10.6* -- Form of Rights Agreement between the Company and The Bank of New
York, as Rights Agent
10.7* -- Form of Noncompetition Agreement between the Company and John Dane
III
10.8* -- Form of Credit Agreement among the Company and certain Lenders
10.9* -- Form of Inland Barge Agreement between Halter Marine, Inc. and
Trinity Marine Products, Inc.
10.10* -- Form of Executive Severance Agreement between the Company and John
Dane III
10.11* -- Form of Executive Severance Agreement between the Company and Vincent
R. Almerico
10.12* -- Form of Executive Severance Agreement between the Company and Harvey
B. Walpert
10.13* -- Form of Executive Severance Agreement between the Company and Wayne
Bourgeois
10.14* -- Form of Executive Severance Agreement between the Company and Sidney
C. Mizell
10.15* -- Form of Executive Severance Agreement between the Company and Anil
Raj
10.16* -- Form of Executive Severance Agreement between the Company and Keith
L. Voigts
10.17* -- Form of Indemnification Agreement between the Company and John Dane
III
10.18* -- Form of Indemnification Agreement between the Company and Vincent R.
Almerico
10.19* -- Form of Indemnification Agreement between the Company and Harvey B.
Walpert
10.20* -- Form of Indemnification Agreement between the Company and Wayne
Bourgeois
10.21* -- Form of Indemnification Agreement between the Company and Sidney C.
Mizell
10.22* -- Form of Indemnification Agreement between the Company and Anil Raj
10.23* -- Form of Indemnification Agreement between the Company and Keith L.
Voigts
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
Jr.10.25* -- Form of Indemnification Agreement between the Company and Kenneth W.
Lewis
10.26* -- Form of Indemnification Agreement between the Company and Rick S.
Rees
10.27* -- Form of Indemnification Agreement between the Company and John T.
Sanford
10.28* -- Form of Indemnification Agreement between the Company and Timothy R.
Wallace
10.29* -- Form of Indemnification Agreement between the Company and W. Ray
Wallace
10.30* -- Form of Indemnity and Security Agreement between Trinity Industries,
Inc. and the Company
10.31* -- Exchange Agreement between Trinity Industries, Inc. and the Company
10.32* -- Assumption Agreement between Trinity Industries, Inc. and the Company
21* -- Subsidiaries of the Company
23.1* -- Consent of Ernst & Young LLP
23.2* -- Consent of Baker & Botts, L.L.P. (contained in the opinion filed as
Exhibit 5 to this Registration Statement)
24*** -- Powers of Attorney (contained on the signature page of Amendment No.
1 to this Registration Statement)
27*** -- Financial Data Schedule
99.1** -- Consent of Rick S. Rees as Director Nominee
99.2** -- Consent of Kenneth W. Lewis as Director Nominee
99.3* -- Form of Agreement between Trinity Industries, Inc. and the
Underwriters
</TABLE>
- ---------------
* Filed herewith
** Previously filed as an exhibit to Amendment No. 2 to the Registration
Statement filed on September 5, 1996 with the Securities and Exchange
Commission
*** Previously filed as an exhibit to Amendment No. 1 to the Registration
Statement filed on August 19, 1996 with the Securities and Exchange
Commission
<PAGE> 1
EXHIBIT 1
Draft 9/20/96
3,000,000 SHARES
HALTER MARINE GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin &
Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Halter Marine Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 3,000,000 shares of its Common Stock, $.01 par value
(the "Firm Shares"), to the several underwriters named in Schedule I hereto
(the "Underwriters"). The Company also proposes to issue and sell to the
several Underwriters not more than an additional 450,000 shares of its Common
Stock (the "Additional Shares"), if requested by the Underwriters as provided
in Section 2 hereof. The Firm Shares and the Additional Shares are herein
collectively called the Shares. Except in Section 8(e) hereof and unless the
context otherwise requires, the shares of Common Stock of the Company to be
outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the Common Stock.
Concurrently with the execution and delivery of this Agreement,
Trinity Industries, Inc. ("Trinity") and the several Underwriters are entering
into an agreement dated of even date herewith (the "Trinity Agreement"),
pursuant to which Trinity agrees, among other things, to indemnify the
Underwriters against certain liabilities, including liabilities under the Act
(as hereinafter defined), or to contribute to losses in respect thereof,
subject to the limitations set forth therein. It is understood and agreed that
Trinity is entering into the Trinity Agreement to induce the Underwriters to
execute and deliver this Agreement and consummate the transactions contemplated
hereby.
<PAGE> 2
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on Form S-1 including
a prospectus relating to the Shares, which may be amended. The registration
statement as amended at the time when it becomes effective, including a
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to
as the Registration Statement; and the prospectus in the form first used to
confirm sales of Shares is hereinafter referred to as the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company hereby agrees to issue and sell the Firm
Shares to the several Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a price per share
of $__________ (the "Purchase Price"), the respective number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Underwriters the Additional Shares, and the Underwriters shall
have the right to purchase, severally and not jointly, up to 450,000 Additional
Shares from the Company at the Purchase Price. Additional Shares may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The Underwriters may exercise their
right to purchase Additional Shares in whole or in part from time to time by
giving written notice thereof to the Company within 30 days after the date of
this Agreement. You shall give any such notice on behalf of the Underwriters
and such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Shares are
to be purchased, each Underwriter, severally and not jointly, agrees to
purchase from the Company the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) which bears
the same proportion to the total number of Additional Shares to be purchased
from the Company as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto bears to the total number of Firm Shares.
The Company hereby agrees not to offer, sell, contract to sell, grant
any option to purchase, or otherwise dispose of any common stock of the Company
or any securities convertible into or exercisable or exchangeable for such
common stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any such common stock, except for
(i) the issuance by the Company of shares of common stock of the Company to
Trinity as part of the Consolidation Transactions (as defined in the
Prospectus), as described in Item 15 of Part II of the Registration Statement,
and (ii) the issuance and sale of the Shares to the Underwriters pursuant to
this Agreement, for a period
- 2 -
<PAGE> 3
of 180 days after the date of the Prospectus without the prior written consent
of Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding the
foregoing, during such 180-day period (i) the Company may grant Awards (as
defined in the Prospectus) pursuant to the Company's 1996 Stock Option and
Incentive Plan and may issue shares of Common Stock pursuant to Awards granted
under such plan, (ii) the Company may assume the Converted Options as defined,
and in the manner described, in the Prospectus and may issue shares of Common
Stock upon the exercise of such options and (iii) the Company may issue shares
of Common Stock in connection with the purchase by the Company from time to
time of any properties, assets or securities from a third party.
3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time, on
the fourth business day unless otherwise permitted by the Commission pursuant
to Rule 15c6-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")(the "Closing Date") following the date of the initial public
offering, at such place as you shall designate. The Closing Date and the
location of delivery of and the form of payment for the Firm Shares may be
varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 hereof (an
"Option Closing Date"). Any such Option Closing Date and the location of
delivery of and the form of payment for such Additional Shares may be varied by
agreement between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection
not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date or the applicable Option Closing Date, as the case
may be. Certificates in definitive form evidencing the Shares shall be
delivered to you on the Closing Date or the applicable Option Closing Date, as
the case may be, with any transfer taxes thereon duly paid by the Company, for
the respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire transfer of same day funds to an account
designated by the Company.
5. Agreements of the Company. The Company agrees with you:
(a) If the Registration Statement shall not have become
effective prior to the execution and delivery of this Agreement, to
use commercially reasonable efforts to cause the Registration
Statement to become effective at the earliest possible time.
- 3 -
<PAGE> 4
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when the Registration Statement
has become effective (if the Registration Statement shall not have
become effective prior to the execution and delivery of this
Agreement) and when any post-effective amendment to it becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, and (iv) of the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading in any material respect.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
(c) To furnish to you, without charge, five signed copies
of the Registration Statement as first filed with the Commission and
of each amendment to it, including all exhibits, and to furnish to you
and each Underwriter designated by you such number of conformed copies
of the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to
which you shall reasonably object.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of
the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) above
any event shall occur as a result of which, in the opinion of counsel
for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser, not
misleading in any material respect, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare
and file with the Commission an appropriate amendment or supplement to
the Prospectus so that the statements in the Prospectus, as so amended
or supplemented, will not in the light of the circumstances when it is
so delivered, be misleading in any material respect, or so that the
Prospectus will comply with law, and to furnish to each Underwriter
and to
- 4 -
<PAGE> 5
such dealers as you shall specify, such number of copies thereof as
such Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may request, to continue
such qualification in effect so long as required for distribution of
the Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be
obligated (i) to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified, (ii) to take any action that would
subject it to taxation in any jurisdiction or (iii) to execute a
consent to service of process under the laws of any jurisdiction
(except service of process with respect to the offering and sale of
the Shares).
(h) To make generally available to its stockholders as
soon as reasonably practicable an earnings statement covering a period
of at least 12 months after the effective date of the Registration
Statement (but in no event commencing later than 90 days after such
date) which shall satisfy the provisions of Section 11(a) of the Act,
and to advise you in writing when such statement has been so made
available.
(i) During the period of five years after the date of
this Agreement, (i) to mail as soon as reasonably practicable after
the end of each fiscal year to the record holders of the Common Stock
a financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of stockholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for
the preceding year, certified by independent certified public
accountants, and (ii) to mail and make generally available as soon as
practicable after the end of each quarterly period (except for the
last quarterly period of each fiscal year) to such holders who request
them, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries, if any) as of
the end of and for such period, and for the period from the beginning
of such year to the close of such quarterly period, together with
comparable information for the corresponding periods of the preceding
year, such requirement being satisfied for any such quarterly period
by mailing to such holders the Company's Quarterly Report on Form 10-Q
for such quarterly period filed with the Commission.
(j) During the period referred to in paragraph (i) above,
to furnish to you as soon as available a copy of each report or other
publicly available information of the Company mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
- 5 -
<PAGE> 6
(k) To pay all costs, expenses, fees and taxes incident
to (i) the preparation, printing, filing and distribution under the
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e) above, (iii) the printing and delivery of the Prospectus
and all amendments or supplements to it during the period specified in
paragraph (e) above, (iii) the printing and delivery of this
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents
printed and delivered in connection with the offering of the Shares
(including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in
each case the fees and disbursements of counsel for the Underwriters
relating to such registration or qualification and memoranda relating
thereto), (v) filings and clearance with the National Association of
Securities Dealers, Inc. in connection with the offering, (vi) the
listing of the Shares on the New York Stock Exchange, Inc. ("NYSE")
and (vii) furnishing such copies of the Registration Statement, the
Prospectus and all amendments and supplements thereto as may be
requested in accordance with the provisions of this Agreement for use
in connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold.
(l) To use commercially reasonable efforts to maintain
the listing of the Common Stock on the NYSE (or on any other national
securities exchange) for a period of five years after the effective
date of the Registration Statement.
(m) To use commercially reasonable efforts to do and
perform all things required or necessary to be done and performed
under this Agreement by the Company prior to the Closing Date or any
Option Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission.
(b) (i) Each part of the Registration Statement, when
such part became effective, did not contain and each such part, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Act and (iii) the Prospectus, as amended or
supplemented, if applicable, does not and will not contain, as of the
date of issue thereof, any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the
- 6 -
<PAGE> 7
representations and warranties set forth in this paragraph (b) do not
apply to statements or omissions in the Registration Statement or the
Prospectus, as amended or supplemented, if applicable, based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
second amendment to the registration statement or as part of any
subsequent amendment to the registration statement, or filed pursuant
to Rule 424 under the Act, and each Registration Statement filed
pursuant to Rule 462(b) under the Act, if any, complied when so filed
in all material respects with the Act.
(d) Each of the Company and its Material Subsidiaries (as
hereinafter defined) has been duly incorporated, is validly existing
as a corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority to carry on
its business as it is currently being conducted and to own, lease and
operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole. As used in this
Agreement, "Material Subsidiaries" means the following subsidiaries of
the Company, each of which (after giving effect to the Consolidation
Transactions) is a significant subsidiary, as defined in Regulation C
of the Commission: Halter Marine, Inc., a Nevada corporation, Gulf
Coast Fabrication, Inc., and Halter Marine Gulfport, Inc. The Company
has no significant subsidiaries (as defined in Regulation C) other
than the Material Subsidiaries.
(e) All the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's Material
Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights and are owned by Trinity; and the Shares have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of the Shares
will not be subject to any preemptive or similar rights.
(g) The authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to the
description thereof contained in the Prospectus.
(h) Neither the Company nor any of its Material
Subsidiaries is (i) in violation of its respective charter or by-laws
or (ii) in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other
- 7 -
<PAGE> 8
evidence of indebtedness or in any other agreement, indenture or
instrument to which the Company or any of its Material Subsidiaries is
a party or by which it or any of its Material Subsidiaries or their
respective property is bound, except for any such default that would
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(i) The execution, delivery and performance by the
Company of this Agreement and the Separation and Related Agreements
(as defined in the Prospectus), compliance by the Company with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may
be required under (i) the Act, (ii) the Exchange Act or (iii) the
securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of the Company or any
of its Material Subsidiaries or any agreement, indenture or other
instrument to which it or any of its Material Subsidiaries is a party
or by which it or any of its Material Subsidiaries or their respective
property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
the Company, any of its Material Subsidiaries or their respective
property.
(j) Except as otherwise set forth in the Prospectus,
there are no material legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any of their respective property is the subject, and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated. No contract or document of a character required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement is not so described
or filed as required.
(k) Neither the Company nor any of its subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder, which in each case
would result in any material adverse change in the business,
prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole.
(l) Each of the Company and its subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business, except where the failure to have such permits would not have
a material adverse effect on the Company and its subsidiaries, taken
as a whole; each of the Company and its subsidiaries has fulfilled and
performed all of its material obligations with respect to
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<PAGE> 9
such permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder
of any such permit, except where such revocation, termination or
impairment would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and, except as described in the
Prospectus, such permits contain no restrictions that are materially
burdensome to the Company or any of its Material Subsidiaries.
(m) Based on the prior experience of the Company and its
subsidiaries with respect to compliance by the Company Businesses (as
defined in the Prospectus) with Environmental Laws, the Company has
reasonably concluded that the costs and liabilities associated with
compliance by the Company with Environmental Laws are not likely to
have, singly or in the aggregate, a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(n) Except as otherwise set forth in the Prospectus or
such as are not material to the business, prospects, financial
condition or results of operation of the Company and its subsidiaries,
taken as a whole, each of the Company and its subsidiaries has good
and defensible title, free and clear of all liens, claims,
encumbrances and restrictions (except (i) liens for taxes not yet due
and payable, (ii) liens existing or arising under law or contract in
favor of surety companies or Trinity and providing security in
connection with obligations of such parties under surety arrangements
or under bid or performance guarantees relating to contractual
obligations of the Company or a subsidiary thereof in the ordinary
course of business or (iii) other liens existing or arising in the
ordinary course of business that are not material to the Company and
its subsidiaries, taken as a whole), to all property and assets
described in the Registration Statement as being owned by it. All
leases to which the Company or any of its Material Subsidiaries is a
party are valid and binding and no default has occurred or is
continuing thereunder, which would result in any material adverse
change in the business, prospects, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, and
the Company and its Material Subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not materially interfere
with the use made by the Company or such Material Subsidiary.
(o) Each of the Company and its subsidiaries maintains
reasonably adequate insurance.
(p) Ernst & Young LLP are independent public accountants
with respect to the Company as required by the Act.
(q) The financial statements, together with related
schedules and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly,
in all material respects, the consolidated financial position, results
of operations and changes in financial position of the Company and its
subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply;
such statements and related schedules
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<PAGE> 10
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and
statistical information and data set forth in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
is, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company.
(r) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) No holder of any security of the Company has any
right to require registration of shares of Common Stock or any other
security of the Company.
(t) The Company has complied with, or is exempt from, the
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida).
(u) There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale
or liens related to or entitling any person to purchase or otherwise
to acquire from the Company or any subsidiary thereof or Trinity any
shares of the capital stock of, or other ownership interest in, the
Company or any subsidiary thereof except as otherwise disclosed in the
Registration Statement.
(v) The Company and its subsidiaries have filed all
applicable federal, state and local tax returns on a timely basis and
paid all such applicable taxes that are shown to be due thereon.
(w) The Company has filed a registration statement
pursuant to Section 12(b) of the Exchange Act to register the Common
Stock and has received notification that the listing of the Shares on
the NYSE has been approved, subject to notice of issuance of the
Shares.
(x) The Consolidation Transactions have been consummated
at the time and in the manner contemplated by the Prospectus, and the
Company has duly and validly succeeded to the assets and operations of
the Company Businesses as defined in, and as contemplated by, the
Prospectus.
(y) The Company has duly executed and delivered the
Credit Facility (as defined in the Prospectus).
7. Indemnification. (a) The Company hereby agrees, and Trinity
has agreed pursuant to the Trinity Agreement (subject to the limitations set
forth in the Trinity Agreement), jointly and severally, to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by, arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in the Registration Statement or the
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<PAGE> 11
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by, arise out of or are based upon
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriters furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages, liabilities
and judgments purchased Shares, or any person controlling such Underwriter, if
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended and supplemented)
would have cured the defect giving rise to such loss, claim, damage, liability
or judgment.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against the Company,
such Underwriter shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all fees and
expenses. Any Underwriter or any such controlling person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company and Trinity shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
in writing by such counsel that representation of such indemnified party and
the Company by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to an actual or reasonably anticipated
material conflict of interest between them (in which case the Company shall not
have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that (x)
the Company and Trinity shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Underwriters and controlling
persons, which firm shall be designated in writing by Donaldson, Lufkin &
Jenrette Securities Corporation and, in the case of clause (iii) above, such
firm shall be reasonably satisfactory to the Company, and (y) all such
reasonable fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with its written consent, the
Company agrees to indemnify and hold harmless any
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<PAGE> 12
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for reasonable fees and expenses of counsel as contemplated by the second
sentence of this paragraph and such indemnifying party shall not have
reimbursed the indemnifying party in accordance with such request within 30
business days after receipt by such indemnifying party of the aforesaid
request, the indemnifying party agrees that it shall pay interest on such
unreimbursed amounts from the date of such request at the indemnifying party's
borrowing rate for funds borrowed from its principal lender plus 2% per annum.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the Company, the
officers of the Company who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter but only with reference to information relating to
such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus. In case any action shall be brought against the
Company, any of the Company's directors, any such officer of the Company or any
person controlling the Company based on the Registration Statement, the
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against any Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such Underwriter),
and the Company, the Company's directors, any such officers of the Company and
any person controlling the Company shall have the rights and duties given to
the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 and in
Section 3 of the Trinity Agreement is unavailable to an indemnified party in
respect of any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party under this Agreement and the Trinity
Agreement, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
Trinity on the one hand, and the Underwriters on the other hand, from the
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and Trinity on the one hand, and the
Underwriters on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and Trinity on the one hand, and the Underwriters on
the other hand,
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<PAGE> 13
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company, and the total
underwriting discounts and commissions received by the Underwriters, bear to
the total price to the public of the Shares, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company,
Trinity, and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company, Trinity or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters hereby agree, and Trinity has agreed
pursuant to the Trinity Agreement, that it would not be just and equitable if
contribution pursuant to this Section 7(d) and Section 3(d) of the Trinity
Agreement were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7(d) are several in proportion to the
respective number of Shares purchased by each of the Underwriters hereunder and
not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) Trinity shall have duly executed and delivered the
Trinity Agreement, and the Trinity Agreement shall be in full force
and effect on the Closing Date.
(b) All the representations and warranties of the Company
contained in this Agreement, and all the representations and
warranties of Trinity contained in the Trinity Agreement, shall be
true and correct on the Closing Date with the same force and effect as
if made on and as of the Closing Date.
(c) The Registration Statement shall have become
effective not later than 5:00 P.M. (and in the case of a Registration
Statement filed under Rule 462(b) under the Act, not later than 10:00
P.M.), New York City time, on the date of this Agreement or at such
later date and time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the Registration
Statement shall have been
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<PAGE> 14
issued and no proceedings for that purpose shall have been commenced
or shall be pending before or contemplated by the Commission. As of
the Closing Date, the Prospectus shall not contain and, as amended or
supplemented, if applicable, shall not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that this condition shall not apply
to statements or omissions in the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(d)(i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, except as expressly
disclosed in the Prospectus, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of the Company, (ii) since the date of
the latest balance sheet included in the Registration Statement and
the Prospectus, there shall not have been any change, or any
development involving a prospective material adverse change, in the
capital stock or in the long-term debt of the Company from that set
forth in the Registration Statement and the Prospectus, (iii) the
Company and its subsidiaries shall have no liability or obligation,
direct or contingent, which is material to the Company and its
subsidiaries, taken as a whole, other than those reflected in the
Registration Statement and the Prospectus and (iv) on the Closing Date
you shall have received (x) a certificate dated the Closing Date,
signed by John Dane III and Keith L. Voigts, in their capacities as
the President and Vice President, Finance of the Company,
respectively, confirming the matters set forth in paragraphs (b)
(insofar as such matters relate to the Company), (c), (d), (h) and (i)
of this Section 8 and (y) a certificate dated the Closing Date, signed
by John T. Sanford, in his capacity as Senior Vice President of
Trinity, confirming the matters set forth in paragraphs (a), (b)
(insofar as such matters relate to Trinity) and (h) of this Section 8.
(e) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriters), dated
the Closing Date, of Baker & Botts, L.L.P., counsel for the Company
and Trinity, to the effect that:
(i) each of the Company and its Material
Subsidiaries has been duly incorporated, is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate
power and authority to carry on its business and to own, lease
and operate its properties as described in the Prospectus;
(ii) Trinity has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware;
(iii) all the outstanding shares of capital stock
of, or other ownership interests in, each of the Company's
Material Subsidiaries are owned of record and, to such
counsel's knowledge, beneficially by the Company, free and
clear,
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<PAGE> 15
to such counsel's knowledge, of any security interest, claim,
lien, encumbrance or adverse interest of any nature, except
for such security interests, liens or encumbrances as are
described in the Prospectus;
(iv) all the outstanding shares of Common Stock of
the Company have been duly authorized by all necessary
corporate action on behalf of the Company and are validly
issued, fully paid and non-assessable and are owned of record
and, to such counsel's knowledge, beneficially by Trinity, and
to such counsel's knowledge, none of the outstanding shares of
Common Stock were issued in violation of or subject to any
preemptive rights or other similar rights to subscribe for or
purchase the same arising under the Certificate of
Incorporation or Bylaws of the Company or the General
Corporation Law of the State of Delaware;
(v) the Shares have been duly authorized by all
necessary corporate action on the part of the Company and,
when issued and delivered to the Underwriters against payment
therefor in accordance with the terms of this Agreement, will
have been validly issued, fully paid and non-assessable, and
to such counsel's knowledge, the Shares will not have been
issued in violation of or subject to any preemptive rights or
other similar rights to subscribe for or purchase the same
arising under the Certificate of Incorporation or Bylaws of
the Company or the General Corporation Law of the State of
Delaware;
(vi) this Agreement has been duly authorized by
all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company, the
Trinity Agreement has been duly authorized by all necessary
corporate action on the part of Trinity and has been duly
executed and delivered by Trinity and the Separation and
Related Agreements (as defined in the Prospectus) have been
duly authorized by all necessary corporate action on the part
of the Company and Trinity and have been duly executed and
delivered by the Company and Trinity;
(vii) the statements made in the Prospectus under
the caption "Description of Capital Stock", insofar as they
constitute a summary of the provisions of the Certificate of
Incorporation and Bylaws of the Company and of the General
Corporation Law of the State of Delaware which relate to the
Common Stock, fairly present in all material respects the
information called for therein;
(viii) the Registration Statement has become
effective under the Act, and to such counsel's knowledge, no
stop order suspending its effectiveness has been issued and no
proceedings for that purpose have been instituted or
threatened by the Commission;
(ix) the statements under the caption
"Underwriting" in the Prospectus and Item 14 of Part II of the
Registration Statement, insofar as such statements constitute
a summary of legal matters, documents or proceedings referred
to
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<PAGE> 16
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
(x) the execution, delivery and performance of
this Agreement by the Company will not (i) result in a
violation of the charter or by-laws of the Company, (ii) to
such counsel's knowledge, result in a breach or violation of
or constitute (either along or with notice or the passage of
time, or both) a default under, any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or
other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound
that is filed as an exhibit to the Registration Statement,
(iii) result in a violation of any existing statute, rule or
regulation of any governmental body of the United States of
America or the State of Texas or (solely with respect to the
General Corporation Law of the State of Delaware) the State of
Delaware or (iv) to such counsel's knowledge, result in a
violation of any existing judgment, order, writ, injunction or
decree of any court or governmental body of the United States
of America or the State of Texas or (solely with respect to
the General Corporation Law of the State of Delaware) the
State of Delaware that specifically names the Company or any
of its subsidiaries or is directed at any of their respective
properties (provided, however, that such counsel need express
no opinion with respect to compliance with any federal or
state securities or antifraud law, rule or regulation except
as otherwise specifically stated in the opinion of such
counsel), except for any such violation, breach or default
referred to in clause (i), (ii), (iii) or (iv) above which
would not prevent or adversely affect in any material respect
the performance of this Agreement or have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(xi) the execution, delivery and performance of
the Trinity Agreement by Trinity will not result in a
violation of the charter or by-laws of Trinity or any existing
statute, rule or regulation of any governmental body of the
United States of America or the State of Texas or (solely with
respect to the General Corporation Law of the State of
Delaware) the State of Delaware (provided, however, that such
counsel need express no opinion with respect to compliance
with any federal or state securities or antifraud law, rule or
regulation except as otherwise specifically stated in the
opinion of such counsel), except for any such violation which
would not prevent or adversely affect in any material respect
the performance of the Trinity Agreement or have a material
adverse effect on Trinity and its subsidiaries, taken as a
whole;
(xii) to such counsel's knowledge, relying solely
on certificates of officers of the Company, (A) there are no
legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of their respective property is subject which are
required to be described in the Registration Statement or the
Prospectus and are not so described, and (B) there are no
contracts or other documents which are required to be
described in the Registration Statement or the Prospectus or
are required
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<PAGE> 17
to be filed as exhibits to the Registration Statement which
are not described or filed as required;
(xiii) the Company is not an "investment company" or
a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xviv) the Registration Statement (including any
Registration Statement filed under Rule 462(b) under the Act,
if any) and the Prospectus and any supplement or amendment
thereto (other than (i) the financial statements (including
the notes thereto and the auditors' report thereon) included
therein, (ii) the other financial and statistical information
included therein and (iii) the exhibits thereto, as to which
no opinion need be expressed) appear on their face to comply
as to form in all material respects with the Act; and
(xv) the [identify particular conveyance
documents] have been duly authorized by all necessary
corporate action on the part of the Company, Trinity and
[Trinity Marine Group, Inc.] and have been duly executed and
delivered by the Company, Trinity and [Trinity Marine Group,
Inc.].
Such counsel shall also include, in a separate paragraph of
its opinion, statements to the following effect: Such counsel has
participated in conferences with officers and other representatives of
the Company and Trinity, representatives of the independent public
accountants of the Company and your representatives at which the
contents of the Registration Statement and Prospectus and related
matters were discussed. Although such counsel did not independently
verify such information and is not passing upon, and does not assume
any responsibility for, the accuracy, completeness or fairness (except
to the extent stated in subparagraphs (vii) and (ix) of this paragraph
(e)) of the statements contained in the Registration Statement and the
Prospectus, such counsel advises you that, on the basis of the
foregoing, no facts have come to the attention of such counsel which
lead such counsel to believe that the Registration Statement (other
than (i) the financial statements (including the notes thereto and the
auditors' report thereon) included therein, (ii) the other financial
and statistical information included therein and (iii) the exhibits
thereto, as to which such counsel has not been asked to comment), as
of the time it became effective, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (other than (i) the financial
statements (including the notes thereto and the auditors' report
thereon) included therein and (ii) the other financial and statistical
information included therein, as to which such counsel has not been
asked to comment), as of the issue date thereof or as of the Closing
Date, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters
of fact on certificates of officers of the Company and Trinity and of
governmental officials, in
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<PAGE> 18
which case their opinion is to state that they are so doing. Such
counsel shall also be entitled to state that its opinion is limited to
the laws of the United States of America and the State of Texas and
the General Corporation Law of the State of Delaware. The opinion of
Baker & Botts, L.L.P. described in this paragraph (e) shall be
rendered to you at the request of the Company and Trinity and shall so
state therein.
(f) You shall have received on the Closing Date an
opinion, dated the Closing Date, of Thompson & Knight, P.C., counsel
for the Underwriters, as to the matters referred to in clauses (v),
(vi) (but only with respect to this Agreement), (vii), (viii) and (ix)
(but only with respect to the statements under the caption
"Underwriting") of the foregoing paragraph (e). Such counsel shall
include in its opinion a separate paragraph substantially to the
effect and in accordance with the penultimate paragraph of the
foregoing paragraph (e). In making such statements with respect to
the matters covered by the penultimate paragraph of the foregoing
paragraph (e), such counsel may state that their belief is based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto and review
and discussion of the contents thereof, but is without independent
check or verification except as specified.
(g) You shall have received a letter on and as of the
Closing Date, in form and substance satisfactory to you, from Ernst &
Young LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Ernst & Young LLP
on the date of this Agreement.
(h) The Consolidation Transactions and the Offering
Related Transactions (as defined in the Prospectus) shall have been
consummated at the time and in the manner contemplated by the
Prospectus, and the Company and Trinity shall have entered into the
Separation and Related Agreements and such agreements shall be in full
force and effect on the Closing Date.
(i) The Company and John Dane III shall have entered into
the noncompetition agreement described in the Prospectus under the
caption "Management-Noncompetition Agreements", and such agreement
shall be in full force and effect on the Closing Date.
(j) You shall have received certificates of officers of
the Company and of governmental officials as to such other matters as
you may reasonably request.
(k) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the Trinity
- 18 -
<PAGE> 19
Agreement, the due authorization and issuance of such Additional Shares and
other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, unless such change or development
has been expressly disclosed in the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and its subsidiaries, taken as a whole,
or the earnings, affairs, or business prospects of the Company or any of its
subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus; (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus; (iii) the
suspension or material limitation of trading in securities on the NYSE, the
American Stock Exchange or the NASDAQ National Market System or limitation on
prices for securities on any such exchange or National Market System; (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company or any of its
Material Subsidiaries; (v) the declaration of a banking moratorium by either
federal or New York State authorities; or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I hereto bears to the total number of
Firm Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of
- 19 -
<PAGE> 20
Firm Shares or Additional Shares, as the case may be, without the written
consent of such Underwriter. If on the Closing Date or on an Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares or Additional Shares, as the case may be, and the
aggregate number of Firm Shares or Additional Shares, as the case may be, with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Shares
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date or the applicable Option Closing Date, as the case may be, but in
no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to Halter
Marine Group, Inc., 13085 Industrial Seaway Road, Gulfport, Mississippi 39503,
Attention: John Dane III, (b) if to Trinity, to Trinity Industries, Inc., 2525
Stemmons Freeway, Dallas, Texas 75207-2401, Attention: John T. Sanford, and
(c) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter or by or on behalf of the Company or
Trinity, the officers or directors of the Company or any controlling person of
the Company, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company hereby agrees,
and Trinity has agreed pursuant to the Trinity Agreement, jointly and
severally, to reimburse the several Underwriters for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them
in connection with the proposed offering of the Shares.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
- 20 -
<PAGE> 21
This Agreement shall be governed and construed in accordance with the
laws of the State of New York without giving effect to the choice of law
provisions thereof.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
HALTER MARINE GROUP, INC.
By
------------------------------------
Name:
------------------------------
Title:
-----------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
--------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
- 21 -
<PAGE> 22
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
- ------------ ----------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Dean Witter Reynolds Inc.
Howard, Weil, Labouisse, Friedrichs
Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
----------------------
Total 3,000,000
<PAGE> 1
EXHIBIT 3.1
DRAFT OF SEPTEMBER 20, 1996
RESTATED CERTIFICATE OF INCORPORATION
OF
HALTER MARINE GROUP, INC.
The undersigned, being the President and Chief Executive
Officer of Halter Marine Group, Inc., a Delaware corporation, hereby certifies
that:
1. The name of the corporation is HALTER MARINE GROUP,
INC. (the "Corporation"). The name under which the Corporation was originally
incorporated is Halter Marine Group, Inc. and the date of filing the original
Certificate of Incorporation of the Corporation with the Secretary of State of
the State of Delaware was June 24, 1996.
2. This Restated Certificate of Incorporation amends and
restates the provisions of the Certificate of Incorporation of the Corporation
and was duly adopted by the written consent of the sole stockholder of the
Corporation in accordance with the provisions of Sections 228, 242 and 245 of
the General Corporation Law of the State of Delaware.
3. The Restated Certificate of Incorporation of the
Corporation, as restated and amended hereby, shall, upon its filing with the
Secretary of State of the State of Delaware, read in its entirety as follows:
ARTICLE I
The name of the Corporation is Halter Marine Group, Inc.
ARTICLE II
The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware. The name of the registered agent of the Corporation at such
address is The Corporation Trust Company.
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<PAGE> 2
ARTICLE III
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "DGCL"), and the Corporation shall have perpetual existence.
ARTICLE IV
The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 51,000,000 shares,
consisting of (i) 1,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock"), and (ii) 50,000,000 shares of common stock, par value $.01
per share ("Common Stock").
The powers, preferences and rights of each class of capital
stock, and the qualifications, limitations and restrictions thereof, are as
follows:
A. Preferred Stock. The Preferred Stock may be issued
from time to time in one or more series. The Board of Directors is hereby
authorized to provide for the issuance of shares of Preferred Stock in series
and, by filing a certificate pursuant to the DGCL (hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
privileges, preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof. The authority of the
Board of Directors with respect to each series shall include, but not be
limited to, determination of the following:
(1) the designation of the series, which may be by
distinguishing number, letter or title;
(2) the number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise provided in
the Preferred Stock Designation) increase or decrease (but not below
the number of shares thereof then outstanding);
(3) whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having
cumulative dividend rights, the date or dates or method of determining
the date or dates from which dividends on the shares of such series
shall be cumulative;
(4) the rate of any dividends (or method of determining
such dividends) payable to the holders of the shares of such series,
any conditions
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<PAGE> 3
upon which such dividends shall be paid and the date or dates or the
method for determining the date or dates upon which such dividends
shall be payable;
(5) the price or prices (or method of determining such
price or prices) at which, the form of payment of such price or prices
(which may be cash, property or rights, including securities of the
same or another corporation or other entity) for which, the period or
periods within which and the terms and conditions upon which the
shares of such series may be redeemed, in whole or in part, at the
option of the Corporation or at the option of the holder or holders
thereof or upon the happening of a specified event or events, if any;
(6) the obligation, if any, of the Corporation to
purchase or redeem shares of such series pursuant to a sinking fund or
otherwise and the price or prices at which, the form of payment of
such price or prices (which may be cash, property or rights, including
securities of the same or another corporation or other entity) for
which, the period or periods within which and the terms and conditions
upon which the shares of such series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(7) the amount payable out of the assets of the
Corporation to the holders of shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(8) provisions, if any, for the conversion or exchange of
the shares of such series, at any time or times at the option of the
holder or holders thereof or at the option of the Corporation or upon
the happening of a specified event or events, into shares of any other
class or classes or any other series of the same or any other class or
classes of stock, or any other security, of the Corporation, or any
other corporation or other entity, and the price or prices or rate or
rates of conversion or exchange and any adjustments applicable
thereto, and all other terms and conditions upon which such conversion
or exchange may be made;
(9) restrictions on the issuance of shares of the same
series or of any other class or series, if any; and
(10) the voting rights, if any, of the holders of shares
of the series.
Subject to the express terms of any series of Preferred Stock outstanding at
any time, the vote or consent of the holders of Preferred Stock of any series
shall not be required for the issuance of any other series of Preferred Stock,
regardless of whether the powers, preferences and rights of such other series
shall be fixed by the Board of Directors as
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<PAGE> 4
senior to, on a parity with or junior to the powers, preferences and rights
of such outstanding series.
B. Common Stock.
(1) Dividends. Subject to the rights, if any, of the
holders of Preferred Stock with respect to the payment of dividends
and the requirements, if any, with respect to the setting aside of
sums as sinking funds or redemption or purchase accounts for the
benefit of such holders and subject to any other conditions that may
be fixed in accordance with the provisions of Paragraph A of this
Article IV, then, but not otherwise, the holders of Common Stock shall
be entitled to receive such dividends, if any, as may be declared from
time to time by the Board of Directors on the Common Stock out of
assets which are legally available therefor. Any such dividends shall
be distributed among the holders of the Common Stock pro rata in
accordance with the number of shares of such stock held by each such
holder.
(2) Liquidation. In the event of any voluntary or
involuntary liquidation, distribution or sale of assets, dissolution
or winding-up of the Corporation, after payment or provision for
payment of the debts and liabilities of the Corporation and after
distribution to the holders of Preferred Stock of the amounts fixed in
accordance with the provisions of Paragraph A of this Article IV, the
holders of the Common Stock shall be entitled to receive all the
remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders. Any such
distribution shall be made among the holders of Common Stock pro rata
in accordance with the number of shares of such stock held by each
such holder.
(3) Voting. Except as may otherwise be required by law
or the provisions of any resolution or resolutions adopted by the
Board of Directors pursuant to Paragraph A of this Article IV, each
holder of Common Stock shall have one vote for each share of Common
Stock held by such holder on each matter submitted to a vote of the
stockholders. Cumulative voting of shares of Common Stock shall not
be permitted. The number of authorized shares of Preferred Stock may
be increased or decreased (but not below the number of shares thereof
then outstanding) by the affirmative vote of the holders of a majority
of the outstanding Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such
holders is required pursuant to any Preferred Stock Designation.
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<PAGE> 5
ARTICLE V
Effective as of the time at which Trinity Industries, Inc., a
Delaware corporation, and its affiliates shall cease to be the beneficial owner
of an aggregate of at least fifteen percent of the then outstanding shares of
Common Stock (the "Trigger Date"), any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly called annual
or special meeting of such holders and may not be effected by any consent in
writing by such holders. Effective as of the Trigger Date, except as otherwise
required by law and subject to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation, special meetings of stockholders of the Corporation for any
purpose or purposes may be called only by the Board of Directors pursuant to a
resolution stating the purpose or purposes thereof approved by a majority of
the total number of directors which the Corporation would have if there were no
vacancies (the "Whole Board") or by the Chairman of the Board of Directors of
the Corporation and, effective as of the Trigger Date, any power of
stockholders to call a special meeting is specifically denied. No business
other than that stated in the notice shall be transacted at any special
meeting.
ARTICLE VI
A. General. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. In
furtherance and not in limitation of the powers conferred upon the Board of
Directors by the DGCL and this Restated Certificate of Incorporation, the Board
of Directors is hereby expressly empowered to exercise all such powers and do
all such acts and things as may be exercised or done by the Corporation,
subject to the provisions of the DGCL, this Restated Certificate of
Incorporation and any bylaws adopted by the stockholders of the Corporation;
provided, however, that no bylaws adopted by the stockholders of the
Corporation shall invalidate any prior act of the Board of Directors that would
have been valid if such bylaws had not been adopted.
B. Number of Directors. Except as otherwise fixed by or
pursuant to the provisions of Article IV hereof relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors under
specified circumstances, the number of the directors of the Corporation shall
be fixed from time to time exclusively pursuant to a resolution adopted by a
majority of the Whole Board (but shall not be less than three). The directors,
other than those who may be elected by the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, one class to be originally elected for a term expiring
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<PAGE> 6
at the first annual meeting of stockholders held after the Trigger Date,
another class to be originally elected for a term expiring at the second annual
meeting of stockholders held after the Trigger Date, and another class to be
originally elected for a term expiring at the third annual meeting of
stockholders held after the Trigger Date, with each director to hold office
until such person's successor is duly elected and qualified. At each
succeeding annual meeting of stockholders, directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until such person's successor shall
have been duly elected and qualified.
C. Manner of Election. The election of directors at
any annual or special meeting of the stockholders of the Corporation need not
be by written ballot unless the Bylaws of the Corporation so provide.
D. Stockholder Nomination of Director Candidates;
Stockholder Proposal of Business. Advance notice of stockholder nominations
for the election of directors and of the proposal of business by stockholders
shall be given in the manner provided in the Bylaws of the Corporation, as
amended and in effect from time to time.
E. Newly Created Directorships and Vacancies. Except as
otherwise provided for or fixed by or pursuant to the provisions of Article IV
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect directors under specified circumstances, newly created directorships
resulting from any increase in the number of directors and any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors, and not by the stockholders. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full
term of the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been duly
elected and qualified. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
F. Removal. Subject to the rights of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified circumstances, any director
may be removed from office only for cause by the affirmative vote of the
holders of at least a majority of the voting power of all shares of the
Corporation entitled to vote generally in the election of directors (the
"Voting Stock") then outstanding, voting together as a single class; provided,
however, that prior to the Trigger Date, any director or directors may be
removed from office, with or without cause, by the affirmative vote of the
holders of at least 80% of the voting power of all Voting Stock then
outstanding, voting together as a single class.
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<PAGE> 7
ARTICLE VII
The Bylaws may be altered or repealed and new Bylaws may be
adopted (1) at any annual or special meeting of stockholders, by the
affirmative vote of the holders of a majority of the voting power of the stock
issued and outstanding and entitled to vote thereat, provided, however, that
any proposed alteration or repeal of, or the adoption of any bylaw inconsistent
with, Sections 2.3, 2.10, 2.11 or 2.12 of Article II of the Bylaws or with
Sections 3.1, 3.2 or 3.13 of Article III of the Bylaws, by the stockholders
shall require the affirmative vote of the holders of at least 80% of the voting
power of all Voting Stock then outstanding, voting together as a single class;
and provided, further, however, that in the case of any such stockholder action
at a special meeting of stockholders, notice of the proposed alteration, repeal
or adoption of the new Bylaw or Bylaws must be contained in the notice of such
special meeting, or (2) by the affirmative vote of a majority of the Whole
Board.
ARTICLE VIII
The Corporation reserves the right at any time from time to
time to amend, alter, change or repeal any provision contained in this Restated
Certificate of Incorporation, and any other provisions authorized by the laws
of the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and, except as set forth in Article
IX, all rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Restated Certificate of Incorporation in its present form or as hereafter
amended are granted subject to the right reserved in this Article.
Notwithstanding anything contained in this Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the Voting Stock then outstanding, voting together as a single class,
shall be required to alter, amend, adopt any provision inconsistent with or
repeal Article V, VI, VII or this sentence.
ARTICLE IX
A. Limited Liability of Directors. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except, if required by the DGCL, as amended from time to time, for liability
(i) for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. Neither the amendment nor repeal of Paragraph A of
this Article IX shall eliminate or reduce the effect of Paragraph A of this
Article IX in respect of any matter occurring, or
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<PAGE> 8
any cause of action, suit or claim that, but for Paragraph A of this Article IX
would accrue or arise, prior to such amendment or repeal.
B. Indemnification and Insurance.
(1) Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that such person, or a person of whom such person
is the legal representative, is or was or has agreed to become a
director or officer of the Corporation or is or was serving or has
agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving or
having agreed to serve as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the DGCL, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, amounts paid or
to be paid in settlement and excise taxes or penalties arising under
the Employee Retirement Income Security Act of 1974, as in effect from
time to time) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of such person's heirs, executors and
administrators; provided, however, that, except as provided in
Paragraph B(2) hereof, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the Board of Directors. The right to
indemnification conferred in this Paragraph shall be a contract right
and shall include the right to have the Corporation pay the expenses
incurred in defending any such proceeding in advance of its final
disposition; any advance payments to be paid by the Corporation within
20 calendar days after the receipt by the Corporation of a statement
or statements from the claimant requesting such advance or advances
from time to time; provided, however, that, if and to the extent the
DGCL requires, the payment of such expenses incurred by a director or
officer in advance of the final disposition of a proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced
if it shall ultimately be determined that such director or
-8-
<PAGE> 9
officer is not entitled to be indemnified under this Paragraph or
otherwise. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification, and
rights to have the Corporation pay the expenses incurred in defending
any proceeding in advance of its final disposition, to any employee or
agent of the Corporation to the fullest extent of the provisions of
this Article IX with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
(2) Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this
Paragraph B shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, provision of the
Restated Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or
modification of this Article IX shall in any way diminish or adversely
affect the rights of any director, officer, employee or agent of the
Corporation hereunder in respect of any occurrence or matter arising
prior to any such repeal or modification.
(3) Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under
the DGCL.
(4) Severability. If any provision or provisions of this
Article IX shall be held to be invalid, illegal or unenforceable for
any reason whatsoever: (1) the validity, legality and enforceability
of the remaining provisions of this Article IX (including, without
limitation, each portion of any paragraph of this Article IX
containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby;
and (2) to the fullest extent possible, the provisions of this Article
IX (including, without limitation, each such portion of any paragraph
of this Article IX containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or
unenforceable.
ARTICLE X
No stockholder of the Corporation shall by reason of his or
her holding shares of any class or series of its capital stock have any
preemptive or preferential right to purchase or subscribe for or otherwise
acquire or receive any shares of any class or series of capital stock issued by
the Corporation, whether now or hereafter authorized, or any
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<PAGE> 10
shares of any class or series of capital stock of the Corporation now or
hereafter acquired by the Corporation as treasury stock and subsequently
reissued or sold or otherwise disposed of, or any notes, debentures, bonds or
other securities convertible into, or any warrants, rights or options
exercisable for, any shares of any class or series of capital stock of the
Corporation, whether or not the issuance of any such shares or such notes,
debentures, bonds or other securities or warrants, rights or options would
adversely affect the dividend, voting or any other rights of such stockholder.
IN WITNESS WHEREOF, the undersigned has duly executed this
Restated Certificate of Incorporation as of the day of September, 1996.
-----------------------------
John Dane III President
and Chief Executive Officer
ATTEST:
- ----------------------------
J. J. French, Jr.
Secretary
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<PAGE> 1
EXHIBIT 3.2
DRAFT OF SEPTEMBER 20, 1996
AMENDED AND RESTATED
BYLAWS
OF
HALTER MARINE GROUP, INC.
Adopted and Effective
___________, 1996
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.3 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.4 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.5 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.6 Conduct of Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.7 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.8 Stockholder List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.9 Stock Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.10 Stockholder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.11 Proposals at Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.12 Proposals at Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.13 General Provisions Relating to Proposals at Stockholder Meetings . . . . . . . . . . . . . 5
ARTICLE III - DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.1 Number and Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.2 Vacancies and Newly Created Directorships . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.4 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.5 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.7 Conduct of Meetings of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.8 Meetings by Telephone Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.9 Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.10 Committees of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.11 Interested Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.12 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.13 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.14 Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Election and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
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<TABLE>
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SECTION 4.3 Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.5 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.6 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.7 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.8 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.9 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.10 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.11 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.12 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.13 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.14 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V - STOCK AND STOCK CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.1 Certificates Evidencing Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Transfer Agents and Registrars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.3 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.4 Lost, Stolen or Destroyed Stock Certificates . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.5 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.7 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.1 Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.2 Right of Claimant to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.3 Non Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.2 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.1 Amendments by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Amendments by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IX - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.2 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.3 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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<PAGE> 4
AMENDED AND RESTATED
BYLAWS
OF
HALTER MARINE GROUP, INC.
ARTICLE I
OFFICES
SECTION 1.1 Registered Office. The registered office of
Halter Marine Group, Inc. (the "Corporation") in the State of Delaware shall be
in care of The Corporation Trust Company, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware.
SECTION 1.2 Other Offices. The Corporation may also have
offices at such other places, both within and without the State of Delaware, as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 Place of Meetings. All meetings of the
stockholders shall be held at such place, either within or without the State of
Delaware, as shall be designated from time to time by the Board of Directors.
SECTION 2.2 Annual Meeting. An annual meeting of the
stockholders, for the purpose of electing directors and transacting such other
business as may properly be brought before the meeting, shall be held on such
date in each year and at such time as shall be designated by the Board of
Directors. A failure to hold the annual meeting at the designated time or to
elect a sufficient number of directors to conduct the business of the
Corporation shall not affect otherwise valid corporate acts or work a
forfeiture or dissolution of the Corporation, except as may be otherwise
specifically provided by law. If the annual meeting for the election of
directors is not held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient. Written notice
of the annual meeting stating the place, date and hour of the meeting shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited
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<PAGE> 5
in the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
SECTION 2.3 Special Meeting. Except as otherwise
required by law and subject to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation, special meetings of stockholders of the Corporation for any
purpose or purposes may be called only by (i) the Board of Directors pursuant
to a resolution stating the purpose or purposes thereof approved by a majority
of the total number of Directors which the Corporation would have if there were
no vacancies (the "Whole Board"), or (ii) by the Chairman of the Board of
Directors of the Corporation. In addition, prior to the Trigger Date (as
defined in the Certificate of Incorporation), the Corporation will call a
special meeting of stockholders promptly upon request by Trinity Industries,
Inc., a Delaware corporation ("Trinity"), or any of its affiliates, in each
case, if such entity is a stockholder of the Corporation. No business other
than that stated in the notice shall be transacted at any special meeting.
Written notice of a special meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
SECTION 2.4 Quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, the presence, in person or
represented by proxy, of the holders of a majority of the voting power of the
shares of capital stock of the Corporation entitled to vote on any matter shall
constitute a quorum for the purpose of considering such matter at a meeting of
the stockholders. If a meeting of the stockholders cannot be organized because
a quorum has not attended, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the meeting
from time to time until a quorum shall be present or represented. When a
meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting at which a quorum
shall be present or represented, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 2.5 Voting. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, any question brought before
any meeting of stockholders shall be decided by the affirmative vote of the
holders of a majority of the shares present in person or represented by proxy
at the meeting and entitled to vote on the subject matter. Directors of the
Corporation shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors.
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SECTION 2.6 Conduct of Meetings of Stockholders. At each
meeting of the stockholders, the Chairman of the Board or, in his absence, the
President or, in his absence, a chairman chosen by a majority vote of the
stockholders present in person or represented by proxy and entitled to vote
thereat, shall preside and act as chairman of the meeting. The Secretary or,
in his absence, an Assistant Secretary, or, in the absence of the Secretary and
all Assistant Secretaries, a person whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
The Board of Directors may adopt such rules and regulations as it determines
are reasonably necessary or appropriate in connection with the organization and
conduct of any meeting of the stockholders. Without limiting the generality of
the foregoing, the Board of Directors, in its discretion, or the person
presiding at a meeting of the stockholders, in his or her discretion, may
require that any votes cast at such meeting be cast by written ballot.
SECTION 2.7 Proxies. Each stockholder entitled to vote
at a meeting of stockholders may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
SECTION 2.8 Stockholder List. The officer or agent who
has charge of the stock ledger of the Corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept open at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present. In lieu of making and
producing such list, the Corporation may make the information therein available
by any other means permitted by law.
SECTION 2.9 Stock Ledger. The stock ledger shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2.8 or the books of the Corporation, or to
vote in person or by proxy at any meeting of the stockholders.
SECTION 2.10 Stockholder Action by Written Consent.
Effective as of the Trigger Date, any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly called annual
or special meeting of such holders and may not be effected by any consent in
writing by such holders.
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<PAGE> 7
SECTION 2.11 Proposals at Annual Meetings.
(a) Nominations of persons for election to the
Board of Directors of the Corporation and the proposal of business to
be considered by the stockholders may be made at an annual meeting of
stockholders (i) by or at the direction of the Chairman of the Board
of Directors or by the Board of Directors, (ii) by any stockholder of
the Corporation who was a stockholder of record at the time of giving
of notice to the Corporation as provided in this Section 2.11, who is
entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 2.11, or (ii) prior to the
Trigger Date, by Trinity or any of its affiliates that is a
stockholder of the Corporation.
(b) For nominations or other business to be
properly brought before an annual meeting by a stockholder pursuant to
clause (ii) of paragraph (a) of Section 2.11, the stockholder must
have given timely notice thereof in writing to the Secretary of the
Corporation and such other business must otherwise be a proper matter
for stockholder action. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 90th calendar
day nor earlier than the close of business on the 120th calendar day
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is more than 30 calendar days before or more than 60 calendar
days after such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the close of business on
the 120th calendar day prior to such annual meeting and not later than
the close of business on the later of the 90th calendar day prior to
such annual meeting or the 10th calendar day following the calendar
day on which public announcement of the date of such meeting is first
made by the Corporation. For purposes of determining whether a
stockholder's notice shall have been delivered in a timely manner for
the annual meeting of stockholders in 1997, the first anniversary of
the previous year's meeting shall be deemed to be ____, 1997. In no
event shall the public announcement of an adjournment of an annual
meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth
(i) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, the name, business address and
residence address of the person, the principal occupation or
employment of the person, the class and number of shares of the
Corporation which are beneficially owned by such person and all other
information relating to such person that is required to be disclosed
in solicitations of proxies for election of directors pursuant to
Regulation 14A under the Securities exchange Act of 1934, as amended
(the "Exchange Act"); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting, the reasons
for conducting such business at the meeting and any material interest
in such business of such stockholder; and (iii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (x) the name and address of such
stockholder, as they appear on the Corporation's books, and (y) the
class and number of shares of the Corporation which are beneficially
owned by such stockholder.
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<PAGE> 8
SECTION 2.12 Proposals at Special Meetings. Only such
business shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the Corporation's notice of meeting
under Section 2.3 of these Bylaws. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the notice of meeting (a) by or at the
direction of the Board of Directors, (b) by any stockholder of the Corporation
who is a stockholder of record at the time of giving of notice set forth below,
who shall be entitled to vote at the meeting and who complies with the notice
procedures set forth below, or (c) prior to the Trigger Date, by Trinity or any
of its affiliates that is a stockholder of the Corporation. In the event the
Corporation calls a special meeting of stockholders for the purpose of electing
one or more directors to the Board of Directors, any stockholder may nominate a
person or persons (as the case may be) for election to such position(s), if the
stockholder gives timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier
than the close of business on the 120th calendar day prior to such special
meeting and not later than the close of business on the later of the 90th
calendar day prior to such special meeting or the 10th calendar day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected at
such meeting. Such stockholder's notice shall set forth the information
required by paragraph (b) of Section 2.11 in the case of an annual meeting. In
no event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as
described above.
SECTION 2.13 General Provisions Relating to Proposals at Stockholder
Meetings.
(a) Only such business shall be conducted at a
meeting of stockholders as shall have been brought before the meeting
in accordance with the procedures set forth in Section 2.11 and 2.12.
Except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, the Chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be,
in accordance with the procedures set forth in Sections 2.11 and 2.12
and, if any proposed nomination or business is not in compliance with
Sections 2.11 and 2.12, to declare that such defective proposal or
nomination shall be disregarded.
(b) For purposes of Sections 2.11 and 2.12,
"public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to
Section 13,14 or 15(d) of the Exchange Act.
(c) Notwithstanding the provisions of Sections
2.11 and 2.12, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in Sections 2.11 and
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<PAGE> 9
2.12. Nothing in Sections 2.11 and 2.12 shall be deemed to affect
any rights (i) of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (ii) of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon
liquidation to elect directors.
ARTICLE III
DIRECTORS
SECTION 3.1 Number and Election of Directors. The
business and affairs of the Corporation shall be managed by or under the
direction of the Board of Directors. Except as otherwise fixed by or pursuant
to the provisions of Article IV of the Certificate of Incorporation relating to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of the directors of the
Corporation shall be fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the Whole Board (but shall not be less than
three). Effective at the Trigger Date, the directors, other than those who may
be elected by the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, shall be classified,
with respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, one class to be originally
elected for a term expiring at the annual meeting of stockholders held
following the Trigger Date, another class to be originally elected for a term
expiring at the second annual meeting of stockholders held following the
Trigger Date, and another class to be originally elected for a term expiring at
the third annual meeting of stockholders held following the Trigger Date, with
each class to hold office until its successor is duly elected and qualified. At
each succeeding annual meeting of stockholders, directors elected to succeed
those directors whose terms then expire shall be elected for a term of office
to expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until such person's successor shall
have been duly elected and qualified.
SECTION 3.2 Vacancies and Newly Created Directorships.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
When one or more directors shall resign from the Board of Directors, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective. A director elected to fill a vacancy or a newly created
directorship shall hold office for the remainder of the full term of the class
of directors in which the directorship was created or the vacancy occurred and
until such director's successor shall have been duly elected and qualified. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
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SECTION 3.3 Place of Meetings. The Board of Directors of
the Corporation may hold its meetings, both regular and special, at such place,
either within or without the State of Delaware, as shall be designated from
time to time by the Board of Directors, the Chairman of the Board or the
President.
SECTION 3.4 Regular Meetings. Promptly after each annual
election of directors, the Board of Directors shall meet for the purpose of the
election of officers and the transaction of other business, at the place where
such annual election is held. The Board of Directors may also hold other
regular meetings at such time or times and at such place or places as shall be
designated by the Board of Directors from time to time. Notice of regular
meetings of the Board of Directors need not be given.
SECTION 3.5 Special Meetings. Special meetings of the
Board of Directors may be called by (i) the Chairman of the Board, (ii) the
President or (iii) the Secretary, if requested to do so by a majority of the
members of the Board of Directors. Notice shall be sent to the last known
address of each director, by mail, telegram, cable or telex, at least two days
before the meeting, or oral notice may be substituted for such written notice
if received not later than the day preceding such meeting, and the place and
time of such special meeting shall be as designated in the notice of such
meetings.
SECTION 3.6 Quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, at all meetings of the Board
of Directors a majority of the total number of directors in office shall
constitute a quorum for the transaction of business, and the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
SECTION 3.7 Conduct of Meetings of the Board of
Directors. The Board of Directors may, in its discretion, elect from among its
members a Chairman of the Board, who may, but need not be, an officer of the
Corporation. A person elected as Chairman of the Board shall serve in such
capacity for such term as is specified by the Board of Directors at the time of
his or her election. At each meeting of the Board of Directors, the Chairman
of the Board or, in his or her absence, any other director chosen by a majority
of the directors present, shall preside and act as chairman of the meeting.
The Secretary or, in his or her absence, any other person whom the chairman of
the meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.8 Meetings by Telephone Conference. Members of
the Board of Directors of the Corporation may participate in a meeting of such
Board of Directors or a committee thereof by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section 3.8 shall constitute presence in person at such meeting.
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SECTION 3.9 Action by Written Consent. Except as
otherwise provided by the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing setting
forth the action so taken, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
SECTION 3.10 Committees of Directors. The Board of
Directors may, by resolution passed by a majority of the whole Board of
Directors, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or she or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors establishing such
committee, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation. Notwithstanding the foregoing, no committee shall have the power
or authority to take any of the following actions:
(a) amend the Certificate of Incorporation
(except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of any
series of capital stock of the Corporation adopted by the Board of
Directors as permitted by the General Corporation Law of the State of
Delaware as set forth in Title 8 of the Delaware Code (the "DGCL"),
fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or
the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock
of the Corporation or fix the number of shares of any series of stock
or authorize the increase or decrease of the shares of any series);
(b) adopt an agreement of merger or consolidation
under the DGCL;
(c) recommend to the stockholders the sale, lease
or exchange of all or substantially all of the Corporation's property
and assets;
(d) recommend to the stockholders a dissolution
of the Corporation or a revocation of a dissolution; or
(e) amend the Bylaws of the Corporation.
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In addition, unless the resolution of the Board of Directors
designating the committee expressly so provides, no such committee shall have
the power or authority to take any of the following actions:
(i) declare a dividend;
(ii) authorize the issuance of stock; or
(iii) adopt a certificate of ownership and merger
pursuant to the DGCL.
Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
SECTION 3.11 Interested Directors. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (i) the material
facts as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or the committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee thereof
or the stockholders. Interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 3.12 Resignation. Any director of the Corporation
may resign at any time by giving written notice of his resignation to the
President or the Secretary. Such resignation shall take effect at the date of
receipt of such notice by the President or the Secretary, or at any later time
specified therein. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.13 Removal. Subject to the rights of any class
or series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified circumstances, any director
may be removed from office only for cause by the affirmative vote of the
holders of at least a majority of the voting power of all shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (the "Voting Stock")
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then outstanding, voting together as a single class. In addition, Prior to the
Trigger Date, any director or directors may be removed from office, with or
without cause, by the affirmative vote of the holders of at least 80% of the
voting power of all Voting Stock then outstanding, voting together as a single
class.
SECTION 3.14 Compensation of Directors. The directors
shall receive such compensation for their services as the Board of Directors
may from time to time determine. No director shall be prevented from receiving
compensation for his services as a director by reason of the fact that he is
also an officer of the Corporation. All directors shall be reimbursed for
their reasonable expenses of attendance at each regular or special meeting of
the Board of Directors. Members of any committee of directors may be allowed
like compensation and reimbursement for expenses for serving as members of any
such committee and for attending committee meetings.
ARTICLE IV
OFFICERS
SECTION 4.1 General. The officers of the Corporation
shall be chosen by the Board of Directors and shall include a President, a
Secretary and a Treasurer. In addition, following the Trigger Date, the
officers of the Corporation shall include a Chairman of the Board. The Board
of Directors, in its discretion, may also elect one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these Bylaws. The officers of the Corporation
need not be stockholders or directors of the Corporation.
SECTION 4.2 Election and Terms. The Board of Directors
at its first meeting held after each annual meeting of stockholders shall elect
the officers of the Corporation, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and qualified
or until their earlier resignation or removal. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors.
SECTION 4.3 Salaries. The salaries of all officers of
the Corporation shall be fixed by the Board of Directors and may be altered
from time to time, except as otherwise provided by contract. No officer shall
be prevented from receiving a salary solely be reason of the fact that he is
also a director.
SECTION 4.4 Chairman of the Board. The Chairman of the
Board, if there be any, shall preside at all meetings of the stockholders and
of the Board of Directors. The Chairman of the Board shall perform all duties
incidental to such person's office which may be required by law and all such
other duties as are properly required of him by the Board of Directors.
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He shall make reports to the Board of Directors and the stockholders, and shall
see that all orders and resolutions of the Board of Directors and of any
committee thereof are carried into effect.
SECTION 4.5 President. The President shall be the chief
executive officer of the Corporation and, subject to the supervision of the
Board of Directors, shall have general charge of the business, affairs and
property of the Corporation and shall have control over its officers, agents,
and employees. The President shall see that all orders and resolutions of the
Board of Directors are carried into effect. He or she may execute and deliver
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts or other instruments that the Board of Directors has authorized to be
executed and delivered, except where required or permitted by law to be
otherwise executed and delivered and except that the other officers of the
Corporation may execute and deliver documents when authorized to do so by these
Bylaws, the Board of Directors or the President. The President shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him or her by these Bylaws or by the Board of
Directors.
SECTION 4.6 Vice Presidents. Each Vice President shall
perform such duties and have such other powers as the Board of Directors from
time to time may prescribe. Certain Vice Presidents may from time to time be
designated by the Board of Directors as Executive Vice Presidents or Senior
Vice Presidents, which positions shall have such varying degrees of authority
as the Board of Directors shall prescribe.
SECTION 4.7 Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
all the proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors, under whose supervision he or she shall act. If the Secretary shall
be unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be no
Assistant Secretary, then the Board of Directors may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or an Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his or her signature. The Secretary shall see that
all books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be.
SECTION 4.8 Treasurer. The Treasurer shall be the chief
financial officer of the Corporation and shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and
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shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Board of Directors, at its regular
meeting, or when the Board of Directors so requires, an account of all his or
her transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or
her possession or under his or her control belonging to the Corporation.
SECTION 4.9 Assistant Secretaries. Except as may be
otherwise provided in these Bylaws, Assistant Secretaries, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in
the event of his or her disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
SECTION 4.10 Assistant Treasurers. Assistant Treasurers,
if there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his or her disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer. If
required by the Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or
her possession or under his or her control belonging to the Corporation.
SECTION 4.11 Other Officers. Such other officers as the
Board of Directors may appoint shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The
Board of Directors may delegate to any other officer of the Corporation the
power to choose such other officers and to prescribe their respective duties
and powers.
SECTION 4.12 Delegation of Authority. In the case of the
absence of any officer of the Corporation or for any other reason that the
Board of Directors may deem sufficient, the Board of Directors may delegate
some or all of the powers or duties of such officer to any other officer or to
any director, employee, stockholder or agent for whatever period of time the
Board of Directors determines is necessary or appropriate.
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SECTION 4.13 Removal. Any officer may be removed, either
with or without cause, by the affirmative vote of a majority of the Board of
Directors, or, except in the case of any officer elected by the Board of
Directors, by any officer upon whom the powers of removal may be conferred by
the Board of Directors.
SECTION 4.14 Resignation. Any officer of the Corporation
may resign at any time by giving written notice of his resignation to the
Corporation. Such resignation shall take effect at the date of receipt of such
notice by the Corporation, or at any later time specified therein. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
ARTICLE V
STOCK AND STOCK CERTIFICATES
SECTION 5.1 Certificates Evidencing Shares. Every holder
of stock in the Corporation shall be entitled to have a certificate evidencing
the number of shares owned by such holder signed by or in the name of the
Corporation by (i) the President or a Vice President and (ii) the Secretary or
an Assistant Secretary.
SECTION 5.2 Transfer Agents and Registrars. The Board of
Directors may appoint, or authorize any officer or officers to appoint, one or
more transfer agents and one or more registrars.
SECTION 5.3 Signatures. Where a certificate is
countersigned by (i) a transfer agent other than the Corporation or an employee
thereof or (ii) a registrar other than the Corporation or an employee thereof,
any other signature on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if such
officer, transfer agent or registrar continued to discharge said office or
function at the date of issuance.
SECTION 5.4 Lost, Stolen or Destroyed Stock Certificates.
The Corporation may issue a new stock certificate in place of any certificate
theretofore issued by it which is alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing
such issuance of a new certificate or certificates, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof, require
that the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representative, give the Corporation a bond sufficient to
indemnify the Corporation against any claim that may be made against the
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Corporation on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 5.5 Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by his or her attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be canceled before
a new certificate shall be issued.
SECTION 5.6 Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more then 60 days nor
less than ten days before the date of such meeting, nor more than 60 days prior
to any other action. A determination of stockholders of record entitled to
notice or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 5.7 Registered Stockholders. Except as otherwise
required by law, the Corporation shall be entitled to recognize the exclusive
right of the person registered on its books as the owner of shares to receive
dividends in respect of such shares and to vote as the owner thereof, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
notice thereof.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that such
person, or a person of whom such person is the legal representative, is or was
or has agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving or having agreed to serve as a director, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the DGCL, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law
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permitted the Corporation to provide prior to such amendment), against all
expense, liability or loss (including attorney's fees, judgments, fines,
amounts paid or to be paid in settlement and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974, as in effect from
time to time) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
such person's heirs, executors and administrators; provided, however, that,
except as provided in Section 6.2 hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification conferred
in this Section 6.1 shall be a contract right and shall include the right to
have the Corporation pay the expenses incurred in defending any such proceeding
in advance of its final disposition; any advance payments to be paid by the
Corporation within 20 calendar days after the receipt by the Corporation of a
statement or statements from the claimant requesting such advance or advances
from time to time; provided, however, that, if and to the extent the DGCL
requires, the payment of such expenses incurred by a director or officer in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this Section 6.1 or otherwise. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and rights to be have the Corporation pay the expenses
incurred in defending any proceeding in advance of its final disposition, to
any employee or agent of the Corporation to the fullest extent of the
provisions of this Article VI with respect to the indemnification and
advancement of the expenses of directors and officers of the Corporation.
SECTION 6.2 Right of Claimant to Bring Suit. If a claim
under Section 6.1 is not paid in full by the Corporation within 30 calendar
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce
a claim for expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which make it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
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SECTION 6.3 Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise. No
repeal or modification of this Article VI shall in any way diminish or
adversely affect the rights of any director, officer, employee or agent of the
Corporation hereunder in respect of any occurrence or matter arising prior to
any such repeal or modification.
SECTION 6.4 Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the DGCL.
SECTION 6.5 Severability. If any provision or provisions
of this Article VI shall be held to be invalid, illegal or unenforceable for
any reason whatsoever: (1) the validity, legality and enforceability of the
remaining provisions of this Article VI (including, without limitation, each
portion of any paragraph of this Article VI containing any such provision held
to be invalid, illegal or unenforceable, that is not itself held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and (2) to the fullest extent possible, the provisions of this Article VI
(including, without limitation, each such portion of any paragraph of this
Article VI containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
ARTICLE VII
NOTICES
SECTION 7.1 Notices. Whenever written notice is required
by law, the Certificate of Incorporation or these Bylaws to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by
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telegram, telecopy, telex or cable and such notice shall be deemed given at the
time when the same is sent.
SECTION 7.2 Waiver of Notice. Whenever notice is
required by law, the Certificate of Incorporation or these Bylaws to given to
any director, member of a committee or stockholder, a written waiver, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting of
stockholders, in person or by proxy, or at a meeting of the Board of Directors
or committee thereof shall constitute a waiver of notice of such meeting,
except when the person attends such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or these Bylaws.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 Amendments by Stockholders. These Bylaws may
be altered, amended or repealed, in whole or in part, or new Bylaws may be
adopted, by the affirmative vote of the holders of a majority of the voting
power of the stock issued and outstanding and entitled to vote at any annual or
special meeting; provided, however, that Sections 2.3, 2.10, 2.11 or 2.12 of
Article II or Sections 3.1, 3.2 or 3.13 of Article III of these Bylaws may be
altered, amended or repealed, in whole or in part, only by the affirmative vote
of the holders of 80% of the voting power of all Voting Stock then outstanding,
voting together as a single class.
SECTION 8.2 Amendments by Directors. These Bylaws may be
altered, amended or repealed, in whole or in part, or new Bylaws may be
adopted, by action of a majority of directors then in office.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Fiscal Year. The fiscal year of the
Corporation shall end on the 31st day of March of each year, unless otherwise
provided by resolution of the Board of Directors.
SECTION 9.2 Disbursements. All checks or demands for
money and notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
-17-
<PAGE> 21
SECTION 9.3 Corporate Seal. The corporate seal shall
have inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced.
-18-
<PAGE> 1
EXHIBIT 3.3
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HALTER MARINE GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
HALTER MARINE GROUP, INC., a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated Certificate of
Incorporation of the said Corporation, the said Board of Directors on September
23, 1996 adopted the following resolution creating a series of 500,000 shares
of Preferred Stock designated as "Series A Junior Participating Preferred
Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of
the Restated Certificate of Incorporation, a series of Preferred
Stock, par value $.01 per share, of the Corporation be and hereby is
created, and that the designation and number of shares thereof and the
voting and other powers, preferences and relative, participating,
optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of
Preferred Stock that shall be designated as "Series A Junior Participating
Preferred Stock," and the number of shares constituting such series shall be
500,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to less than
the number of shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
1
<PAGE> 2
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 15th day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Junior Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all cash dividends, and
the Adjustment Number times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on shares of Common Stock,
par value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the Corporation shall
at any time after September 23, 1996 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on shares of Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been
declared on shares of Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date,
a dividend of $10 per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or
2
<PAGE> 3
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of Series A
Junior Participating Preferred Stock, the holders of shares of any other class
or series entitled to vote with the Common Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") that shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on all
shares of Series A Junior Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, (1) the number of Directors shall be increased by two, effective as of
the time of election of such Directors as herein provided, and (2) the holders
of Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) upon which these or like voting rights have been conferred and
are exercisable (the "Voting Preferred Stock") with dividends in arrears in an
amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such two Directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right shall not be
exercised unless the holders of at least one-third in number of the shares of
Voting Preferred Stock outstanding shall
3
<PAGE> 4
be present in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Voting Preferred
Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent of the total
number of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the Chairman of the
Board, the President, a Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Voting
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Voting Preferred Stock by mailing a copy
of such notice to him at his last address as the same appears on the books of
the Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or, in default of
the calling of such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder or stockholders
owning in the aggregate not less than ten percent of the total number of shares
of Voting Preferred Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next annual meeting
of the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred Stock
shall continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class or classes of stock
which elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders of
Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Restated
Certificate of Incorporation or By-Laws irrespective of any increase made
pursuant to the provisions of paragraph (C) of this Section 3 (such number
being subject, however, to change thereafter in any manner provided by law or
in the Restated Certificate of Incorporation or By-Laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A
Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent
4
<PAGE> 5
they are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of Series A Junior Participating
Preferred Stock, or to all such holders and the holders of any such
shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series
5
<PAGE> 6
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) the Adjustment Number. Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall, subject to the
prior rights of all other series of Preferred Stock, if any, ranking prior
thereto, receive their ratable and proportionate share of the remaining assets
to be distributed in the ratio of the Adjustment Number to 1 with respect to
such Series A Junior Participating Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, that rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger or consolidation of
any other corporation into or with the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 6, but the sale, lease or conveyance of all or substantially all
the Corporation's assets shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.
7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination, or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Junior Participating Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share equal to the
Adjustment Number times the
6
<PAGE> 7
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged.
8. Redemption. (A) The Corporation, at its option, may
redeem shares of the Series A Junior Participating Preferred Stock in whole at
any time and in part from time to time, at a redemption price equal to the
Adjustment Number times the current per share market price (as such term is
hereinafter defined) of the Common Stock on the date of the mailing of the
notice of redemption, together with unpaid accumulated dividends to the date of
such redemption. The "current per share market price" on any date shall be
deemed to be the average of the closing price per share of such Common Stock
for the ten consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Common Stock is determined during a
period following the announcement of (A) a dividend or distribution on the
Common Stock other than a regular quarterly cash dividend or (B) any
subdivision, combination or reclassification of such Common Stock and the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, shall not have occurred prior to
the commencement of such ten Trading Day period, then, and in each such case,
the current per share market price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sales price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, or, if
the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other self- regulatory organization or registered securities
information processor (as such terms are used under the Securities Exchange Act
of 1934, as amended) that then reports information concerning the Common Stock,
or, if sales price information is not so reported, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
NASDAQ or such other entity, or, if on any such date the Common Stock is not
quoted by any such entity, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Corporation. If on any such date no
such market maker is making a market in the Common Stock, the fair value of the
Common Stock on such date as determined in good faith by the Board of Directors
of the Corporation shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction of business, or, if
the Common Stock is not listed or admitted to trading on any national
securities exchange but is quoted by NASDAQ, a day on which NASDAQ reports
trades, or, if the Common Stock is not so quoted, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the State of New York are
not authorized or obligated by law or executive order to close.
7
<PAGE> 8
(B) In the event that fewer than all the outstanding
shares of the Series A Junior Participating Preferred Stock are to be redeemed,
the number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board of Directors or by any other method that may
be determined by the Board of Directors in its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by
mailing to the holders of the shares of Series A Junior Participating Preferred
Stock to be redeemed a notice of such redemption, first class postage prepaid,
not later than the fifteenth day and not earlier than the sixtieth day before
the date fixed for redemption, at their last address as the same shall appear
upon the books of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on the close of business on such redemption date.
Any notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the stockholder received such
notice, and failure duly to give such notice by mail, or any defect in such
notice, to any holder of Series A Junior Participating Preferred Stock shall
not affect the validity of the proceedings for the redemption of any other
shares of Series A Junior Participating Preferred Stock that are to be
redeemed. On or after the date fixed for redemption as stated in such notice,
each holder of the shares called for redemption shall surrender the certificate
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the redemption
price. If fewer than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(D) The shares of Series A Junior Participating Preferred
Stock shall not be subject to the operation of any purchase, retirement or
sinking fund.
9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise, and shall rank senior to the
Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A
Junior Participating Preferred Stock are outstanding, the Restated Certificate
of Incorporation of the Corporation shall not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds or more of
the outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share that shall entitle the
holder, in proportion to such holder's fractional
8
<PAGE> 9
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series
A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate and does affirm the foregoing as true this ___ day of _______,
199_.
---------------------------------------
[Vice] President
9
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE
- -----------
No.
--------
For_________Shares
Issued to
__________________
__________________
Dated September 1996
FROM WHOM TRANSFERRED
_____________________
Dated____________19__
NO. ORIGINAL NO. ORIGINAL NO OF SHARES
CERTIFICATE SHARES TRANSFERRED
- -----------------------------------------------------------------
RECEIVED CERTIFICATE NO.___________
FOR ______________ SHARES
THIS _____________ DAY OF ___________ 19____
____________________________________________
____________________________________________
INCORPORATED UNDER THE LAWS OF
DELAWARE
NUMBER SHARES
HALTER MARINE GROUP, INC.
THIS CERTIFIES THAT _______________________________ is the registered holder of
_______________________________ Shares of the Common Stock, Par Value $0.01 Per
Share, of Halter Marine Group, Inc.
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______________ day of __________________ A.D. 1996.
______________________________________ ___________________________________
PRESIDENT SECRETARY
<PAGE> 2
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OR
PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRAION UNDER THE ACT AND
ANY SUCH LAWS IS AVAILABLE.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN HALTER MARINE GROUP, INC.
(THE "COMPANY") AND THE BANK OF NEW YORK (THE "RIGHTS AGENT") DATED AS OF
SEPTEMBER , 1996 AS IT MAY FROM TIME TO TIME BE SUPPLEMENTED OR AMENDED (THE
"RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS MAY BE REDEEMED, MAY BE EXCHANGED, MAY EXPIRE OR MAY BE EVIDENCED
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE.
THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS
AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER
RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH
IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), AND CERTAIN
TRANSFEREES THEREOF, WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
CERTIFICATE
FOR
--------------
SHARES
OF
Halter Marine Group, Inc.
Common Stock, Par Value
$0.01 Per Share
ISSUED TO
-------------------------------
DATED
-------------------------------
FOR VALUE RECEIVED, ____________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
_______________________________________________________________________________
___________________________________________ SHARES REPRESENTED BY THE WITHIN
CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
_______________________________________________ ATTORNEY TO TRANSFER THE SAID
SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF
SUBSTITUTION IN THE PREMISES.
DATED ______________ 19 ___
In presence of
***************************************************************************
* *
* NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE *
* NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY *
* PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. *
* *
***************************************************************************
<PAGE> 1
EXHIBIT 5
091078-0527 September 20, 1996
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Gentlemen:
As set forth in the Registration Statement on Form S-1, Registration
No. 333-6967 (the "Registration Statement"), filed by Halter Marine Group,
Inc., a Delaware corporation (the "Company"), with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to 3,000,000
shares (the "Shares") of the Company's common stock, par value $.01 per share
("Common Stock"), together with 450,000 additional shares of Common Stock (the
"Additional Shares") subject to the underwriters' over-allotment option as
described in the Registration Statement, certain legal matters in connection
with the Shares and the Additional Shares are being passed upon for you by us.
We understand that the Shares and any Additional Shares are to be sold
pursuant to the terms of an Underwriting Agreement (the "Underwriting
Agreement") in substantially the form filed as an exhibit to the Registration
Statement.
In our capacity as your counsel in the connection referred to above, we
have examined the form of the Company's Restated Certificate of Incorporation
filed as an exhibit to the Registration Statement (the "Restated Certificate of
Incorporation"), the Company's Amended and Restated Bylaws, the originals, or
copies certified or otherwise identified, of corporate records of the Company,
certificates of public officials and of representatives of the Company,
statutes and other instruments and documents as a basis for the opinions
hereinafter expressed.
On the basis of the foregoing, and subject to the assumptions,
limitations and qualifications hereinafter set forth, we are of the opinion
that:
1. The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware.
<PAGE> 2
Halter Marine Group, Inc. -2- September 20, 1996
2. Upon (a) the effectiveness of the Restated Certificate of
Incorporation under the laws of the State of Delaware, (b) the taking of
action by the duly authorized Pricing Committee of the Board of Directors
of the Company to determine the price at which the Shares and Additional
Shares are to be sold under the Underwriting Agreement and (c) the sale of
the Shares and any Additional Shares in accordance with the terms and
provisions of the Underwriting Agreement for the price so determined, the
Shares and any Additional Shares will be duly authorized by all necessary
corporate action on the part of the Company, validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us under "Legal Matters" in the
prospectus forming a part of the Registration Statement.
Very truly yours,
/s/ BAKER & BOTTS, L.L.P.
------------------------------
Baker & Botts, L.L.P.
<PAGE> 1
EXHIBIT 10.1
HALTER MARINE GROUP, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
1. Purpose of Plan. The Halter Marine Group, Inc. 1996 Stock
Option and Incentive Plan is intended to enable the Company to remain
competitive and innovative in its ability to attract, motivate, reward and
retain a strong management team of superior capability, to encourage the sense
of proprietorship and to stimulate the active interest of persons who occupy
key positions in the Company or its Affiliates by enabling the Company to make
awards that recognize the creation of value for the stockholders of the Company
and promote the Company's development, growth, performance and financial
success. In furtherance of that purpose, eligible persons may receive stock
options, stock appreciation rights, restricted stock, performance awards,
dividend equivalent rights, and other awards, or any combination thereof.
2. Definitions. Unless the context otherwise requires, the
following terms when used herein shall have the meanings set forth below:
"Affiliate" - Any corporation, partnership or other entity in
which the Company, directly or indirectly, owns a fifty percent (50%)
or greater interest.
"Award" - A stock option, stock appreciation right, restricted
stock, performance award, dividend equivalent right or other award
under this Plan.
"Board" - The Board of Directors of the Company, as the same
may be constituted from time to time.
"Code" - The Internal Revenue Code of 1986, as amended from
time to time.
"Committee" - The Compensation Committee or such other
committee as may be designated by the Board to administer this Plan.
Each member of the Committee shall be appointed by, and shall serve at
the pleasure of, the Board. To the extent required by Rule 16b-3
under the Securities Exchange Act of 1934 in order for the grant of
Awards to be exempt under Section 16(b) of that act, the Committee
will at all times consist of at least two members of the Board who
qualify as "Non-Employee Directors", as defined in Rule
16b-3(b)(3)(i). The Board may amend the Plan to modify the definition
of Committee within the limits of Rule 16b-3 to assure that the Plan
is administered by Non-Employee Directors.
"Company" - Halter Marine Group, Inc., a Delaware corporation.
"Disability" - Permanent and total inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment.
"Dividend Equivalent Right" - The right of the holder thereof
to receive credits based on the cash dividends that would have been
paid on the Shares specified in the Award if the Shares were held by
the eligible employee to whom the Award is made.
"Fair Market Value" - The last reported sales price per share
of Shares on the New York Stock Exchange on the date of determination
or, if no sale is made on such date, on the last sale date immediately
preceding the date of determination. If Shares are not listed on such
exchange on that date, the Fair Market Value shall be the highest
reported bid price on the date of determination or, if such bid price
is not available for such date, on the closest preceding date when
such bid price is available.
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"Incentive Stock Option" - A stock option meeting the
requirements of Section 422 of the Code or any successor provision.
"Non-qualified Stock Option" - A stock option other than an
incentive stock option.
"Optionee" - A person who has been granted a stock option
under this Plan and who has executed a written stock option agreement
with the Company.
"Plan" - The Plan set forth herein.
"Performance Award" - An Award hereunder of Shares, units or
rights based upon, payable in, or otherwise related to, Shares.
"Stock Appreciation Right" - The right to receive an amount in
cash or Shares equal to the excess of the Fair Market Value of a Share
on the date of exercise over the Fair Market Value of a Share on the
date of the grant (or other value specified in the agreement granting
the Stock Appreciation Right).
"Retirement" - Termination of employment, other than discharge
for cause, after age 65 or on or before age 65 if pursuant to the
terms of any retirement plan maintained by the Company or any of its
Affiliates in which such person participates.
"Reorganization" - Any merger or consolidation in which the
Company is not the surviving corporation; sale of all or substantially
all of the assets of the Company; or sale, pursuant to an agreement
with the Company, of Shares of the Company pursuant to which another
corporation, person or other entity acquires fifty percent (50%) or
more of the outstanding Shares of the Company.
"Share" - A share of the Company's Common Stock, par value
$1.00 per share, and any share or shares of capital stock or other
securities of the Company hereafter issued or issuable upon, in
respect of or in substitution or exchange for each such share.
3. Administration of the Plan. The Plan shall be administered by
the Committee. Subject to the provisions of the Plan and directions from the
Board, the Committee is authorized to:
(a) determine the persons to whom Awards are to be granted;
(b) determine the type of Award to be granted, the number of
Shares to be covered by the Award, the pricing of the Award, the time
or times when the Award shall be granted and may be exercised, any
restrictions on the exercise of the Award, and any restrictions on
Shares acquired pursuant to the exercise of an Award;
(c) provide for the extension of the exercisability of an
Award, accelerate the vesting or exercisability of an Award, eliminate
or make less restrictive any restrictions contained in any Award,
waive any restriction or other provisions of the Plan or in any Award,
and to amend or modify any Award that is either (i) not adverse to the
holder of the Award or (ii) consented to by such holder;
(d) conclusively interpret the Plan provisions;
(e) prescribe, amend and rescind rules and regulations
relating to the Plan or make individual decisions as questions arise,
or both;
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(f) rely upon employees of the Company for such clerical and
record-keeping duties as may be necessary in connection with the
administration of the Plan; and
(g) make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.
All questions of interpretation and application of the Plan or
pertaining to any question of fact or Award granted hereunder shall be decided
by the Committee, whose decision shall be final, conclusive and binding upon
the Company and each other affected party.
4. Shares Subject to Plan. The maximum number of Shares that may
be issued pursuant to Awards under this Plan shall not exceed 1,400,000, unless
such maximum shall be increased or decreased by reason of changes in
capitalization of the Company as hereinafter provided. The Shares issued
pursuant to the Plan may be authorized but unissued Shares, or may be issued
Shares which have been reacquired by the Company.
To the extent that any Award under this Plan shall be forfeited, shall
expire or be canceled, in whole or in part, then the number of Shares covered
by the Award or stock option so forfeited, expired or canceled may again be
awarded pursuant to the provisions of this Plan. In the event that previously
acquired Shares are delivered to the Company in full or partial payment of the
exercise price for the exercise of a stock option granted under this Plan, the
number of Shares available for future Awards under this Plan shall be reduced
only by the net number of Shares issued upon the exercise of the option.
Awards that may be satisfied either by the issuance of Shares or by cash or
other consideration shall be counted against the maximum number of Shares that
may be issued under this Plan, even though the Award is ultimately satisfied by
the payment of consideration other than Shares, as, for example, a stock option
granted in tandem with a Stock Appreciation Right that is settled by a cash
payment of the stock appreciation. However, Awards will not reduce the number
of Shares that may be issued pursuant to this Plan if the settlement of the
Award will not require the issuance of Shares, as, for example, a Stock
Appreciation Right that can be satisfied only by the payment of cash.
5. Eligibility. Eligibility for participation in the Plan shall
be confined to a limited number of persons who are employed by the Company, or
one or more of its Affiliates, and who are directors or officers of the Company
or one or more of its Affiliates, or who are in managerial or other key
positions in the Company or one or more of its Affiliates. In making any
determination as to persons to whom Awards shall be granted, the type of Award,
and/or the number of Shares to be covered by the Award, the Committee shall
consider the position and responsibilities of the person, his or her importance
to the Company and its Affiliates, the duties of such person, his or her past,
present and potential contributions to the growth and success of the Company
and its Affiliates, and such other factors as the Committee shall deem relevant
in connection with accomplishing the purpose of the Plan.
6. Grant of Stock Options. The Committee may grant stock options
to any eligible employee. Each person so selected shall be offered an option
to purchase the number of Shares determined by the Committee. The Committee
shall specify whether such option is an Incentive Stock Option or Non-qualified
Stock Option. Each such person so selected shall have a reasonable period of
time within which to accept or reject the offered option. Failure to accept
within the period so fixed by the Committee may be treated as a rejection.
Each person who accepts an option shall enter into a written agreement with the
Company, in such form as the Committee may prescribe, setting forth the terms
and conditions of the option, consistent with the provisions of this Plan. The
Optionee and the Company shall enter into separate option agreements for
Incentive Stock Options and Non-qualified Stock Options. At any time and from
time to time, the Optionee and the Company may agree to modify an option
agreement in order that an Incentive Stock Option may be converted to a
Non-qualified Stock Option.
The Committee may require that an Optionee meet certain
conditions before the option or a portion thereof may be exercised, as, for
example, that the Optionee remain in the employ of the Company or one of its
Affiliates for a stated period or periods of time before the option, or stated
portions thereof, may be exercised;
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<PAGE> 4
provided, however, nothing in the Plan or in any option agreement shall confer
upon any Optionee any right to remain in the employ of the Company or one of
its Affiliates, and nothing herein shall be construed in any manner to
interfere in any way with the right of the Company or its Affiliates to
terminate such Optionee's employment or directorship at any time.
7. Option Exercise Price of Stock Options. The option exercise
price of the Shares covered by each stock option shall be determined by the
Committee; provided, however, that the option exercise price of an Incentive
Stock Option shall not be less than one hundred percent (100%) of the Fair
Market Value of Shares on the date of the grant of such Incentive Stock Option.
8. Limitations on Grant of Incentive Stock Options.
(a) In no event shall any person be granted Incentive Stock
Options in any calendar year covering Shares having an aggregate Fair Market
Value in excess of $100,000. For this purpose, the Fair Market Value of the
Shares shall be determined as of the dates on which the Incentive Stock Options
are granted. It is intended that the limitation on Incentive Stock Options
provided in this paragraph be the maximum limitation on options which may be
considered Incentive Stock Options under the Code.
(b) Notwithstanding anything herein to the contrary, in no
event shall any employee owning more than ten percent (10%) of the total
combined voting power of the Company or any Affiliate corporation be granted an
Incentive Stock Option hereunder unless: (1) the option exercise price shall
be at least one hundred ten percent (110%) of the Fair Market Value of the
Shares at the time that the option is granted and (2) the term of the option
shall not exceed five (5) years.
9. Term of Stock Options. The term of a stock option shall be
for such period of months or years from the date of its grant as may be
determined by the Committee; provided, however, that no Incentive Stock Option
shall be exercisable later than ten (10) years from the date of its grant.
Each option shall otherwise be subject to earlier termination as hereinafter
provided:
(a) If the Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of the fact that the
Optionee is discharged for cause, as determined solely and exclusively by the
Committee, all rights of the Optionee to exercise an option shall terminate,
lapse, and be forfeited at the time of the Optionee's discharge for cause.
(b) If the Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of the Optionee's
resignation, all rights of the Optionee to exercise an option shall terminate,
lapse, and be forfeited ten (10) days after the date of such resignation by the
Optionee; except that in case the Optionee shall die within ten (10) days after
the date of such resignation, the personal representatives, heirs, legatees, or
distributees of the Optionee, as appropriate, shall have the right up to twelve
(12) months from the date of such resignation to exercise any such option to
the extent that the option was exercisable prior to death and had not been so
exercised.
(c) If the Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of the Optionee's
retirement, all rights of the Optionee to exercise an option shall terminate,
lapse, and be forfeited three (3) months after the date of the Optionee's
retirement, except that in case the Optionee shall die within three (3) months
after the date of retirement, the personal representatives, heirs, legatees, or
distributees of the Optionee, as appropriate, shall have the right up to twelve
(12) months from the date of retirement to exercise any such option to the
extent that the option was exercisable prior to death and had not been so
exercised.
(d) If the Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of the Optionee's
disability, all rights of the Optionee to exercise an option shall terminate,
lapse, and
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be forfeited three (3) months after the date that the Optionee ceased, on
account of such disability, to be an officer, director, or employee of the
Company or any Affiliate; except that in case the Optionee shall die within
three (3) months after the Optionee ceases to be an officer, director, or
employee by reason of the Optionee's disability, the personal representatives,
heirs, legatees, or distributees of the Optionee, as appropriate, shall have
the right up to twelve (12) months from such cessation of service to exercise
any such option to the extent that the option was exercisable prior to death
and had not been so exercised.
(e) If the Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of death, the personal
representatives, heirs, legatees, or distributees of the Optionee, as
appropriate, shall have the right up to twelve (12) months from the termination
of service to exercise any such option to the extent that the option was
exercisable prior to death and had not been so exercised.
(f) If the Optionee ceases to be an officer, director or
employee of the Company or any Affiliate for any reason other than discharge
for cause, resignation, retirement, disability, or death, all rights of the
Optionee to exercise an option shall terminate, lapse and be forfeited three
(3) months after the date that the Optionee ceased to be an officer, director,
or employee of the Company or an Affiliate; except that in case the Optionee
shall die within three (3) months thereafter, the personal representatives,
heirs, legatees, or distributees of the Optionee, as appropriate, shall have
the right up to twelve (12) months from such cessation of service to exercise
any such option to the extent that the option was exercisable prior to death
and had not been so exercised.
(g) Despite the provisions of paragraphs (b), (c), (d), (e),
and (f) of this Section, no Incentive Stock Option shall be exercisable after
the expiration of ten (10) years from the date of its grant.
10. Vesting of Stock Options.
(a) Each stock option granted hereunder may only be exercised
to the extent that the Optionee is vested in such option. Each stock option
shall vest separately in accordance with the option vesting schedule determined
by the Committee, in its sole discretion, which will be incorporated in the
stock option agreement. The option vesting schedule will be accelerated in the
event the provisions of paragraph (b), (c), (d), or (e) of this Section apply;
or, in the sole discretion of the Committee, if the Committee determines that
acceleration of the option vesting schedule would be desirable for the Company.
(b) If an Optionee ceases to be an officer, director, or
employee of the Company or any Affiliate by reason of death, disability, or
retirement, the Optionee or the personal representatives, heirs, legatees, or
distributees of the Optionee, as appropriate, shall become fully vested in each
stock granted to the Optionee and shall have the immediate right to exercise
any such option to the extent not previously exercised.
(c) In the event of the dissolution or liquidation of the
Company, each stock option granted under the Plan shall terminate as of a date
to be fixed by the Board, provided that not less than thirty (30) days written
notice of the date so fixed shall be given to each Optionee and each such
Optionee shall have the right during such period to exercise the option, even
though such option would not otherwise be exercisable under the option vesting
schedule. At the end of such period any unexercised option shall terminate and
be of no further effect.
(d) In the event of a Reorganization:
(1) If there is no plan or agreement respecting the
Reorganization, or if such plan or agreement does not specifically provide for
the change, conversion, or exchange of the Shares under outstanding and
unexercised stock options for securities of another corporation, then the
provisions of the above paragraph (c) of this Section shall apply as if the
Company had dissolved or been liquidated on the effective date of the
Reorganization; or
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(2) If there is a plan or agreement respecting the
Reorganization, and if such plan or agreement specifically provides for the
change, conversion, or exchange of the Shares under outstanding and unexercised
stock options for securities of another corporation, then the Board shall
adjust the Shares under such outstanding and unexercised stock options (and
shall adjust the Shares remaining under the Plan which are then available to be
awarded under the Plan, if such plan or agreement makes no specific provision
therefor) in a manner not inconsistent with the provisions of such plan or
agreement for the adjustment, change, conversion, or exchange of such Shares
and such options.
(e) In the event of the acquisition of fifty (50%) or more of
the outstanding Shares of the Company as a result of any tender or exchange
offer, other than one made by the Company, then the provisions of paragraph (c)
of this Section shall apply as if the Company had dissolved or been liquidated
on the date that the corporation, person, or other entity making the tender or
exchange offer acquired fifty percent (50%) or more of the outstanding shares.
11. Non-transferability of Stock Options. A stock option shall
not be transferable otherwise than by will or the laws of descent and
distribution, and a stock option may be exercised, during the lifetime of the
Optionee, only by the Optionee. Any attempted assignment, transfer, pledge,
hypothecation, or other disposition of a stock option contrary to the
provisions hereof, or the levy of any execution, attachment, or similar process
upon a stock option shall be null and void and without effect.
12. Exercise of Stock Options.
(a) Stock options may be exercised as to Shares only in
minimum quantities and at intervals of time specified in the written option
agreement between the Company and the Optionee. Each exercise of a stock
option, or any part thereof, shall be evidenced by a notice in writing to the
Company. The purchase price of the Shares as to which an option shall be
exercised shall be paid in full at the time of exercise, and may be paid to the
Company either:
(1) in cash (including check, bank draft, or money
order); or
(2) by the delivery of Shares already owned by the
Optionee having a Fair Market Value equal to the aggregate option
price; or
(3) by a combination of cash and Shares.
(b) If an Optionee delivers Shares already owned by him or
her in full or partial payment of the exercise price for any stock option
granted under this Plan or any prior stock option plan of the Company, the
Committee may authorize the automatic grant of a new option (a "Reload Option")
for that number of Shares as shall equal the number of already owned Shares
surrendered in payment of the option exercise price of the underlying stock
option being exercised. The grant of a Reload Option will become effective
upon the exercise of underlying stock option. The option exercise price of the
Reload Option shall be the Fair Market Value of a Share on the effective date
of the grant of the Reload Option. Each Reload Option shall be exercisable no
earlier than six (6) months from the date of its grant and no later than the
time when the underlying stock option being exercised could be last exercised.
The Committee may also specify additional terms, conditions and restrictions
for the Reload Option and the Shares to be acquired upon the exercise thereof.
(c) The amount, as determined by the Committee, of any
federal, state, or local tax required to be withheld by the Company due to the
exercise of a stock option shall be satisfied, at the election of the Optionee
but subject to the consent of the Committee, either (a) by payment by the
Optionee to the Company of the amount of such withholding obligation in cash
(the "Cash Method"), or (b) through the retention by the Company of a number of
Shares out of the Shares being acquired through the exercise of the option
having a Fair Market Value
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equal to the amount of the withholding obligation (the "Share Retention
Method"). The cash payment or the amount equal to the Fair Market Value of the
Shares so withheld, as the case may be, shall be remitted by the Company to the
appropriate taxing authorities. The Committee shall determine the time and
manner in which an Optionee may elect to satisfy a withholding obligation by
either the Cash Method or the Share Retention Method.
(d) An Optionee shall not have any of the rights of a
stockholder of the Company with respect to the Shares covered by a stock option
except to the extent that one or more certificates of such Shares shall have
been delivered to the Optionee, or the Optionee has been determined to be a
stockholder of record by the Company's Transfer Agent, upon due exercise of the
option.
13. Date of a Stock Option Grant. The granting of a stock option
shall take place only when the Committee approves the granting of such option.
Neither any action taken by the Board nor anything contained in the Plan or in
any resolution adopted or to be adopted by the Board or stockholders of the
Company shall constitute the granting of a stock option under this Plan.
14. Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights to any eligible person, either as a separate Award or in
connection with a stock option. Stock Appreciation Rights shall be subject to
such terms and conditions as the Committee shall impose. The grant of the
Stock Appreciation Right may provide that the holder may be paid for the value
of the Stock Appreciation Right either in cash or in Shares, or a combination
thereof. In the event of the exercise of a Stock Appreciation Right payable in
Shares, the holder of the Stock Appreciation Right shall receive that number of
whole Shares of stock of the Company having an aggregate Fair Market Value on
the date of exercise equal to the value obtained by multiplying (i) the
difference between the Fair Market Value of a Share on the date of exercise
over the Fair Market value on the date of the grant (or other value specified
in the agreement granting the Stock Appreciation Right) by (ii) the number of
Shares as to which the Stock Appreciation Right is exercised. If a Stock
Appreciation Right is granted in tandem with a stock option, there shall be
surrendered and canceled from the option at the time of exercise of the Stock
Appreciation Right, in lieu of exercise under the option, that number of Shares
as shall equal the number of Shares as to which the Stock Appreciation Right
shall have been exercised. However, notwithstanding the foregoing, the
Committee, in its sole discretion, may place a ceiling on the amount payable
upon exercise of a Stock Appreciation Right, but any such limitation shall be
specified at the time that the Stock Appreciation Right is granted.
15. Restricted Stock.
(a) The Committee may grant Awards of restricted stock to any
eligible employee, for no cash consideration, for such minimum consideration as
may be required by applicable law, or for such other consideration as may be
specified by the grant. The terms and conditions of restricted stock shall be
specified by the grant. The Committee, in its sole discretion, shall determine
what rights, if any, the person to whom an Award of restricted stock is made
shall have in the restricted stock during the restriction period and the
restrictions applicable to the particular Award, including whether the holder
of the restricted stock shall have the right to vote the Shares and receive all
dividends and other distributions applicable to the Shares. The Committee
shall determine when the restrictions shall lapse or expire and the conditions,
if any, under which the restricted stock will be forfeited or sold back to the
Company. Each Award of restricted stock may have different restrictions and
conditions. The Committee, in its discretion, may prospectively change the
restriction period and the restrictions applicable to any particular Award of
restricted stock. Restricted stock may not be disposed of by the recipient
until the restrictions specified in the Award expire.
(b) Any restricted stock issued hereunder may be evidenced in
such manner as the Committee, in its sole discretion, shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of Shares of restricted stock awarded hereunder, such certificate shall
bear an appropriate legend with respect to the restrictions applicable to such
Award. The Company may retain, at its option, the physical custody of the
restricted stock during the
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restriction period or require that the restricted stock be placed in an escrow
or trust, along with a stock power endorsed in blank, until all restrictions
are removed or expire.
16. Performance Awards.
(a) The Committee may grant Performance Awards to any
eligible person, for no cash consideration, for such minimum consideration as
may be required by applicable law, or for such other consideration as may be
specified at the time of the grant. A Performance Award will be paid, vested
or otherwise deliverable solely upon the attainment of one or more
pre-established, objective performance goals established by the Committee prior
to (i) ninety (90) days after the commencement of the period of service to
which the performance goals relate and (ii) the lapse of twenty-five percent
(25%) of the period of service, and in any event while the outcome is
substantially uncertain. The other terms and conditions of Performance Awards
shall be specified at the time of the grant and may include provisions
establishing the performance period, the performance criteria to be achieved
during a performance period, and the maximum or minimum settlement values. Each
Performance Award shall have its own terms and conditions. If the Committee
determines, in its sole discretion, that the established performance measures
or objectives are no longer suitable because of a change in the Company's
business, operations, corporate structure, or for other reasons that the
Committee deems satisfactory, the Committee may modify the performance measures
or objectives and/or the performance period.
(b) Performance Awards may be valued by reference to the Fair
Market Value of a Share or according to any formula or method deemed
appropriate by the Committee, in its sole discretion, including, but not
limited to, achievement of specific financial, production, sales or cost
performance objectives that the Committee believes to be relevant to the
Company's business and/or remaining in the employ of the Company for a
specified period of time. Performance Awards may be paid in cash, Shares, or
other consideration, or any combination thereof. If payable in Shares, the
consideration for the issuance of the Shares may be the achievement of the
performance objective established at the time of the grant of the Performance
Award. Performance Awards may be payable in a single payment or in
installments and may be payable at a specified date or dates or upon attaining
the performance objective. The extent to which any applicable performance
objective has been achieved shall be conclusively determined by the Committee.
17. Dividend Equivalent Rights and Interest Equivalents.
(a) The Committee may grant a Dividend Equivalent Right to
any eligible employee, either as a component of another Award or as a separate
Award. The terms and conditions of the Dividend Equivalent Right shall be
specified by the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional Shares (which may thereafter accrue additional
dividend equivalents). Any such reinvestment shall be at the Fair Market Value
at the time thereof. Dividend Equivalent Rights may be settled in cash or
Shares, or a combination thereof, in a single payment or in installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other Award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other Award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other Award.
(b) Any Award under this Program that is settled in whole or
in part in cash on a deferred basis may provide for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
18. Other Awards. The Committee may grant to any eligible person
other forms of Awards based upon, payable in, or otherwise related to, in whole
or in part, Shares if the Committee determines that such other form of Award is
consistent with the purposes and restrictions of this Program. The terms and
conditions of such
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other form of Award shall be specified by the grant. Such Awards may be
granted for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be specified
by the grant.
19. Compliance with Securities and Other Laws. In no event shall
the Company be required to sell or issue Shares under any Award if the sale or
issuance thereof would constitute a violation of applicable federal or state
securities law or regulation or a violation of any other law or regulation of
any governmental authority or any national securities exchange. As a condition
to any sale or issuance of Shares, the Company may place legends on Shares,
issue stop transfer orders, and require such agreements or undertakings as the
Company may deem necessary or advisable to assure compliance with any such law
or regulation, including, if the Company or its counsel deems it appropriate,
representations from the person to whom an Award is granted that he or she is
acquiring the Shares solely for investment and not with a view to distribution
and that no distribution of the Shares will be made unless registered pursuant
to applicable federal and state securities laws, or in the opinion of counsel
of the Company, such registration is unnecessary.
20. Adjustments Upon Changes in Capitalization. The value of an
Award in Shares shall be adjusted from time to time as follows:
(a) Subject to any required action by stockholders, the
number of Shares covered by each outstanding Award, and the exercise price,
shall be proportionately adjusted for any increase of decrease in the number of
issued Shares of the Company resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only on Shares) or any other
increase or decrease in the number of Shares effected without receipt of
consideration by the Company.
(b) Subject to any required action by stockholders, if the
Company shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of Shares subject to the option would have been entitled.
(c) In the event of a change in the Shares of the Company as
presently constituted, which is limited to a change of par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination shall be final, binding, and conclusive.
Except as hereinbefore expressly provided in this Plan, any person to
whom an Award is granted shall have no rights by reason of any subdivision or
consolidation of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, reorganization, merger, or
consolidation or spinoff of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made without respect to, the number or exercise price
of Shares subject to an Award.
The grant of an Award pursuant to this Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate, or sell or transfer all or any part
of its business or assets.
21. Effective Date. The Plan shall be effective as of the date of
its adoption by the Board.
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22. Amendment of the Plan. All provisions of the Plan (including
any Award made under the Plan) may at any time or from time to time be modified
or amended by the Board; provided, however, no Award at any time outstanding
under the Plan may be modified, impaired, or canceled adversely to the holder
of the Award without the consent of such holder, and provided, further, the
Plan may not be amended without approval by the holders of a majority of the
Shares of the Company represented and voting at a meeting of the stockholders
(a) to increase the maximum number of Shares subject to the Plan, (b) to
materially modify the requirements as to eligibility for participation in the
Plan, (c) to otherwise materially increase the benefits accruing to persons to
whom Awards may be made under the Plan, or (d) if such approval is otherwise
necessary, to comply with Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 or to comply with any other applicable law, regulation, or listing
requirement, or to qualify for an exemption or characterization that is deemed
desirable by the Board.
23. Termination of Plan. The Board may terminate the Plan at any
time. However, termination of the Plan shall not affect any Award previously
granted hereunder and the rights of the holder of the Award shall remain in
effect until the Award has been exercised in its entirety or has expired or
otherwise has been terminated.
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EXHIBIT 10.2
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (the "Agreement"), entered into as
of _______ ___, 1996, between Trinity Industries, Inc., a Delaware corporation
("Trinity"), and Halter Marine Group, Inc., a Delaware corporation ("Halter").
WITNESSETH:
WHEREAS, Halter has filed a Registration Statement on Form S-1
(Commission File No. 333-6967) (such registration statement, together with any
registration statement filed by Halter pursuant to Rule 462(b) under the
Securities Act of 1933, being referred to herein as the "Registration
Statement") with the Securities and Exchange Commission in order to effect the
registration of an aggregate of 3,450,000 shares (the "Shares") of common
stock, par value $.01 per share ("Common Stock"), for sale in an underwritten
public offering (the "Offering");
WHEREAS, the Registration Statement has become effective under
the Securities Act of 1993, as amended; and
WHEREAS, as of the date hereof (prior to giving effect to the
sale of any Shares in the Offering), Trinity owns all of the issued and
outstanding capital stock of Halter;
WHEREAS, it is desirable to set forth the terms and agreements
relating to the relationship of Halter and Trinity following the Offering;
NOW THEREFORE, in consideration of the premises, the terms and
conditions set forth herein, the mutual benefits to be gained by the
performance thereof, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions.
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" of any Person means a Person that
controls, is controlled by, or is under common control with such Person. As
used herein, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
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of such entity, whether through ownership of voting securities or other
interests, by contract or otherwise.
(b) "Allocable Halter Portion" means, with respect to
any Joint Employee Hazardous Substance Liabilities, that portion of such Joint
Employee Hazardous Substance Liabilities that is equal to a fraction, the
numerator of which shall be equal to the total number of days that the person
to whom such Joint Employee Hazardous Substance Liabilities relate was an
employee of any of the Halter Businesses or an employee at any facility with
respect to which Liabilities from operations are the responsibility of Halter
pursuant to Section 3.2, and the denominator of which shall be equal to the
numerator plus the total number of days that such person was an employee of any
of the Trinity Businesses.
(c) "Allocable Trinity Portion" means, with respect to
any Joint Employee Hazardous Substance Liabilities, that portion of such Joint
Employee Hazardous Substance Liabilities that is equal to a fraction, the
numerator of which shall be equal to the total number of days that the person
to whom such Joint Employee Hazardous Substance Liabilities relate was an
employee of any of the Trinity Businesses, and the denominator of which shall
be equal to the numerator plus the total number of days that such person was an
employee of any of the Halter Businesses or an employee at any facility with
respect to which Liabilities from operations are the responsibility of Halter
pursuant to Section 3.2.
(d) "Component" means, with respect to any ocean-going or
inland vessel, any component of such vessel or other item included in or on
such vessel, excluding, however, the hull and superstructure of such vessel.
(e) "Consolidation Transactions" means those transactions
that will be consummated prior to or concurrently with the consummation of the
Offering as a result of which the assets and liabilities related to the Halter
Businesses shall have been transferred to Halter or members of the Halter
Group.
(f) "Environmental Laws" means all present and future
applicable federal, state, interstate, local and foreign government or agency
laws, statutes, ordinances, rules, regulations, codes, orders, approvals,
permits and requirements of common law relating to protection of the public
health and environment.
(g) "Environmental Liabilities" means all liabilities,
obligations, responsibilities, losses, damages (including punitive damages),
costs and expenses (including reasonable fees, disbursements and expenses of
counsel, paralegal, experts, consultants and expert witnesses), fines,
penalties, interest or bonds, based upon any Environmental Laws, or incurred as
a consequence of noncompliance with any Environmental Laws.
(h) "Group" means either the Trinity Group or the Halter
Group, as the context requires.
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(i) "Halter Asset Liabilities" means (i) all Liabilities
relating to, arising at any time out of or resulting at any time from any
Halter Assets or Specified Entity Assets or any operations conducted by any
Person at any time with or on any Halter Assets or Specified Entity Assets
(excluding, however, any liabilities resulting from the operation of any item
of tangible personal property exclusively in connection with any of the Trinity
Businesses) and (ii) all Liabilities of any of the Specified Entities existing
at any time.
(j) "Halter Assets" means any and all assets and
properties of Halter or any member of the Halter Group, including but not
limited to (i) any assets or properties transferred from Trinity to Halter
Marine, Inc. pursuant to that certain Bill of Sale, Assignment and Assumption
Agreement dated as of September 20, 1996 (the "Bill of Sale, Assignment and
Assumption Agreement") and (ii) any real property transferred from Trinity to
Halter Marine, Inc. as described in the Bill of Sale, Assignment and
Assumption Agreement.
(k) "Halter Businesses" means the businesses and
operations conducted prior to the date hereof by Trinity and certain of its
subsidiaries which consist of (i) the construction, repair and conversion of
ocean-going and inland vessels (other than inland hopper barges and inland tank
barges and the construction of accessories for such barges) and (ii) the
production of any Component of or accessory to any ocean-going or inland vessel
being constructed by any member of the Halter Group (but only for sale as part
of, or in conjunction with, the vessel being constructed).
(l) "Halter Group" means the group consisting of Halter
and all of its subsidiaries.
(m) "Indemnity and Security Agreement" means that certain
Indemnity and Security Agreement dated as of the date hereof among Trinity and
various members of the Halter Group.
(n) "Information" means information, in written, oral,
electronic or other tangible or intangible forms, stored in any medium,
including studies, reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, computer programs or other software,
marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other material prepared
by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data.
(o) "Inland Barge Agreement" means that certain Inland
Barge Agreement dated as of the date hereof between Trinity and Halter pursuant
to which Halter has agreed to construct inland hopper barges for Trinity.
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(p) "Joint Employee Hazardous Substance Liabilities"
means any Liabilities incurred in connection with any Third Party Claim which
arises from any actual or alleged workplace exposure to any hazardous substance
in connection with any person's employment both (i) by any of the Trinity
Businesses and (ii) by any of the Halter Businesses or at any facility with
respect to which Liabilities from operations are the responsibility of Halter
pursuant to Section 3.2.
(q) "Liabilities" means any and all losses, claims,
charges, debts, demands, actions, causes of action, suits, damages,
obligations, payments, costs and expenses, sums of money, accounts, reckonings,
bonds, specialities, indemnities and similar obligations, exonerations,
covenants, contracts, controversies, agreements, promises, doings, omissions,
variances, guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising and including those arising under
any law, rule, regulation, action, threatened or contemplated action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses (including allocated costs of in-house counsel and other personnel),
whatsoever reasonably incurred in investigating, preparing or defending against
any such actions or threatened or contemplated actions), order or consent
decree of any governmental authority or any award of any arbitrator or mediator
of any kind, and those arising under any agreement, in each case, whether or
not recorded or reflected or required to be recorded or reflected on the books
and records of financial statements of any Person.
(r) "Person" means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any governmental
authority.
(s) "Prospectus" means the prospectus in the form first
used to confirm sales of Common Stock pursuant to the Registration Statement.
(t) "Offering Related Transactions" means (i) the
entering into by Halter of the new Credit Facility (as defined in the
Registration Statement) and (ii) the borrowing by Halter under such credit
facility to repay certain indebtedness of Trinity associated with the Halter
Businesses and assumed by Halter in connection with the Consolidation
Transactions.
(u) "Related Agreements" means the Tax Allocation
Agreement, the Trademark License Agreement, the Inland Barge Agreement, the
Underwriting Agreement, the Bill of Sale, Assignment and Assumption Agreement,
the deeds transferring certain real property from Trinity to Halter Marine,
Inc. and referred to in the Bill of Sale, Assignment and Assumption Agreement,
the production contracts assigned by Trinity to one or more members of the
Halter Group and listed on Schedule C hereto, the Indemnity and Security
Agreement and the other agreements listed on Schedule C hereto.
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(v) "Specified Entity Assets" means any and all assets
and properties that at any time were owned by any of the entities specified on
Schedule A hereto (the "Specified Entities"), regardless of when any such
assets or properties were owned by any of such Specified Entities and
regardless of whether any of such Specified Entities are sill in existence.
(w) "Trinity Agreement" means that certain Agreement
dated as of __________, 1996 among Trinity and the Underwriters.
(x) "Tax Allocation Agreement" means that certain Tax
Sharing and Tax Benefit Reimbursement Agreement dated as of the date hereof
between Trinity and Halter.
(y) "Trademark License Agreement" means that certain
Trademark License Agreement dated as of the date hereof between Trinity and
Halter.
(z) "Trinity Businesses" means all businesses and
operations conducted prior to the date hereof by Trinity and its subsidiaries,
other than the Halter Businesses.
(aa) "Trinity Group" means the group consisting of Trinity
and all of its subsidiaries (other than any member of the Halter Group).
(bb) "Underwriters" means the underwriters that are
parties to the Underwriting Agreement.
(cc) "Underwriting Agreement" means that certain
Underwriting Agreement dated as of _______________, 1996 among Halter and the
Underwriters.
ARTICLE II.
RELEASES
SECTION 2.1. Release of Claims. (a) Except as provided in Section
2.1.(c), effective as of the consummation of the Offering (the "Closing Time"),
Halter does hereby, for itself and each other member of the Halter Group, their
respective Affiliates (other than any member of the Trinity Group), successors
and assigns, and all Persons who at any time prior to the Closing Time have
been stockholders, directors, officers, agents or employees of any member of
the Halter Group (in each case, in their respective capacities as such),
remise, release and forever discharge Trinity and each of the respective
members of the Trinity Group, their respective Affiliates (other than any
member of the Halter Group), successors and assigns, and all Persons who at any
time prior to the Closing Time have been stockholders, directors, officers,
agents or employees of any member of the Trinity Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Labilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any
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<PAGE> 6
acts or events occurring or failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or alleged to have existed on
or before the Closing Time, including in connection with the transactions and
all other activities to implement any of the Consolidation Transactions, the
Offering Related Transactions and the Offering.
(b) Except as provided in Section 2.1.(c), effective as
of the Closing Time, Trinity does hereby, for itself and each other member of
the Trinity Group, their respective Affiliates (other than any member of the
Halter Group), successors and assigns, and all Persons who at any time prior to
the Closing Time have been stockholders, directors, officers, agents or
employees of any member of the Trinity Group (in each case, in their respective
capacities as such), remise, release and forever discharge Halter, the
respective members of the Halter Group, their respective Affiliates (other than
any member of the Trinity Group), successors and assigns, and all Persons who
at any time prior to the Closing Time have been stockholders, directors,
officers, agents or employees of any member of the Halter Group (in each case,
in their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Closing Time, including in
connection with the transactions and all other activities to implement any of
the Consolidation Transactions, Offering Related Transactions and the Offering.
(c) Nothing contained in Sections 2.1.(a) or 2.1.(b)
shall impair any right of any Person to enforce this Agreement or any Related
Agreement. Nothing contained in Sections 2.1.(a) or 2.1.(b) shall release any
Person from:
(i) any Liability provided in or resulting from this
Agreement or any Related Agreement;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person
is a member in accordance with, or any other Liability of any member
of any Group under, this Agreement or any Related Agreement;
(iii) any Liability that the parties may have with respect
to indemnification or contribution pursuant to this Agreement for
claims brought against the parties by third Persons, which Liability
shall be governed by the provisions of Article III and, if applicable,
the appropriate provisions of the Related Agreements; or
(iv) any Liability the release of which would result in
the release of any Person other than a Person released pursuant to
this Section 2.1.; provided that the parties agree not to bring suit
or permit any of the members of their Group to bring suit against any
Person with respect to any Liability to the extent that such Person
would be released with respect to such Liability by this Section 2.1.
but for the provisions of this clause (vi).
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(d) Halter shall not make, and shall not permit any
member of the Halter Group to make, any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or any
indemnification, against Trinity or any member of the Trinity Group with
respect to any Liabilities released pursuant to Section 2.1.(a). Trinity shall
not, and shall not permit any member of the Trinity Group to make any claim or
demand or commence any action asserting any claim or demand, including any
claim of contribution or any indemnification, again Halter or any member of the
Halter Group with respect to any Liabilities released pursuant to Section
2.1.(b).
(e) It is the intent of each of Trinity and Halter by
virtue of the provisions of this Section 2.1. to provide for a full and
complete release and discharge of all Liabilities existing or arising from all
acts and events occurring or failing to occur or alleged to have occurred or
failed to occur and all conditions existing or alleged to have existed on or
before the Closing Time, between or among Halter or any member of the Halter
Group, on the one hand, and Trinity or any member of the Trinity Group, on the
other hand (including any contractual agreements or arrangements existing or
alleged to exist between or among any such members on or before the Closing
Time), except as expressly set forth in Section 2.1.(c). At any time, at the
request of any other party, each party shall cause each member of its
respective Group to execute and deliver releases reflecting the provisions
hereof.
SECTION 2.2 Termination of Agreements. In furtherance of the
releases and other provisions of this Article II, each of Trinity and the
respective members of the Trinity Group (on the one hand) and each of Halter
and the respective members of the Halter Group (on the other hand) hereby
terminate any and all agreements, arrangements, commitments or understandings
(other than this Agreement and the Related Agreements), whether or not in
writing, between or among Trinity and/or any member of the Trinity group, on
the one hand, and Halter and/or any member of the Halter Group, on the other
hand, effective as of the Closing Time. No such terminated agreement,
arrangement, commitment or understanding (including any provision thereof which
purports to survive termination) shall be of any further force or effect after
the Closing Time. Each party shall, at the reasonable request of any other
party, take, or cause to be taken, such other actions as may be necessary to
effect the foregoing.
ARTICLE III.
INDEMNIFICATION
SECTION 3.1. Indemnification by Trinity. Except as provided in
Section 3.3., Trinity shall indemnify, defend and hold harmless Halter and each
member of the Halter Group and each of their respective directors, officers and
employees and successors and assigns (collectively, the "Halter Indemnitees"),
from and against any and all Liabilities of the Halter Indemnitees,
respectively (whether such Liabilities have arisen prior to the date hereof or
arise on or after the date hereof), relating to, arising out of or resulting
from any of the following items (without duplication):
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(a) the failure of Trinity or any other member of the
Trinity Group to pay, perform or otherwise promptly discharge any Liabilities
of the Trinity Group, in accordance with their respective terms, whether prior
to or after the Closing Time, other than any Halter Asset Liabilities or any
Liabilities relating to, arising out of or resulting from any of the Halter
Businesses, whether such Liabilities arise prior to or after the Closing Time.
(b) any of the Trinity Businesses, other than any Halter
Asset Liabilities or any Liabilities relating to, arising out of or resulting
from any of the Halter Businesses, whether such Liabilities arise prior to or
after the Closing Time; and
(c) any breach by Trinity or any other member of the
Trinity Group of this Agreement or any Related Agreements.
Notwithstanding the other provisions of this Section 3.1, Trinity shall
indemnify, defend and hold harmless each of the Halter Indemnitees from and
against the Allocable Trinity Portion (and only the Allocable Trinity Portion)
of any Joint Employee Hazardous Substance Liabilities.
SECTION 3.2. Indemnification by Halter. (a) Halter shall indemnify,
defend and hold harmless Trinity and each member of the Trinity Group and each
of the respective directors, officers and employees and successors and assigns
(collectively, the "Trinity Indemnitees"), from and against any and all
Liabilities of the Trinity Indemnitees, respectively (whether such Liabilities
have arisen prior to the date hereof or arise on or after the date hereof),
relating to, arising out of or resulting from any of the following items
(without duplication):
(i) the failure of Halter or any other member of
the Halter Group to pay, perform or otherwise promptly discharge any
Liabilities of any member of the Halter Group in accordance with their
respective terms, whether prior to or after the Closing Time;
(ii) any of the Halter Asset Liabilities;
(iii) any of the Halter Businesses, whether such
Liabilities arise prior to or after the Closing Time;
(iv) any breach by Halter or any member of the
Halter Group of this Agreement or any Related Agreement;
(v) any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, with respect to all information
contained in the Registration Statement or Prospectus (as amended or
supplemented) or any preliminary prospectus relating to the Offering
(except for any untrue statement or alleged untrue statement arising
from information regarding Trinity and supplied in writing
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by Trinity expressly for inclusion in the Registration Statement or
Prospectus or any preliminary prospectus relating to the Offering);
and
(vi) any obligation of Trinity arising pursuant to
or in connection with Section 3 of the Trinity Agreement.
(b) Without limiting the foregoing, Halter shall
indemnify, defend and hold harmless each member of the Trinity Group from and
against any Liabilities of such member of the Trinity Group relating to (i) the
guarantees by such member of the Trinity Group of any contract bid or
performance obligations of Halter or any other member of the Halter Group or
otherwise relating to any of the Halter Businesses, (ii) any obligations of
such member of the Trinity Group under or relating to performance bonds,
letters of credit or similar obligations relating to any of the Halter
Businesses, (iii) the litigation described on Schedule D attached hereto and
(iv) any workers' compensation claims, general liability claims, automobile
liability claims, automobile damage claims, or other claims of any nature to
the extent any of the foregoing claims relate to, arise out of or result from
any of the Halter Businesses, whether such Liabilities or claims arise prior to
or after the Closing Time. Without limiting the indemnification provided for
in this Article III, Halter shall indemnify, defend and hold harmless each
member of the Trinity Group for any increase in insurance costs or insurance
premiums arising out of or resulting from any claims referred to in clause (iv)
of the preceding sentence.
(c) Notwithstanding the other provisions of this Section
3.2, Halter shall indemnify, defend and hold harmless each of the Trinity
Indemnitees from and against the Allocable Halter Portion (and only the
Allocable Halter Portion) of any Joint Employee Hazardous Substance
Liabilities.
SECTION 3.3. Indemnification Obligations Net of Insurance Proceeds;
No Indemnification for Tax Liabilities.
(a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article III will be net of
any insurance proceeds that reduce the amount of the Liability. Accordingly,
the amount which any party (an "Indemnifying Party") is required to pay to any
Person entitled to indemnification hereunder (an "Indemnitee") will be reduced
by any insurance proceeds theretofore actually recovered by or on behalf of the
Indemnitee in reduction of the related Liability. If an Indemnitee receives a
payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
insurance proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the insurance proceeds
recovery had been received, realized or recovered before the Indemnity Payment
was made.
(b) An insurer who would otherwise be obligated to pay
any claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification
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provisions hereof (or solely by virtue of the assumption of any Liabilities by
any member of the Halter Group pursuant to any of the Related Agreements), have
any subrogation or other rights with respect thereto, it being expressly
understood and agreed that no insurer or any other third party shall be
entitled to a "windfall" (i.e., a benefit they would not be entitled to receive
in the absence of the indemnification provisions or in the absence of the
assumption of any Liabilities by any member of the Halter Group pursuant to any
of the Related Agreements) by virtue of the indemnification provisions hereof
or by virtue of the assumption of any Liabilities by any member of the Halter
Group pursuant to any of the Related Agreements. Nothing contained in this
Agreement or any Related Agreement shall obligate any member of any Group to
seek to collect or recover any insurance proceeds.
(c) The indemnification obligations set forth in Sections
3.1 and 3.2 shall not apply to Liabilities in respect of federal, state and/or
local taxes, to the extent such Liabilities are a subject of the Tax Allocation
Agreement.
SECTION 3.4. Procedures for Indemnification of Third Party Claims.
(a) If an Indemnitee shall receive notice or otherwise learn of the assertion
by a Person (including any governmental authority) who is not a member of the
Trinity Group or the Halter Group of any claim or of the commencement by any
such Person of any action (collectively, a "Third Party Claim") with respect to
which an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 3.1. or 3.2., or any other Section of this
Agreement or any Related Agreement, such Indemnitee shall give such
Indemnifying Party and, if Trinity is not the Indemnifying Party, Trinity
written notice thereof within 20 days after becoming aware of such Third Party
Claim. Any such notice shall describe the Third Party Claim in reasonable
detail. Notwithstanding the foregoing, the failure of any Indemnitee to give
notice as provided in this Section 3.4.(a) shall not relieve the related
Indemnifying Party of its obligation under this Article III, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice.
(b) An Indemnifying Party may elect to defend (and,
unless the Indemnifying Party has specified any reservations or exceptions, to
seek to settle or compromise), at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any Third Party Claim. Within 30 days
after the receipt of notice from an Indemnitee in accordance with Section
3.4.(a) (or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After
notice from an Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third Party Claim, such Indemnitee shall have the right to
employ separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee; except that such fees and expenses of
such separate co-counsel shall be borne by the Indemnifying Party to the extent
that the Indemnifying Party elects to assume the defense of the Third Party
Claim but has specified and continues to assert any reservations or exceptions
in such notice.
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(c) If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnitee of its election as provided in Section 3.4.(b), such Indemnitee may
defend such Third Party Claim at the cost and expense (including allocated
costs of in-house counsel and other personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume
the defense of the Third Party Claim in accordance with the terms of this
Agreement, no Indemnitee may settle or compromise any Third Party Claim without
the consent of the Indemnifying Party, which consent will not be unreasonably
withheld. In addition, if the Indemnifying Party has elected not to assume the
defense of a Third Party Claim in order that the Indemnitee's insurer may
control the defense of such Third Party Claim, the Indemnitee shall use
commercially reasonable efforts to persuade the insurer not to settle any such
claim for any amount in excess of coverage limits without the consent of the
Indemnifying Party, which consent will not be unreasonably withheld.
(e) No Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly, against any Indemnitee.
(f) Notwithstanding the other provisions of this Section
3.4, Trinity and Halter will jointly control the defense of, and cooperate with
each other with respect to defending, any Third Party Claim with respect to
which both (i) any member of the Trinity Group is claiming that it is entitled
to indemnification pursuant to Section 3.1 and (ii) any member of the Halter
Group is claiming that it is entitled to indemnification pursuant to Section
3.2. If either Trinity or Halter fails to jointly defend any such Third Party
Claim, the other party shall solely defend such Third Party Claim and the party
failing to jointly defend shall use commercially reasonable efforts to
cooperate with the other party in its defense of such Third Party Claim;
provided, however, that neither party may compromise or settle any such Third
Party Claim without the prior written consent of the other party, which consent
shall not be unreasonably withheld. All costs and expenses of either party in
connection with, and during the course of, the joint control of the defense of
any such Third Party Claim shall be initially paid by the party that incurs
such costs and expenses. Such costs and expenses shall be reallocated and
reimbursed in accordance with the respective indemnification obligations of the
parties at the conclusion of the defense of such Third Party Claim. In
addition, the parties shall cooperate in good faith to resolve in an equitable
manner the dispute regarding which party is entitled to indemnification.
SECTION 3.5. Additional Matters. (a) Any claim on account of a
Liability which does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in whole
or in part, such Indemnitee shall be free to pursue
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such remedies as may be available to such party as contemplated by this
Agreement and the Related Agreements.
(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other Person. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense
(including allocated costs of in-house counsel and other personnel) of such
Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(c) In the event of an action in which the Indemnifying
Party is not a named defendant, if the Indemnifying Party shall so request, the
parties shall endeavor to substitute the Indemnifying Party for the named
defendant. If such substitution or addition cannot be achieved for any reason
or is not requested, the named defendant shall allow the Indemnifying Party to
manage the action as set forth in this Section.
SECTION 3.6. Environmental Matters. (a) Without limiting the
provisions of Section 3.2, and except as provided in Section 3.2(c), Halter
agrees to indemnify, defend and hold harmless Trinity and any other members of
the Trinity Group, and their respective officers, directors, employees, agents,
successors and assigns, from and against any and all Environmental Liabilities
which are Halter Asset Liabilities and from and against any and all
Environmental Liabilities relating to, arising out of or resulting from any of
the Halter Businesses, whether any of the foregoing Environmental Liabilities
arise prior to or after the Closing Time.
(b) Without limiting the provisions of Section 3.1, and
except as provided in the last sentence of Section 3.1, Trinity agrees to
indemnify, defend and hold harmless Halter and any members of the Halter Group,
and their respective officers, directors, employees, agents, successors and
assigns, from and against any and all Environmental Liabilities relating to,
arising out of or resulting from any of the Trinity Businesses prior to or
after the Closing Time, other than any Halter Asset Liabilities or any
Environmental Liabilities relating to, arising out of or resulting from any of
the Halter Businesses.
(c) In the event any investigation or monitoring of site
conditions or any clean-up, abatement, containment, restoration, removal,
monitoring or other remedial work (collectively, the "Remedial Work") is
required under any Environmental Laws because of, or in connection with, any
occurrence, matter or event described in Sections 3.6.(a) and 3.6.(b), the
responsible party (the "Responsible Party") shall perform or cause to be
performed the Remedial Work in compliance with such Environmental Laws;
provided, however, that the Responsible Party may withhold such compliance
pursuant to a good faith dispute, including a dispute regarding the
application, interpretation or validity of the Environmental Laws, subject to
the requirements of Section 3.6.(e).
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(d) All Remedial Work shall be performed by one or more
experienced and qualified contractors, selected by the Responsible Party and
subject to the approval of the other party, which approval shall not be
unreasonably withheld, and under the supervision of one or more experienced and
qualified environmental consultants selected by the Responsible Party and
subject to the approval of the other party, which approval shall not be
unreasonably withheld. All costs and expenses of such Remedial Work shall be
paid by the Responsible Party, including the charges of such contractor(s) and
environmental consultants. The other party may monitor or review such Remedial
Work at its sole cost and expense.
(e) Notwithstanding any provision of this Agreement to
the contrary, the Responsible Party (i) shall have the right to contest or
cause to be contested by appropriate lawful action any Remedial Work
requirement and (ii) shall not be deemed to have failed to comply with
Paragraph (a) or Paragraph (b), as applicable, of this Section 3.6., so long as
the Responsible Party actually lawfully contests or causes to be contested the
application, interpretation or validity of the Environmental Laws pertaining to
the Remedial Work by appropriate proceedings conducted in good faith and with
due diligence; provided, however, that such contest shall not subject the other
party to civil or criminal liability or any other liability or obligation.
(f) A party seeking indemnification under this Section
3.6 must give written notice to the other party pursuant to Article VIII of
this Agreement, including information sufficient to inform the other party of,
and allow such other party to confirm the nature of, the Environmental
Liabilities and any activities required to address the Environmental
Liabilities in sufficient detail for the alleged Responsible Party to confirm
that all costs incurred or to be incurred by the party to be indemnified under
this Section 3.6 are required by applicable Environmental Laws.
(g) Any indemnifiable claim under this Section 3.6 shall
be reduced to account for any insurance, storage tank fund or other proceeds
received by the party to be indemnified. The parties agree to take all
reasonable steps to mitigate any indemnifiable claim under this Section 3.6,
including complying with applicable Environmental Laws.
(h) The rights to indemnification provided for under this
Section 3.6 shall be in addition to any rights the parties may have at law or
in equity, or otherwise.
SECTION 3.7. Miscellaneous.
(a) The remedies provided in this Article III shall be
cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
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(b) The rights and obligations of each of Trinity and
Halter, and their respective Indemnitees under this Article III, shall survive
the sale or other transfer by any party of any assets or businesses or the
assignment by it of any Liabilities.
ARTICLE IV.
COVENANTS NOT TO COMPETE
SECTION 4.1. Halter's Covenant Not to Compete. (a) Halter hereby
acknowledges that Trinity would be irreparably damaged if any proprietary or
confidential information possessed by Halter relating to or affecting the
Trinity Businesses (except for any information that is or becomes generally
available to the public, otherwise than through a breach by Halter of the
provisions of this Agreement) were disclosed to or used by any Person engaged
in competition with the Trinity Businesses. Halter agrees that it will not, and
it will not permit any of the members of the Halter Group to use (except as
specifically permitted under the terms of this Agreement) or disclose any such
confidential or proprietary information unless compelled to do so by judicial
or administrative process of a federal or state court or other government
authority or, in the opinion of counsel, by the requirements of applicable law.
(b) Halter hereby agrees that, for a period of four years
from and after the consummation of the Offering (such period being hereinafter
referred to as the "Non-Competition Period"), neither it nor any other member
of the Halter Group will directly or indirectly (whether acting alone or
through any of the members of the Halter Group, as a member of a partnership or
a joint venture or an investor in, or a holder of securities of, any
corporation or other entity, or otherwise), (i) engage in any of the Trinity
Businesses in the United States of America (such area being hereinafter
referred to as the "Non-Competition Area"); provided, however, that Halter
shall not be prohibited from engaging in the construction of inland hopper
barges pursuant to the Inland Barge Agreement; (ii) solicit or accept business
from any present or future customers of the Trinity Businesses in connection
with a business which competes in any way prohibited by this Agreement with any
of the Trinity Businesses; or (iii) hire, attempt to hire, or assist any other
Person in hiring or attempting to hire any Person employed by Trinity (except
that Halter may, upon request, provide an appropriate reference in its capacity
as a prior employer). Notwithstanding anything to the contrary in this Section
4.1.(b), Halter may own, for investment purposes only, not more than five
percent of the stock of any publicly-held corporation whose stock is either
listed on a national securities exchange or on the Nasdaq National Market.
(c) Should Halter fail to comply with Section 4.1.(b),
then Trinity may, in addition to any other remedies that may be available to
it, terminate all or any portion of the rights granted to Halter under the
Trademark License Agreement.
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SECTION 4.2. Trinity's Covenant Not to Compete. (a) Trinity
hereby acknowledges that Halter would be irreparably damaged if any proprietary
or confidential information possessed by Trinity relating to or affecting the
Halter Businesses (except for any information that is or becomes generally
available to the public, otherwise than through a breach by Trinity of the
provisions of this Agreement) were disclosed to or used by any Person engaged
in competition with the Halter Businesses. Trinity agrees that it will not, and
it will not permit any of the members of the Trinity Group to use (except as
specifically permitted under the terms of this Agreement) or disclose any such
confidential or proprietary information unless compelled to do so by judicial
or administrative process of a federal or state court or other government
authority or, in the opinion of counsel, by the requirements of applicable law.
(b) Trinity hereby agrees that during the Non-Competition
Period, neither it nor any other member of the Trinity Group will directly or
indirectly (whether acting alone or through any of the members of the Trinity
Group, as a member of a partnership or a joint venture or an investor in, or a
holder of securities of, any corporation or other entity, or otherwise), (i)
engage in any of the Halter Businesses in the Non-Competition Area (provided,
however, that Trinity shall not be prohibited from engaging in (A) the
construction, conversion or repair of offshore deck barges and inland deck
barges or (B) the production of any Component of or any accessory to any
ocean-going or inland vessels); (ii) solicit or accept business from any
present or future customers of the Halter Businesses in connection with a
business which competes in any way prohibited by this Agreement with any of the
Halter Businesses; or (iii) hire, attempt to hire, or assist any other Person
in hiring or attempting to hire any Person employed by Halter (except that
Trinity may, upon request, provide an appropriate reference in its capacity as
a prior employer). Notwithstanding anything to the contrary in this Section
4.2.(b), Trinity may own, for investment purposes only, not more than five
percent of the stock of any publicly-held corporation whose stock is either
listed on a national securities exchange or on the Nasdaq National Market.
SECTION 4.3. Miscellaneous. (a) The parties hereto expressly
acknowledge and agree that (i) the agreements set forth in this Article IV
contain reasonable limitations as to time, geographical area and scope of
activity and (ii) in light of the operations heretofore conducted by Trinity,
the interests of the parties hereto and the nature of the transactions
contemplated by this Agreement and the Offering, the agreements contained in
this Article IV are reasonable and do not impose a greater restraint than is
necessary to protect the goodwill and other business interests associated the
Halter Businesses and the Trinity Businesses.
(b) It is expressly understood and agreed that if any of
the agreements set forth in this Article IV is found to be unreasonably broad,
oppressive or unenforceable in an action, suit or proceeding before any federal
or state court or other government authority, such court or other government
authority (i) shall narrow the Non-Competition Period or the Non-Competition
Area or shall otherwise endeavor to reform the scope of such agreements in
order to ensure that the application thereof is not unreasonably broad,
oppressive or unenforceable and (ii) to the fullest extent permitted by law,
shall enforce such agreements as so reformed.
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ARTICLE V.
EXCHANGE OF INFORMATION
SECTION 5.1. Agreement for Exchange of Information. Each of Trinity
and Halter, on behalf of its respective Group, agrees to provide, or cause to
be provided, to the other Group, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the
control of such respective Group which the requesting party reasonably needs
(i) to comply with reporting, disclosure, filing or other requirements imposed
on the requesting party (including under applicable securities laws) by a
governmental authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, or other proceeding or
in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, or (iii) to comply with its obligations under this
Agreement or any Related Agreement; provided, however, that in the event that
any party determines that any such provision of Information could be
commercially detrimental, violate any law or agreement, or waive any attorney-
client privilege, the parties shall take all reasonable measures to permit the
compliance with such obligations in a manner that avoids any such harm or
consequence. Notwithstanding the foregoing, this Section 5.1 shall not require
the provision of information relating to taxes to the extent that the provision
of such information is provided for in the Tax Allocation Agreement.
SECTION 5.2. Ownership of Information. Any Information owned by one
Group that is provided to a requesting party pursuant to Section 5.1 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as
granting or conferring rights of license or otherwise in any such Information.
SECTION 5.3. Compensation for Providing Information. The party
requesting such Information agrees to reimburse the other party for the
reasonable costs, if any, of creating, gathering and copying such Information,
to the extent that such costs are incurred for the benefit of the requesting
party. Except as may be otherwise specifically provided elsewhere in this
Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
SECTION 5.4. Record Retention. To facilitate the possible exchange
of Information pursuant to this Article V and other provisions of this
Agreement, the parties agree to use their reasonable best efforts to retain all
Information in their respective possession or control on the date hereof in
accordance with the policies of Trinity as in effect on the date hereof. No
party will destroy, or permit any of its subsidiaries to destroy, any
Information which the other party may have the right to obtain pursuant to this
Agreement prior to the third anniversary of the date hereof without first using
its reasonable best efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession of
such information prior to such destruction; provided, however, that in the case
of any Information relating to
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Environmental Liabilities, such period shall be extended to the expiration of
the applicable statute of limitations (giving effect to any extensions
thereof).
SECTION 5.5. Limitation of Liability. No party shall have any
liability to any other party in the event that any Information exchanged or
provided pursuant to this Agreement which is an estimate or forecast, or which
is based on an estimate or forecast, is found to be inaccurate, in the absence
of willful misconduct by the party providing such Information. No party shall
have any liability to any other party if any Information is destroyed after
reasonable best efforts by such party to comply with the provisions of Section
5.4.
SECTION 5.6. Other Agreements Providing for Exchange of Information.
The rights and obligations granted under this Article V are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any Related
Agreement.
SECTION 5.7. Production of Witnesses; Records; Cooperation. (a)
Except in the case of an adversarial action by one or more members of a Group
against one or more members of the other Group (which shall be governed by such
discovery rules as may be applicable), each party hereto shall use its
reasonable best efforts to make available to each other party, upon written
request, the former, current and future directors, officers, employees, other
personnel and agents of the members of its respective Group as witnesses and
any books, records or other documents within its control or which it otherwise
has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any action in which the requesting party may from
time to time be involved, regardless of whether such action is a matter with
respect to which indemnification may be sought hereunder. The requesting party
shall beat all costs and expenses (including allocated costs of in-house
counsel and other personnel) in connection therewith. Without limiting the
foregoing, Halter will make available to Trinity, upon written request of
Trinity, the services of John Dane III and any other directors, officers or
employees of Halter or its subsidiaries as Trinity shall reasonably request for
consultation and for service as witnesses in connection with the litigation
relating to the Carruthersville Shipyard.
(b) If an Indemnifying Party chooses to defend or to seek
to compromise or settle any Third Party Claim, the other parties shall make
available to such Indemnifying Party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
such defense, settlement or compromise, and shall otherwise cooperate in such
defense, settlement or compromise.
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(c) In connection with any matter contemplated by this
Section 5.7, the parties will enter into a mutually acceptable joint defense
agreement so as to maintain to the extent practicable any applicable
attorney-client privilege or work product immunity of any member of any Group.
ARTICLE VI.
CERTAIN HALTER COVENANTS
SECTION 6.1. Auditors. For a period of three years following the
date of this Agreement, Halter shall not voluntarily cease to retain Ernst &
Young as its auditing firm with respect to its financial statements; provided,
however, that Halter may voluntarily cease to continue to retain Ernst & Young
as its auditing firm with respect to its financial statements if (i) Ernst &
Young ceases to satisfy any applicable criteria relating to independence of
auditors, (ii) the Board of Directors of Halter determines in good faith that a
disagreement exists between Halter and Ernst & Young that effectively precludes
Ernst & Young from adequately performing its duties as Halter's independent
auditing firm, or (iii) the Board of Directors of Halter determines in good
faith that the performance of Ernst & Young as its outside auditing firm is
materially deficient.
SECTION 6.2. Maintenance of Insurance Coverage. For a period of
three years following the date of this Agreement, Halter shall keep in force
the insurance coverage described in Schedule E attached hereto.
SECTION 6.3. Protection of Tax-Free Status of Separation. Halter
shall not take, nor shall it permit any member of the Halter Group to take, any
action that reasonably could be expected to prevent any divestiture by Trinity
of Trinity's remaining interest in Halter (the "Separation") (whether effected
by means of an exchange offer to Trinity's stockholders or by means of a
distribution of stock of Halter to Trinity's stockholders) from qualifying as a
tax-free transaction pursuant to Section 355 of the Internal Revenue Code of
1986, as amended, or that otherwise reasonable could be expected to jeopardize
the ability of Trinity to effect the proposed Separation as a tax-free
transaction if it elects to do so. Without limiting the foregoing, Halter
shall not, prior to the earlier of the date of the Separation or the date of
notification by Trinity to the Company that Trinity elects not to consummate
the Separation as a tax-free transaction, issue or grant (or permit any other
member of the Halter Group to issue or grant), directly or indirectly, any
shares of common stock of Halter or any rights, warrants, options or other
securities entitling the holder to purchase or acquire any shares of common
stock of Halter, except pursuant to the stock options exercisable for an
aggregate of 250,000 shares of common stock of Halter granted on the date of
consummation of the Offering.
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ARTICLE VII.
FEES AND EXPENSES
SECTION 7.1. Fees and Expenses. Halter shall pay all third party
costs, fees and expenses relating to the Offering, all of the reimbursable
expenses of the Underwriters pursuant to the Underwriting Agreement, all of the
costs of producing, printing, mailing and otherwise distributing the
Prospectus, as well as the Underwriters' discounts and commissions as provided
in the Underwriting Agreement. Except as expressly provided in this Agreement
or any of the Related Agreements, Trinity will pay all third party fees, costs
and expenses paid or incurred in connection with the proposed Separation.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Notices. All notices and other communications hereunder
shall be in writing and shall be given by delivery in person, by registered or
certified mail (return receipt requested and with postage prepaid thereon) or
by cable, telex or facsimile transmission to the parties at the following
addresses (or at such other address as any party shall have furnished to the
other in accordance with the terms of this Section 8.1.):
If to Trinity:
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207-2401
Fax: (214) 589-8910
Attention: F. Dean Phelps, Vice President
If to Halter:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, MS 39503
Fax: (601) 897-4866
Attention: John Dane III, President
All notices and other communications hereunder that are addressed as provided
in or pursuant to this Section 8.1. shall be deemed duly and validly given (a)
if delivered in person, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested and with postage prepaid thereon), 72
hours after being placed in a depository of the United States mails and (c) if
delivered
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by cable, telex or facsimile transmission, upon transmission thereof and
receipt of the appropriate answerback.
SECTION 8.2. Amendment; Waivers. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with any term or provision hereof
may be waived only by a written instrument executed by each party entitled to
the benefits of the same. Except as expressly provided herein to the contrary,
no failure to exercise any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege granted hereunder.
SECTION 8.3. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether written or oral,
between the parties with respect to the subject matter hereof.
SECTION 8.4. Parties in Interest. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors (it being understood and agreed that, except as expressly provided
herein, nothing contained in this Agreement is intended to confer upon any
other person any rights, benefits or remedies of any kind or character
whatsoever under or by reason of this Agreement).
SECTION 8.5. Assignment. No party may assign this Agreement without
the prior written consent of the other party hereto and any such attempted
assignment by either party without such prior written consent shall be null and
void; provided, however, that no consent shall be required upon any transfer of
its rights hereunder to one or more of the members of its respective Group; and
provided further, that no consent shall be required upon any consolidation or
merger of a party with or into another Person, or any transfer of all or
substantially all of the assets of such party to another Person. No assignment
of this Agreement or any of the rights or obligations hereof shall relieve any
party of its obligations under this Agreement, unless consented to in writing
by the other party.
SECTION 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
principles of conflicts of law.
SECTION 8.7. Severability. In the event any provision contained
herein shall be held to be invalid, illegal or unenforceable for any reason,
the invalidity, illegality or unenforceability thereof shall not affect any
other provision hereof, and, to the extent permitted by law, this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
SECTION 8.8. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in
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accordance with the terms hereof. Accordingly, the parties agree that each of
them shall be entitled to seek injunctive relief to prevent breaches of the
terms of this Agreement and to seek specific performance of the terms hereof,
in addition to any other remedy now or hereafter available at law or in equity,
or otherwise.
SECTION 8.9. Headings. The headings herein are for the convenience
of reference only, do not constitute a part of this Agreement and shall not be
deemed to limit, extend or otherwise affect the meaning of any of the
provisions hereof.
SECTION 8.10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
TRINITY INDUSTRIES, INC.
By:
--------------------------------
F. Dean Phelps
Vice President
HALTER MARINE GROUP, INC.
By:
---------------------------------
John Dane III
Vice President
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EXHIBIT 10.4
TAX SHARING AND TAX BENEFIT
REIMBURSEMENT AGREEMENT
This Agreement, by and between TRINITY INDUSTRIES, INC., a Delaware
corporation ("Trinity"), and HALTER MARINE GROUP, INC., a Delaware corporation
("Halter").
WITNESSETH:
WHEREAS, Trinity files consolidated federal income tax returns in
accordance with the privilege granted by Sections 1501 and 1502 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the temporary and final
Treasury regulations promulgated thereunder (the "Regulations"), with respect
to its taxable year ending March 31, 1997 and tax periods thereafter, for and
on behalf of itself, Halter, and other "includible corporations" within the
meaning of Section 1504 of the Code which are members of the affiliated group
of which Trinity is the common parent (the "Group"); and
WHEREAS, it is deemed equitable that with respect to each taxable
period for which a consolidated return is filed by Trinity which includes
Halter, Halter pay to Trinity an amount equal to Halter's Separate Return Tax
Liability hereinafter defined; and
WHEREAS, it is deemed equitable that with respect to each taxable
period for which a consolidated return is filed by Trinity which includes
Halter and in which the Group utilizes a net operating loss or credit of
Halter, Trinity shall, in the manner prescribed hereinafter, credit against the
future liability of Halter to Trinity hereunder an amount equal to the income
tax benefit
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<PAGE> 2
obtained by Trinity as a result of the utilization by the Group of such net
operating loss or credit of Halter; and
WHEREAS, it is deemed equitable that in the event that Halter or its
subsidiaries, if any, for any reason becomes disaffiliated from the Group as a
result of failing to meet the requirements for inclusion in the Group
prescribed by Section 1504 of the Code, the portion of the economic burdens and
benefits of tax payments, deficiencies and refunds of the Group which are
attributable to the period in which disaffiliation occurs and for prior
consolidated return periods in which Halter or any such subsidiary was included
in the Group, are to be allocated to Trinity and Halter as hereinafter
provided.
NOW, THEREFORE, the parties signatory hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following
additional definitions shall apply:
(a) "Halter Group" shall mean Halter and its
Subsidiaries, if any.
(b) "Subsidiary" of Trinity or Halter, as the context may
require, shall mean any corporation that is a member
of the Group and that is connected in an unbroken
chain of stock ownership satisfying the requirements
of Section 1504(a) of the Code beginning with Trinity
or Halter as the case may be.
2
<PAGE> 3
2. Payment of Separate Return Tax Liability by Halter to Trinity.
(a) With respect to each taxable period for which a
consolidated, combined or unitary tax return is filed
by Trinity which includes Halter, Halter shall pay to
Trinity an amount equal to the Separate Return Tax
Liability of the Halter Group, determined in
accordance with Section 3 hereof, such payment by
Halter, including installments of estimated tax
payments, to be made to Trinity at least five (5)
business days prior to the due dates thereof (such
due dates being determined as if the Halter Group
were required to file a separate consolidated or
unitary tax return reflecting its Separate Return Tax
Liability for the taxable period), whether or not the
Group is obligated to pay a tax liability for the
applicable period. The amount and due dates of
estimated tax payments to be made by Halter to
Trinity shall be determined by Trinity, but shall not
be, in the aggregate, less than the Halter Group's
Separate Return Tax Liability for the immediately
preceding taxable period.
(b) The parties hereto acknowledge that any payment under
this Section 2 is the payment of a tax obligation by
Halter and shall be taken into account in determining
the earnings and profits of Halter and Trinity's
basis in Halter's stock in the hands of Trinity,
subject to the applicable provisions of Sections 1552
and 312(h) of the Code and Sections 1.312-10,
1.1552-1, 1.1502-32, and 1.1502-33 of the
Regulations.
3
<PAGE> 4
3. Determination of Separate Return Tax Liability. For each
taxable period during which Halter is a member of the Group,
the Separate Return Tax Liability of the Halter Group shall
mean the hypothetical federal, state or local income tax
liability (computed without regard to any consolidated credit,
capital loss or net operating loss deduction allocated under
the Regulations under Section 1502 of the Code to one or more
members of the Halter Group, to the extent that (i) such
credit or loss becomes allocable as a carryover for the first
taxable year of the Halter Group beginning on or after the
date on which Halter becomes disaffiliated from the Group or
(ii) such credit or loss has previously been taken into
account in determining the tax sharing obligations of any
member or members of the Halter Group for any prior taxable
period under this Agreement or any other tax sharing agreement
or arrangement previously in effect), determined as if the
Halter Group had filed a separate consolidated, unitary or
combined income tax return for the applicable period and its
income were taxable at the highest corporate tax rate in
effect for such period. If the computation of the Separate
Return Tax Liability of the Halter Group pursuant to this
Section 3 for a taxable period does not result in positive tax
liability, then for purposes of Section 2 hereof the Separate
Return Tax Liability of the Halter Group shall be deemed to be
zero, and any net operating loss of the Halter Group for such
period shall be taken into account only as otherwise provided
herein. The determination of the Separate Return Tax
Liability of the Halter Group shall be made by Trinity and
such determination shall be conclusive for purposes hereof.
4
<PAGE> 5
4. Credit to Separate Return Tax Liability of Halter
If the Halter Group is entitled to a tax credit or would incur
a capital or net operating loss during a taxable period if it
filed a separate consolidated return for such period, or
would, if it filed a separate consolidated, combined or
unitary return for all periods covered by this Agreement
computed as described in section 3, be entitled to a credit or
a capital or net operating loss deduction with respect to
capital losses, net operating losses or credits carried
forward or back to such period (exclusive of capital losses,
net operating losses or credits for which the Halter Group has
previously received credit in computing its tax sharing
obligation under this Agreement or any other tax sharing
agreement or arrangement previously in effect), and if it is
determined by Trinity that such credit, capital loss, net
operating loss or deduction will be utilized by Trinity in
filing its consolidated, combined or unitary income tax return
for the current taxable period or for any previous period and
that such credit, capital loss, net operating loss or
deduction will provide a tax benefit in any such period,
Trinity shall credit against the Separate Return Tax Liability
owed by Halter to Trinity pursuant to this Agreement for the
current taxable period and all future taxable periods until
the credit fully utilizes an amount equal to the net tax
benefit which Trinity, in its sole judgement, determines the
Group will obtain. Trinity shall apply such credit against
the Separate Return Tax Liability of the Halter Group as
provided above with respect to any taxable period as of the
first installment date for such year. Trinity shall have the
right to adjust, as of the last day of succeeding quarters the
5
<PAGE> 6
amount credited pursuant to this Section 4 based upon the
determination of Trinity that the amount credited in preceding
quarters was incorrect.
5. Excess Loss Account Income. If Trinity is required for any
reason to include in the Group's consolidated federal taxable
income the amount of any excess loss account (as defined in
Section 1.1502-19(a)(2)(i) of the Regulations), applicable to
the stock of Halter, Halter shall pay to Trinity an amount
equal to 66% of such excess loss account (prior to the
payment) as determined by Trinity. Such payment shall be made
within sixty (60) days following the end of the taxable period
of the Group in which the excess loss account inclusion
occurred.
6. Tax Liability of Halter in the Event of Disaffiliation. In
the event that Halter or another member of the Halter Group
becomes disaffiliated from the Group for any reason, Halter
shall remain liable under this Agreement for the tax liability
of the Group for the taxable period during which
disaffiliation occurs and for prior taxable periods in which
Halter or the other affected member, as the case may be, was a
member of the Group and this Agreement was effective. Halter
shall be required to pay Trinity only those amounts for the
period of disaffiliation that are determined pursuant to
Sections 2, 3, 4 and 5 hereof. Payment of such tax liability
by Halter shall be made to Trinity at least five (5) business
days prior to the due date of the applicable tax return.
Moreover, should a tax controversy with the Internal Revenue
Service or any state or local taxing authority ultimately
result in assessment of a tax deficiency against the Group for
years in which Halter was affiliated with such Group, Halter
shall remain liable for Halter's portion of such
6
<PAGE> 7
tax deficiency determined pursuant to Sections 2, 3, 4 and 5
hereof, plus interest and penalties as provided in Section 9,
if any.
7. Payment of Tax Refunds to Halter. If, after the
disaffiliation of Halter from the Group, Trinity receives from
the Internal Revenue Service or any state or local taxing
authority any refund of tax (and interest, if any) paid by the
Group, any amount of which in the sole judgment of Trinity
should be regarded as a refund of amounts paid by Halter
pursuant to Section 2 or 5 hereof, such amount shall be paid
by Trinity to Halter within sixty (60) business days after
receipt.
8. Indemnity. In the event Halter is required to pay to the
Internal Revenue Service or any state or local taxing
authority tax liability in excess of its Separate Return Tax
Liability determined pursuant to Section 3 hereof, Halter
shall be entitled to reimbursement within sixty (60) business
days of such payment by Trinity. In the event Trinity is
required to pay to the Internal Revenue Service or any state
or local taxing authority additional taxes due to the
disallowance of all or part of any item utilized by Trinity
and for which Halter received credit against amounts due from
Halter hereunder as provided in Section 4 hereof (or if
Trinity would have been so required to pay the Internal
Revenue Service or any state or local taxing authority but for
other adjustments), Halter shall pay to Trinity the amount of
such additional tax paid by Trinity (or which Trinity would
have been required to pay but for other adjustments);
provided, however, the amount so paid by Halter to Trinity
shall not exceed the cumulative payments made by Trinity to
Halter
7
<PAGE> 8
pursuant to Section 4 hereof with respect to such item (except
as provided in Section 9 below).
9. Payment of Interest, Penalties and Expenses. Interest,
penalties and expenses incurred by Trinity in connection with
the amendment of any consolidated, combined or unitary tax
return, and/or the examination of any consolidated, combined
or unitary return by the Internal Revenue Service or any state
or local taxing authority or subsequent administrative or
judicial proceedings, shall be borne equitably by those
parties whose tax liability may be affected by such amendment,
examination or subsequent proceedings. No interest shall be
charged to Trinity or Halter in connection with any allocation
under this Agreement, however, unless interest is payable to
the Internal Revenue Service or any state or local taxing
authority or to another member of the Group as a result of any
tax allocation.
10. Trinity as Agent.
(a) Trinity, as agent for the members of the Group, shall
have full authority to prepare and file the Group's
consolidated, combined or unitary tax return, to pay
any tax liability shown thereon, and to represent the
Group in connection with the examination of any such
return by the Internal Revenue Service or any state
or local taxing authority and in the resolution of
disputes regarding any consolidated, combined or
unitary tax liability.
(b) Halter shall provide Trinity with the data necessary
for the proper and timely filing of all federal,
state and local tax returns and forms. In the
8
<PAGE> 9
event Halter fails to provide data in proper form and
within sufficient time to permit the timely filing of
any such tax return, any penalties or interest
assessed against the Group by reason of a delay in
filing such tax return shall be payable by Halter.
If Halter provides data in proper form and within
sufficient time to permit the timely filing of a
particular tax return, any penalties or interest
assessed against the Group by reason of a delay in
filing such return shall not be payable by Halter.
Any and all such data shall be confidential and may
be disclosed by Trinity to third parties only to the
extent Trinity, in the exercise of its reasonable
business judgment, determines such disclosure is
necessary or appropriate to comply with its
obligations under applicable federal, state or local
taxing provisions.
(c) The agency power of Trinity, as described in this
section, shall extend to all periods during which
Halter or any member of the Halter Group is a member
of the Group, and, in the event of Halter's
disaffiliation, Trinity shall retain the sole power
to make or change on behalf of Halter any election or
other decision affecting tax liabilities for such
periods that Halter was affiliated with the Group
under the provisions of the Code providing for
elections.
11. State or Local Income or Excise Tax Returns. Trinity shall
have the responsibility and authority to file in any state or
local consolidated, combined or unitary income, franchise and
excise tax returns on behalf of the Group and to allocate
state or local income, franchise or excise tax liabilities
among the members of the Group.
9
<PAGE> 10
12. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of Trinity and Halter and their
respective successors and assigns; provided, however, that
neither this Agreement, nor any rights or interest hereunder,
shall be assignable by any such corporation without the prior
written consent of Trinity.
13. Application of Agreement. This Agreement shall be applicable
to the taxable period of the Group ending March 31, 1997, and
to each taxable period thereafter, so long as a consolidated
federal income tax return is filed by Trinity which includes
Halter.
14. Allocation Among Halter and Its Included Subsidiaries.
Nothing herein shall be deemed to preclude or require any
allocation of the Separate Return Tax Liability of Halter
among or between Halter and its Subsidiaries, if any.
15. Modifications. This Agreement may be modified or amended only
pursuant to an instrument in writing executed by all the
parties signatory hereto.
16. Entire Agreement. This Agreement constitutes the entire
agreement among the parties relating to the allocation of the
consolidated federal income tax liability of the Group between
or among the parties.
17. Applicable Law. This Agreement shall constitute a contract
governed and construed in accordance with the laws of the
State of Texas.
18. Headings. The headings used in this Agreement are for
convenience only and shall not in any way affect the meaning
or interpretation of any provision hereof.
10
<PAGE> 11
19. Copies. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original, but
all of which shall together constitute one Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and the corporate
seals affixed hereto on this ____day of ___________, 1996, but to be effective
as of the day and year first above written.
TRINITY INDUSTRIES, INC.
BY
-----------------------------------
HALTER MARINE GROUP, INC.
BY
-----------------------------------
11
<PAGE> 1
EXHIBIT 10.5
TRADEMARK LICENSE AGREEMENT
THIS NONEXCLUSIVE TRADEMARK LICENSE AGREEMENT is made and
entered into this _____ day of ___________________, 1996, by and between
Trinity Industries, Inc., a Delaware corporation, having an address of 2525
Stemmons Freeway, Dallas, Texas 75207 ("Licensor"), and Halter Marine, Inc., a
Nevada corporation, Equitable Shipyards, Inc., Gretna Machine and Ironworks,
Inc., Gulf Coast Fabrication, Inc., Halter Marine, Inc., a Louisiana
corporation, Halter Marine Services, Inc., Halter Gulf Repair, Inc., Halter
Marine Gulfport, Inc., Halter Marine Panama City, Inc., Halter Marine
Pascagoula, Inc., Trinity Yachts, Inc. and Washington Marine Fabricators, Inc.
(collectively, "Licensee").
W I T N E S S E T H :
WHEREAS, Licensor is the owner of all right, title and
interest in and to the trademark TRINITY in the United States and worldwide
(the "Mark"); and
WHEREAS, Licensee desires to use the Mark as "TRINITY YACHTS"
upon and in connection with the manufacture, design, sale and maintenance of
yachts (the "Goods and Services");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, it is hereby agreed as follows:
1. Grant of License.
a. Grant. Upon the terms and conditions
hereinafter set forth, Licensor hereby grants to Licensee a
nonexclusive license to use the Mark in connection with the
Goods and Services throughout the world (the "License").
b. Sublicensing. Licensee shall have the right
to grant sublicenses only under such terms and to such parties
as are approved in advance by Licensor. Each approved
sublicensee shall be bound by the terms and conditions of this
Agreement as if it were named herein in the place of Licensee.
c. Term. The License hereby granted shall be
effective on the date set forth above, and shall remain in
full force and effect for ninety-nine (99) years thereafter.
2. Goodwill. Licensee recognizes the great value of the
goodwill associated with the Mark and acknowledges that the Mark and all rights
therein and the goodwill pertaining thereto belong exclusively to Licensor, and
that the Mark has a secondary meaning in the mind of the public.
1
<PAGE> 2
3. Licensor's Title and Protection of Licensor's Rights.
Licensee shall not during the term of this Agreement, or thereafter, attack the
title or any rights of Licensor in and to the Mark or attack the validity of
this License.
4. Quality of Goods and Services. The sale or rendering
of Goods and Services by Licensee will be provided in accordance with any
written guidelines designated by Licensor from time to time and with all
applicable federal, state and local laws, and the same shall not reflect
adversely upon the good name of Licensor or the Mark. All Goods and Services
provided by Licensee will be of high quality, standard and skill. Upon request
by Licensor, Licensee shall furnish to Licensor free of cost, for its written
approval in advance, examples of printed items used and to be used by Licensee
in connection with the Goods and Services.
5. Inspection. Licensor shall have the right to inspect
the premises operated by Licensee and the Goods sold by Licensee under the
Mark, upon reasonable notice, to ensure compliance with Licensor's quality
control requirements.
6. Use of Mark by Licensee.
a. Licensee shall use the Mark with the
applicable symbols identifying trademark ownership, namely,
"TM" or (R) , whichever is appropriate, on all printed matter
and on the builder's plate attached to the Goods.
b. Licensee shall cooperate fully and in good
faith with Licensor for the purpose of securing and preserving
Licensor's rights in and to the Mark. However, it is agreed
that all rights relating to the Mark are reserved by Licensor,
except for the License hereunder to Licensee of the right to
use the Mark only as specifically and expressly provided in
this Agreement. At the termination or expiration of this
Agreement, Licensee will be deemed to have assigned,
transferred and conveyed to Licensor any right in and to the
Mark which may have been obtained by Licensee or which may
have vested in Licensee in pursuance of any endeavors covered
hereby, and Licensee will execute any instruments requested by
Licensor to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without
consideration other than the mutual covenants and
considerations of this Agreement.
c. Licensee's every use of the Mark shall inure
to the benefit of Licensor. Licensee shall not at any time
acquire any rights in the Mark by virtue of any use it may
make of such Mark.
7. Policing and Enforcement of Rights. Licensee
shall take reasonable steps to police Licensor's rights in the Mark. Upon
discovering a third party use of any of the Mark that conflicts with the rights
of Licensor, Licensee shall notify Licensor of the circumstances
2
<PAGE> 3
of the conflict. Within thirty (30) days of its receipt of such notice,
Licensor, in its sole discretion, will provide Licensee with its approval or
disapproval for Licensee to take action with respect to the conflict and, if
any action is approved by Licensor, Licensor shall specify which action or
actions that Licensee may take. Licensor shall have no duty to defend the
Mark.
8. Promotional Material. In all cases where Licensee
desires artwork pertaining to the subject of this License, the cost of such
artwork and the time for production thereof shall be borne by Licensee unless
otherwise agreed between the parties. All artwork and designs involving the
Mark, or any reproduction thereof, shall, notwithstanding their creation or use
by Licensee, be and remain the property of Licensor.
9. Termination for Cause. If Licensee shall violate any
of its obligations under the terms of this Agreement, Licensor shall have the
right to terminate the license hereby granted upon ten (10) days' notice in
writing, and such notice of termination shall become effective unless Licensee
shall completely remedy the violation within the ten (10) day period and
satisfy Licensor, in Licensor's sole discretion, that such violation has been
remedied.
10. Disposal of Stock Upon Termination or Expiration.
After termination of the License, Licensee, except as otherwise provided in
this Agreement, may dispose of inventory and promotional articles covered by
this Agreement which are on hand at the time notice of termination is received
for a period of sixty (60) days after notice of termination. Notwithstanding
anything to the contrary herein, Licensee shall not sell Goods or render
Services in conjunction with the Mark after termination of the License if the
License is terminated due to the departure by Licensee from the quality and
style approved by Licensor.
11. Effect of Termination or Expiration.
a. Upon and after the expiration or termination
of the License, all rights granted to Licensee hereunder shall
forthwith revert to Licensor, and Licensee will refrain from
further use of the Mark or any further reference to said Mark,
whether direct or indirect, or anything deemed by Licensor to
be similar to the Mark in connection with Licensee's Goods and
Services.
b. Termination of the License shall be without
prejudice to any rights which Licensor may otherwise have
against Licensee.
12. Licensor's Remedies.
a. Licensee acknowledges that its failure
(except as otherwise provided herein) to cease the sale or
rendering of the Goods and Services at the termination or
expiration of this Agreement, or its improper use of the
Mark, will result in immediate and irremediable damage to
Licensor. Licensee acknowledges and admits that there is no
adequate remedy at law for such
3
<PAGE> 4
failure to cease sale and distribution or improper use, and
Licensee agrees that in the event of such failure, Licensor
shall be entitled to equitable relief by way of temporary and
permanent injunctions (it being understood that any
requirement for the posting of a bond in connection therewith
is hereby waived by Licensee), and such other and further
relief as any court with jurisdiction may deem just and
proper.
b. Resort to any remedies referred to herein
shall not be construed as a waiver of any other rights and
remedies to which Licensor is entitled under this Agreement or
otherwise.
13. Non-Use of Mark by Licensee. If Licensee does not
make substantial use of the Mark in connection with the Goods and Services
within any three (3) year period during the term of this Agreement, this
License shall automatically terminate and all rights granted hereunder shall
revert to Licensor as provided in Paragraph 11.
14. Indemnification
a. Licensee shall hold harmless and indemnify
Licensor, its subsidiaries, divisions, affiliates,
stockholders, officers and agents from any costs (including
attorneys' fees and costs of court), liabilities, damages or
awards arising out of any lawsuit or claim that may be brought
against Licensor, its subsidiaries, divisions, affiliates,
stockholders, officers and agents, for any claims, demands,
causes of action, litigation or other proceedings which may
result from or arise from the use of the Mark by Licensee.
Licensee further agrees to defend any action which may be
brought against Licensor, its subsidiaries, divisions,
affiliates, stockholders, officers and agents, at Licensee's
sole cost and expense, provided that Licensor shall notify
Licensee, by telephone, with immediate notice, of any claim or
complaint in any action, and promptly forward all documents
relating thereto to Licensee and to otherwise assist Licensee
and its attorneys in any manner necessary in the defense of
any such action.
b. Licensee agrees to indemnify and hold
harmless Licensor against any and all losses, damages,
injuries and any other liabilities arising out of or in
connection with the operation of Licensee's business, to
defend, at its own expense, any and all actions, suits and
other legal proceedings that may be commenced against Licensor
and/or Licensee arising out of or in connection with the
operation of Licensee's business, and to pay or satisfy any
judgment that may be rendered against Licensor and/or Licensee
in any such action, suit or legal proceeding.
15. Notices. All notices and other
communications hereunder shall be in writing and shall be given by delivery in
person, by registered or certified mail (return receipt
4
<PAGE> 5
requested and with postage prepaid thereon) or by cable, telex or facsimile
transmission to the parties at the following addresses (or at such other
address as any party shall have furnished to the other in accordance with the
terms of this Paragraph 15):
If to TII:
Trinity Industries, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207
Fax: (214) 589-8824
Attention: F. Dean Phelps
Vice President
If to Licensee:
c/o Halter Marine, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Fax: (601) 897-4866
Attention: John Dane III
President
All notices and other communications hereunder that are addressed as provided
in or pursuant to this Paragraph 14 shall be deemed duly and validly given (a)
if delivered in person, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested and with postage prepaid thereon),
seventy-two (72) hours after being placed in a depository of the United States
mails and (c) if delivered by cable, telex or facsimile transmission, upon
transmission thereof and receipt of the appropriate answer back.
16. No Joint Venture. Nothing herein contained shall be
construed to place the parties in the relationship of partners or joint
venturers, and Licensee shall have no power to obligate or bind Licensor in any
manner whatsoever.
17. No Waiver. There are no representations, promises,
warranties, covenants or undertakings other than those contained in this
Agreement, which represent the entire understanding of the parties. The
failure of either party hereto to enforce, or the delay by either party in
enforcing any of its rights under this Agreement, shall not be deemed a
continuing waiver or a modification thereof, and either party may, within the
time provided by applicable law, commence appropriate legal proceedings to
enforce any or all of such rights.
18. Assignment. Neither this Agreement nor any interest
herein may be assigned, in whole or in part, by Licensee without the prior
written consent of the other party, except that without securing such prior
written consent, Licensee may assign this Agreement to a successor of its
entire business or of all of its assets. Licensor may assign this Agreement.
5
<PAGE> 6
19. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
FOR ITS CHOICE OF LAW PRINCIPLES.
20. Jurisdiction and Venue. The parties consent to the
personal jurisdiction and venue of the Federal District Court for the Northern
District of Texas, Dallas Division, and of the Dallas County, Texas District
Courts, for any action arising from the breach, misrepresentation of any
warranty or enforcement of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first above written.
LICENSOR:
TRINITY INDUSTRIES, INC.
By:
-------------------------------------
F. Dean Phelps
Vice President
LICENSEE:
HALTER MARINE, INC.,
a Nevada corporation
By:
-------------------------------------
John Dane III
President
EQUITABLE SHIPYARDS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
6
<PAGE> 7
GULF COAST FABRICATION, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE SERVICES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER GULF REPAIR, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE GULFPORT, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE PANAMA CITY, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
7
<PAGE> 8
HALTER MARINE PASCAGOULA, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
TRINITY YACHTS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
WASHINGTON MARINE FABRICATORS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE, INC., a Louisiana
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
GRETNA MACHINE AND IRONWORKS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
8
<PAGE> 9
STATE OF TEXAS )
)
COUNTY OF DALLAS )
On this __________ day of _________________, 1996, personally
appeared before me F. Dean Phelps, known to me to be the Vice President of
Trinity Industries, Inc., the Licensor above named, and acknowledged that he
executed the foregoing agreement on behalf of said Licensor and pursuant to
authority duly received.
----------------------------------------
Notary Public, State of Texas
----------------------------------------
Printed Name of Notary
My Commission Expires:
----------------------------------------
STATE OF _____________________ )
)
COUNTY OF ___________________ )
On this __________ day of ___________________, 1996,
personally appeared before me John Dane III, known to me to be the President of
Halter Marine Group, Inc., the Licensee above named, and acknowledged that he
executed the foregoing agreement on behalf of said Licensee and pursuant to
authority duly received.
----------------------------------------
Notary Public, State of_________________
----------------------------------------
Printed Name of Notary
My Commission Expires:
----------------------------------------
7
<PAGE> 1
EXHIBIT 10.6
Draft of September 5, 1996
================================================================================
HALTER MARINE GROUP, INC.
AND
THE BANK OF NEW YORK,
RIGHTS AGENT
________________
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER [__,] 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Issue of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Exercise of Rights; Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9. Reservation and Availability of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights . . . . . . . . . . . . 16
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . 24
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . 29
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 29. Determinations and Actions by the Board of Directors, etc. . . . . . . . . . . . . . . . . . . . . 37
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
Exhibit A - Form of Certificate of Designations of Series A Junior
Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
-ii-
<PAGE> 4
RIGHTS AGREEMENT
This Rights Agreement, dated as of September [__,] 1996 (the
"Agreement"), between Halter Marine Group, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, a New York banking corporation (the
"Rights Agent"),
W I T N E S S E T H:
WHEREAS, on September [__,] 1996 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
dividend of one Right for each share of common stock, par value $.01 per share,
of the Company (the "Common Stock") outstanding at the close of business on
September [__,] 1996 (the "Record Date"), and has authorized the issuance of
one Right (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common Stock of the
Company issued (whether originally issued or delivered from the Company's
treasury) between the Record Date and the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter defined), and, in
certain circumstances provided for in Section 22 hereof, after the Distribution
Date, each Right initially representing the right to purchase one Fractional
Share (as hereinafter defined) of Series A Junior Participating Preferred Stock
of the Company, upon the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include any Exempt Person; provided, however, that a Person shall not be or
become an Acquiring Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding solely as a result of a reduction in the number
of shares of Common Stock outstanding due to the repurchase of Common Stock by
the Company, unless and until such time as such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial
Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of shares of Common Stock constituting
1% or more of the then outstanding shares of Common Stock shall become an
Affiliate or Associate of such Person, unless, in either such case, such
Person, together with all Affiliates and Associates of such Person, is not then
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; and provided, further, that if there is at least one Continuing
Director then in office and the Board of Directors, with the concurrence of a
majority of the Continuing Directors then in office, determines in good faith
that a Person that would otherwise be an "Acquiring Person" has become such
inadvertently (including, without limitation,
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<PAGE> 5
because (i) such Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an "Acquiring Person"
or (ii) such Person was aware of the extent of its Beneficial Ownership of
Common Stock but had no actual knowledge of the consequences of such Beneficial
Ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person as promptly as
practicable divested or divests itself of Beneficial Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement; and provided
further, however, that Trinity Industries, Inc., a Delaware corporation
("Trinity"), shall not be an Acquiring Person unless it shall first cease to be
the Beneficial Owner of 15% or more of the shares of Common Stock outstanding,
at which time this proviso shall cease to have any effect.
At any time that the Rights are redeemable, there is at least one
Continuing Director then in office, the Board of Directors, with the
concurrence of a majority of the Continuing Directors then in office, may,
generally or with respect to any specified Person or Persons, determine to
increase to a specified percentage greater than that set forth herein or
decrease to a specified percentage lower than that set forth herein or
determine a number of shares to be (but in no event less than or equal to the
percentage or number of shares of Common Stock then beneficially owned by such
Person), the level of Beneficial Ownership of Common Stock at which a Person or
such Person or Persons becomes an Acquiring Person.
"Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on
the date of this Agreement; provided, however, that no Person shall be deemed
an "Affiliate" of Trinity solely by virtue of being an officer or director of
Trinity unless and until such officer or director, as the case may be, and
Trinity (or an Affiliate or Associate of Trinity) (i) have any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or consent as
described in the proviso to subparagraph (i) of the definition of "Beneficial
Owner") or disposing of any voting securities of the Company or (ii) are
members of any group (as that term is used in Rule 13d-5(b) of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement) with respect to the Company.
"Associate" shall mean, with reference to any Person, (1) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a Subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of
a general partner) or is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of equity securities, (2) any trust or other estate in
which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity and (3) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person.
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<PAGE> 6
A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, is the "beneficial owner" of
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement) or otherwise has the right to vote or dispose of, including
pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (i) as a result of an agreement, arrangement
or understanding to vote such security if such agreement, arrangement
or understanding: (A) arises solely from a revocable proxy or consent
given in response to a public (i.e., not including a solicitation
exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement)
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and (B) is not then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor
report);
(ii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right or obligation to
acquire (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights,
exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant
to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i) or (p)
hereof in connection with an adjustment made with respect to any
Original Rights; or
(iii) that are beneficially owned, directly or indirectly,
by (A) any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy or consent as described in the proviso
to subparagraph (i) of this definition) or disposing of any voting
securities of the Company or (B) any group (as that term is used in
Rule 13d-5(b) of the General Rules and Regulations under the Exchange
Act) of which such Person is a member;
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<PAGE> 7
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting (including
without limitation securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Rule 10b-7 promulgated under
the Exchange Act, or to cover overallotments created in connection with a
public offering) until the expiration of forty days after the date of such
acquisition provided further, however, that no such Person shall be deemed to
be an Acquiring Person as a result of such Person's participation as an
underwriter in the Company's initial public offering. For purposes of this
Agreement, "voting" a security shall include voting, granting a proxy, acting
by consent, making a request or demand relating to corporate action (including,
without limitation, calling a stockholder meeting) or otherwise giving an
authorization (within the meaning of Section 14(a) of the Exchange Act as in
effect on the date of this Agreement) in respect of such security.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"close of business" on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that if such date is not a Business
Day, it shall mean 5:00 p.m., New York City time, on the next succeeding
Business Day.
"Closing Price" of a security for any day shall mean the last sales
price, regular way, on such day or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which
such security is listed or admitted to trading, or, if such security is not
listed or admitted to trading on any national securities exchange but sales
price information is reported for such security, as reported by NASDAQ or such
other self-regulatory organization or registered securities information
processor (as such terms are used under the Exchange Act) that then reports
information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by NASDAQ or such other
entity, or, if on such day such security is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of
Directors of the Company. If on such day no market maker is making a market in
such security, the fair value of such security on such day as determined in
good faith by the Board of Directors of the Company shall be used.
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company, except that "Common Stock" when used with reference to equity
interests issued by any Person other than the Company shall mean the capital
stock of such Person with the greatest voting
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<PAGE> 8
power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Company" shall mean the Person named as the "Company" in the preamble
of this Agreement until a successor Person shall have become such or until a
Principal Party shall assume, and thereafter be liable for, all obligations and
duties of the Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor Person or
Principal Party.
"Continuing Director" shall mean any member of the Board of Directors
of the Company, while such Person is a member of the Board of Directors of the
Company, who is not an officer or employee of the Company or any Subsidiary of
the Company and who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a nominee or representative of an Acquiring Person or
of any such Affiliate or Associate, if (i) such Person was a member of the
Board of Directors of the Company prior to the time a Person becomes an
Acquiring Person or (ii) such Person's nomination for election or election to
the Board of Directors of the Company is recommended or approved by a majority
of the then Continuing Directors.
"Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
"Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"Distribution Date" shall mean the earlier of (i) the close of
business on the tenth day (or, if such Stock Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be determined by the
Company's Board of Directors as set forth below before the Distribution Date
occurs) after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Company's Board of Directors as set
forth below before the Distribution Date occurs) after the date that a tender
offer or exchange offer by any Person (other than any Exempt Person) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act as then in effect, if upon
consummation thereof, such Person would be an Acquiring Person, other than a
tender or exchange offer that is determined before the Distribution Date occurs
to be a Permitted Offer. If there is at least one Continuing Director then in
office, the Board of Directors of the Company, with the concurrence of a
majority of the Continuing Directors then in office, may, to the extent set
forth in the preceding sentence, defer the date set forth in clause (i) or (ii)
of the preceding sentence to a specified later date or to an unspecified later
date to be determined by a subsequent action or event (but in no event to a
date later than the close of business on the tenth day after the first
occurrence of a Triggering Event).
"Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
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<PAGE> 9
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
"Exempt Person" shall mean the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
and any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
"Expiration Date" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, (iii) the time at which the Rights expire pursuant to Section 13(d)
hereof and (iv) the time at which all Rights then outstanding and exercisable
are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the close of business on September
[__,] 2006 Expiration.
"Flip-In Event" shall mean an event described in Section 11(a)(ii)
hereof.
"Flip-In Trigger Date" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Flip-Over Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof, but excluding any transaction described in Section
13(d) hereof that causes the Rights to expire.
"Fractional Share" with respect to the Preferred Stock shall mean one
one-hundredth of a share of Preferred Stock.
"NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotations System.
"Original Rights" shall have the meaning set forth in the definition
of "Beneficial Owner."
"Permitted Offer" shall mean a tender offer or an exchange offer for
all outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the Continuing Directors who are not officers or employees
of the Company and who are not, and are not representatives, nominees,
Affiliates or Associates of, the person making the offer , after receiving
advice from one or more investment banking firms, to be (a) at a price and on
terms that are fair to stockholders (taking into account all factors that such
members of the Board deem relevant including, without limitation, prices that
could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in the best
interests of the Company and its stockholders.
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<PAGE> 10
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity.
"Preferred Stock" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights,
powers and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A and, to the extent that there is not a sufficient
number of shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock,
par value $.01 per share, of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
"Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
"Record Date" shall have the meaning set forth in the recitals clause
at the beginning of this Agreement.
"Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
"Rights" shall have the meaning set forth in the recitals clause at
the beginning of this Agreement.
"Rights Agent" shall mean the Person named as the "Rights Agent" in
the preamble of this Agreement until a successor Rights Agent shall have become
such pursuant to the applicable provisions hereof, and thereafter "Rights
Agent" shall mean such successor Rights Agent. If at any time there is more
than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
"Rights Certificates" shall mean the certificates evidencing the
Rights.
"Rights Dividend Declaration Date" shall have the meaning set forth in
the recitals clause at the beginning of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
"Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition and Section 23, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
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<PAGE> 11
"Subsidiary" shall mean, with reference to any Person, any corporation
or other Person of which an amount of voting securities sufficient to elect at
least a majority of the directors or other persons performing similar functions
is beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
"Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to Purchase
Preferred Stock sent pursuant to Section 3(b) hereof.
"Trading Day" with respect to a security shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business, or, if such
security is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.
"Triggering Event" shall mean any Flip-In Event or any Flip-Over
Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and to take certain
actions in respect of the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the holders of
the Common Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the Distribution Date, (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Stock registered in the names of the holders of the
Common Stock and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date (other than any Person referred
to in the first sentence of Section 7(e)), at the address of such holder shown
on the records of the Company, one or more Rights Certificates, evidencing one
Right for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
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<PAGE> 12
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C, to the sole record holder
of Common Stock as of the close of business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to
certificates for Common Stock outstanding as of the Record Date, until the
Distribution Date or the earlier surrender for transfer thereof or the
Expiration Date, the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates for
Common Stock together with the Summary of Rights, and the registered holders of
the Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any of the certificates for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
(c) Rights shall be issued in respect of all shares of Common
Stock that are issued (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances provided
in Section 22 hereof, after the Distribution Date. Certificates issued for
shares of Common Stock that shall so become outstanding or shall be transferred
or exchanged after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date shall also be deemed to be certificates for Rights,
and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between Halter
Marine Group, Inc. (the "Company") and The Bank of New York (the
"Rights Agent") dated as of September [__,] 1996 as it may from time
to time be supplemented or amended (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights may be redeemed, may be exchanged, may expire or may be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a written request
therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON
WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone, and registered holders of Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of
such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates.
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Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof), when, as and if
issued, shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
quotation system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever issued, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase
such number of Fractional Shares of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per Fractional
Share (or, as set forth in this Agreement, for other securities), the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by a Person
described in the first sentence of Section 7(e), and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any such Rights, shall contain (to the extent
feasible) the following legend, modified as applicable to apply to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby [will] [have] become
null and void in the circumstances and with the effect specified in
Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate. The
Company shall give notice to the Rights Agent promptly after it becomes aware
of the existence of any Acquiring Person or any Associate or Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof, which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such
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<PAGE> 14
officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the certificate number and the date of
each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 13(d), Section 14 and Section 24 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of Fractional Shares of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Rights Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof or of the
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e),
Section 13(d), Section 14 and Section 24 hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment by the holder of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split- up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case
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<PAGE> 15
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will,
subject to Section 4(b), Section 7(e), Section 13(d), Section 14 and Section
24, execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly completed and executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of Fractional Shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Fractional Share of Preferred
Stock pursuant to the exercise of a Right shall initially be $[___], and shall
be subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per Fractional Share of
Preferred Stock (or other shares, securities, cash or other assets, as the case
may be) to be purchased as set forth below and an amount equal to any
applicable transfer tax, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i)(A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of Fractional
Shares of Preferred Stock to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing interests in such number of Fractional Shares of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash,
if any, to be paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights
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<PAGE> 16
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified check, cashiers or
official bank check or bank draft payable to the order of the Company or the
Rights Agent. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) or Section 13(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by or transferred to (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person other than any such Person that became such
pursuant to a Permitted Offer and a majority of the Continuing Directors in
good faith determines was not involved in and did not cause or facilitate,
directly or indirectly, such Triggering Event, (ii) a direct or indirect
transferee of such Rights from such Acquiring Person (or any such Associate or
Affiliate) who becomes a transferee after such Triggering Event or (iii) a
direct or indirect transferee of such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
such Triggering Event and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from such Acquiring Person (or such
Affiliate or Associate) to holders of equity interests in such Acquiring Person
(or such Affiliate or Associate) or to any Person with whom such Acquiring
Person (or such Affiliate or Associate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Company determines (or a majority of the
Continuing Directors determines) is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action, no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise, and such Rights
shall not be transferable. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered
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<PAGE> 17
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) that, as provided in this Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) So long as any shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights are listed on any
national securities exchange or quoted on any trading system, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange, or quoted on such system, upon official notice of issuance upon such
exercise. Following the occurrence of a Triggering Event, the Company will use
its best efforts to list (or continue the listing of) the Rights and the
securities issuable and deliverable upon the exercise of the Rights on one or
more national securities exchanges or to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or such other
transaction reporting system then in use.
(c) The Company shall use its best efforts to (i) prepare and
file, as soon as practicable following the first occurrence of a Flip-In Event
or, if applicable, as soon as practicable following the earliest date after the
first occurrence of a Flip-In Event on which the consideration to be delivered
by the Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise
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<PAGE> 18
of the Rights, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the
Company shall determine that the Securities Act requires an effective
registration statement under the Securities Act following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights
until such time as such a registration statement has been declared effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or any required registration statement shall
not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Fractional Shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of Fractional Shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Rights Certificates to a Person other than, or the issuance or delivery of a
number of Fractional Shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of Fractional
Shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder upon the exercise of
any Rights until such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for a number of Fractional Shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed
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<PAGE> 19
to have become the holder of record of such shares (fractional or otherwise) of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
or other securities subject to purchase upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
Rights Dividend Declaration Date (A) declare a dividend on the
outstanding shares of Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a smaller
number of shares or (D) otherwise reclassify the outstanding shares of
Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number
and kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement, in
the event any Person shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing
such Person to become an Acquiring Person is (1) a Flip-
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<PAGE> 20
Over Event or (2) an acquisition of shares of Common Stock pursuant to
a Permitted Offer (provided that this clause (2) shall cease to apply
if such Acquiring Person thereafter becomes the Beneficial Owner of
any additional shares of Common Stock other than pursuant to such
Permitted Offer or a transaction set forth in Section 13(a) or 13(d)
hereof), then, (x) the Purchase Price shall be adjusted to be the
Purchase Price immediately prior to the first occurrence of a Flip-In
Event multiplied by the number of Fractional Shares of Preferred Stock
for which a Right was exercisable immediately prior to such first
occurrence and (y) each holder of a Right (except as provided below in
Section 11(a)(iii) and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at a price equal to the
Purchase Price in accordance with the terms of this Agreement, in lieu
of shares of Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by dividing the
Purchase Price by 50% of the Current Market Price per share of Common
Stock on the date of such first occurrence (such number of shares, the
"Adjustment Shares"); provided that the Purchase Price and the number
of Adjustment Shares shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of such first
occurrence.
(iii) In the event that the number of shares of Common
Stock that are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall,
to the extent permitted by applicable law and regulation, (A)
determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (computed using the Current
Market Price used to determine the number of Adjustment Shares) (the
"Current Value") over (2) the Purchase Price (such excess is herein
referred to as the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon the
exercise of the Rights and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock (including, without
limitation, the Preferred Stock) that the Board of Directors of the
Company has determined to have the same value as shares of Common
Stock (such shares of preferred stock are herein referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based
upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however,
if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the later of (x)
the first occurrence of a Flip-In Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Flip-In Trigger
Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the Company
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shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the 30-day period set forth above
may be extended to the extent necessary, but not more than 90 days
after the Flip-In Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To
the extent that the Company or the Board of Directors determines that
some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value
of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Flip-In Trigger Date and the value of any Common
Stock Equivalent shall be deemed to have the same value as the Common
Stock on such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling them
to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock that the aggregate offering price of the total number of shares
of Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration, part
or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the
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<PAGE> 22
Purchase Price shall be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current
Market Price per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock of a Person on any
date shall be deemed to be the average of the daily Closing Prices per
share of such Common Stock for the 30 consecutive Trading Days
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock on any date shall be deemed to be the average of
the daily Closing Prices per share of such Common Stock for the 10
consecutive Trading Days immediately following such date; provided,
however, that in the event that the Current Market Price per share of
Common Stock is determined during a period following the announcement
of (A) a dividend or distribution on such Common Stock other than a
regular quarterly cash dividend or the dividend of the Rights, or (B)
any subdivision, combination or reclassification of such Common Stock,
and the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification,
shall not have occurred prior to the commencement of the requisite 30
Trading Day or 10 Trading Day period, as set forth above, then, and in
each such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per
share shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share (or Fractional Share) of Preferred
Stock shall be determined in the same
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<PAGE> 23
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current
Market Price per share (or Fractional Share) of Preferred Stock cannot
be determined in the manner provided above or if the Preferred Stock
is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the "Current Market Price" per share
of Preferred Stock shall be conclusively deemed to be an amount equal
to 100 (as such number may be appropriately adjusted for such events
as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement)
multiplied by the Current Market Price per share of the Common Stock.
If neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of a Fractional Share of
Preferred Stock shall be equal to the Current Market Price of one
share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments that by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or to the nearest ten-thousandth of a Fractional Share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive in respect of such Right any shares of capital stock
other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (f), (g), (h), (i), (j), (k) and
(m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Fractional Shares of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
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<PAGE> 24
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Fractional Shares of Preferred Stock (calculated to the nearest one
ten-thousandth of a Fractional Share) obtained by (i) multiplying (x) the
number of Fractional Shares of Preferred Stock covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights in lieu of any adjustment
in the number of Fractional Shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of Fractional Shares
of Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of Fractional Shares of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Fractional Share and the
number of Fractional Shares that were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, or the stated
capital of the number of Fractional Shares of Preferred Stock or of the number
of shares of Common Stock or other securities issuable upon exercise of a
Right, the Company shall take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and
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<PAGE> 25
nonassessable such number of Fractional Shares of Preferred Stock or such
number of shares of Common Stock or other securities at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities that by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11 hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time that there is an Acquiring Person, (i) consolidate with any other Person,
(ii) merge with or into any other Person, or (iii) sell, lease or transfer (or
permit one or more Subsidiaries to sell, lease or transfer), in one transaction
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons, if (x) at the time of or
immediately after such consolidation, merger, sale, lease or transfer there are
any rights, warrants or other instruments or securities of the Company or any
other Person outstanding or agreements, arrangements or understandings in
effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease or transfer, the
stockholders or other equity owners of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates or Associates, or (z) the identity, form or nature of
organization of the Principal Party (including without limitation the selection
of the Person that will be the Principal Party as a result of the Company's
entering into one or more consolidations, mergers, sales, leases, transfers or
transactions with more than one party) would preclude or limit the exercise of
Rights or otherwise diminish substantially or eliminate the benefits intended
to be afforded by the Rights.
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<PAGE> 26
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if the purpose of
such action is to, or if at the time such action is taken it is reasonably
foreseeable that such action will, diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
(p) Notwithstanding Section 3(c) hereof or any other provision of
this Agreement to the contrary, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares or (iv) otherwise reclassify the outstanding shares of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding,
or issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction (the "Adjustment
Fraction") the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. In lieu of
such adjustment in the number of Rights associated with one share of Common
Stock, the Company may elect to adjust the number of Fractional Shares of
Preferred Stock purchasable upon the exercise of one Right and the Purchase
Price. If the Company makes such election, the number of Rights associated
with one share of Common Stock shall remain unchanged, and the number of
Fractional Shares of Preferred Stock purchasable upon exercise of one Right and
the Purchase Price shall be proportionately adjusted so that (i) the number of
Fractional Shares of Preferred Stock purchasable upon exercise of a Right
following such adjustment shall equal the product of the number of Fractional
Shares of Preferred Stock purchasable upon exercise of a Right immediately
prior to such adjustment multiplied by the Adjustment Fraction and (ii) the
Purchase Price following such adjustment shall equal the product of the
Purchase Price immediately prior to such adjustment multiplied by the
Adjustment Fraction.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) mail a
brief summary thereof to each registered holder of a Rights Certificate (or, if
prior to the Distribution Date, to each registered holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
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<PAGE> 27
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, from and after the time an Acquiring Person
has become such, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person, and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, (y)
any Person shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger, and, in connection with such consolidation or merger, all or part
of the outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of the Company or any other Person or cash or any
other property, or (z) the Company shall sell, lease or otherwise transfer (or
one or more of its Subsidiaries shall sell, lease or otherwise transfer), in
one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any wholly owned Subsidiary of the Company or any combination
thereof in one or more transactions each of which complies (and all of which
together comply) with Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper provision shall
be made so that: (i) the Purchase Price shall be adjusted to be the Purchase
Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of Fractional Shares of Preferred Stock for which a
Right was exercisable immediately prior to such first occurrence; (ii) on and
after the Distribution Date, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the Purchase Price in accordance with the terms of this
Agreement, in lieu of shares of Preferred Stock or Common Stock of the Company,
such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such
Flip-Over Event; provided that the Purchase Price and the number of shares of
Common Stock of such Principal Party issuable upon exercise of each Right shall
be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such first occurrence of a Triggering Event or
after the date of such Flip-Over Event, as applicable; (iii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
Flip-Over Event, all the obligations and duties of the Company pursuant to this
Agreement; (iv) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of a Flip-Over Event; (v) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (vi) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the occurrence of any Flip-Over Event.
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<PAGE> 28
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), (A) the Person that
is the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the Common Stock of
which has the greatest aggregate market value, or (B) if no securities
are so issued, (x) the Person that survives such consolidation or is
the other party to the merger and survives such merger, or, if there
is more than one such Person, the Person the Common Stock of which has
the greatest aggregate market value or (y) if the Person that is the
other party to the merger does not survive the merger, the Person that
does survive the merger (including the Company if it survives); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred, or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, the Person the Common Stock of which has
the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act, and if (1) such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
Person; (2) such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3) such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a "Subsidiary"
of both or all of such joint venturers and the Principal Parties in each such
chain shall bear the obligations set forth in this Section 13 in the same ratio
as their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any Flip-Over Event unless
each Principal Party (or Person that may become a Principal Party as a result
of such Flip-Over Event) shall have a sufficient number of authorized shares of
its Common Stock that have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and each such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of such Flip-Over
Event, the Principal Party at its own expense will
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<PAGE> 29
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the "blue sky" laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts, if the Common Stock of the
Principal Party is or shall become listed on a national securities
exchange, to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be
listed on a national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be reported by
NASDAQ or such other transaction reporting system then in use; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Flip-Over
Event shall occur at any time after the occurrence of a Flip-In Event, the
Rights that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a Permitted
Offer (or a wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transaction is not less than
the price per share of Common Stock paid to all holders of Common Stock whose
shares were purchased pursuant to such Permitted Offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates or scrip evidencing fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the Closing Price of one Right
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<PAGE> 30
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than, except as provided in Section 7(c) hereof,
fractions that are integral multiples of a Fractional Share of Preferred Stock)
upon exercise of the Rights or to distribute certificates or scrip evidencing
fractional shares of Preferred Stock (other than, except as provided in Section
7(c) hereof, fractions that are integral multiples of a Fractional Share of
Preferred Stock). Interests in fractions of shares of Preferred Stock in
integral multiples of a Fractional Share of Preferred Stock may, at the
election of the Company in its sole discretion, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the shares of
Preferred Stock represented by such depositary receipts. In lieu of fractional
shares of Preferred Stock that are not integral multiples of a Fractional Share
of Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of one one-hundredth of the Closing Price of
a share of Preferred Stock for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates or scrip evidencing
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the Closing Price of one share of Common Stock for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent pursuant
to Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock) and, where applicable, the Company; and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against
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<PAGE> 31
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement. After a Triggering Event, holders of Rights shall
be entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by Rights Certificates and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the
certificate contained therein duly completed and fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
Fractional Shares of Preferred Stock or any other securities of the Company
that may at any time be issuable upon the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or
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other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it, after proper inquiry or
examination, to be genuine and to be signed and executed by the proper Person
or Persons and, where necessary, to be guaranteed, verified or acknowledged.
The provisions of this Section 18 shall survive any termination of
this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the President, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by
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Rights Certificates after receipt of actual knowledge of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred
Stock or Common Stock or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Preferred
Stock or Common Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, omission, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, omission, default, neglect or misconduct; provided, however, that
reasonable care was exercised in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
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Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and the Preferred Stock, by registered or
certified mail, and to the registered holders, if any, of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause) upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock and the Preferred Stock, by
registered or certified mail, and to the registered holders of the Rights
Certificates, if any, by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of
a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the registered
holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then the Rights Agent or the
registered holder of any Rights Certificate may apply to any court of competent
Texas jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of the State of New York (or of any other state of the United States so long
as such corporation is authorized to conduct a stock transfer or corporate
trust business in the State of Texas), in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000 or (b) an affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date,
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the Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement granted or awarded on or prior to the Distribution Date, or upon
the exercise, conversion or exchange of securities issued by the Company on or
prior to the Distribution Date, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the close of business on the tenth day
following the first date of public announcement of the occurrence of a Flip-In
Event (or, if such date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date) and (ii) the Expiration
Date, cause the Company to redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted, if necessary, to reflect any stock split, stock
dividend or similar transaction occurring after the Rights Dividend Declaration
Date (such redemption price being hereinafter referred to as the "Redemption
Price"); provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights after the time a Person becomes an Acquiring Person,
the Rights may be redeemed only if (A) there is at least one Continuing
Director then in office and (B) the Board of Directors, with the concurrence of
a majority of the Continuing Directors then in office, determines that such
redemption is, in their judgment, in the best interests of the Company and its
stockholders. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Flip-In Event until such time as the Company's right of redemption hereunder
has expired. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price of the Common Stock
at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors.
(b) Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the redemption of the Rights (the
effectiveness of which action may be conditioned on the occurrence of one or
more events or on the existence of one or more facts or may be effective at
some future time), evidence of which shall be filed with the Rights Agent and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly
after the effectiveness of the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the registered holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Company for the Common Stock.
Any notice that
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is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) If there is at least one Continuing Director then in office,
the Board of Directors of the Company, with the concurrence of a majority of
the Continuing Directors then in office, may, at its option, at any time and
from time to time after the occurrence of a Flip-In Event, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
shares of Common Stock or Common Stock Equivalents or any combination thereof,
at an exchange ratio of one share of Common Stock, or such number of Common
Stock Equivalents or units representing fractions thereof as would be deemed to
have the same value as one share of Common Stock, per Right, appropriately
adjusted, if necessary, to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors may not effect such exchange at any time
after (i) any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the shares of Common Stock then outstanding or (ii) the occurrence
of a Flip-Over Event.
(b) Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the exchange of any Rights pursuant to and
in accordance with subsection (a) of this Section 24 (the effectiveness of
which action may be conditioned on the occurrence of one or more events or on
the existence of one or more facts or may be effective at some future time) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or Common Stock
Equivalents equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the registered
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock and/or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected as nearly pro rata
as possible based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that the number of shares of Common Stock that
are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option, take all such
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action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates or scrip evidencing fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 24, the value of a whole share of Common Stock shall
be the Closing Price per share of Common Stock for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24, and the value of any
Common Stock Equivalent shall be deemed to have the same value as the Common
Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings
or retained earnings of the Company), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a wholly
owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or to effect any sale, lease or other transfer of all or
substantially all the Company's assets to any other Person or Persons (other
than a wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, lease, transfer, liquidation, dissolution or
winding up is to take place and the date of participation therein by the
holders of the shares of Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 20 days prior to the record date for determining holders
of the shares of Preferred Stock for purposes of such action, and in the case
of any such other action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any Flip-In Event or Flip-Over Event shall occur, then
the Company shall as soon as practicable thereafter give to each registered
holder of a Rights Certificate (or if occurring prior to the Distribution Date,
the registered holders of Common Stock), in accordance
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with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13(a) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Bank of New York
101 Barclay Street, 12W
New York, New York 10286
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Except as provided in
the last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of Rights or
holders of Common Stock. At any time when the Rights are not redeemable,
except as provided in the last sentence of this Section 27, the Company may and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
that may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable; provided that no such amendment or supplement shall
materially adversely affect the interests of the holders of Rights (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person); and
further provided that this Agreement may not
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be supplemented or amended pursuant to this sentence to lengthen (A) a time
period relating to when the Rights may be redeemed or (B) any other time period
unless the lengthening of such other time period is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than any Acquiring Person and its Affiliates and
Associates). Upon the delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment; provided, however, that the Rights Agent may, but
shall not be obligated to, enter into any such supplement or amendment that
affects the Rights Agent's own rights, duties or immunities under this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, (1) at any time after the time a Person becomes an Acquiring Person,
this Agreement may be supplemented or amended only if (A) there is at least one
Continuing Director then in office and (B) the Board of Directors, with the
concurrence of a majority of the Continuing Directors then in office,
determines that such supplement or amendment is, in their judgment, in the best
interests of the Company and its stockholders, and (2) no supplement or
amendment shall be made that decreases the Redemption Price.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (or, as set forth herein,
certain specified members thereof and, where specifically provided for herein,
the concurrence of a majority of the Continuing Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of a majority of
the Continuing Directors) or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
that are done or made by the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of a majority of the
Continuing Directors) in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights, as such, and all
other parties, and (y) not subject the Board of Directors (or the Continuing
Directors) to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders
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of the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company (with the concurrence of a majority of the Continuing
Directors) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors of the
Company. Without limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board of Directors of the Company
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, such determination shall then be made by the entire
Board of Directors of the Company.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
-38-
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HALTER MARINE GROUP, INC.
By
---------------------------
Name:
------------------------
Title:
-----------------------
THE BANK OF NEW YORK
By
---------------------------
Name:
------------------------
Title:
-----------------------
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<PAGE> 43
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HALTER MARINE GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
HALTER MARINE GROUP, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Restated Certificate of Incorporation of
the said Corporation, the said Board of Directors on September [__,] 1996
adopted the following resolution creating a series of 500,000 shares of
Preferred Stock designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of
the Restated Certificate of Incorporation, a series of Preferred
Stock, par value $.01 per share, of the Corporation be and hereby is
created, and that the designation and number of shares thereof and the
voting and other powers, preferences and relative, participating,
optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series A Junior Participating Preferred
Stock," and the number of shares constituting such series shall be 500,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, however, that no decrease shall reduce the number of
shares of Series A Junior Participating Preferred Stock to less than the number
of shares then issued and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
A-1
<PAGE> 44
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of any class or series of stock
of the Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the 15th day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Junior Participating Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all cash dividends, and
the Adjustment Number times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on shares of Common Stock,
par value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the Corporation shall
at any time after September [__,] 1996 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on shares of
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on shares of Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date,
a dividend of $10 per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such
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<PAGE> 45
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to a number of votes equal to the Adjustment
Number on all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of Series A
Junior Participating Preferred Stock, the holders of shares of any other class
or series entitled to vote with the Common Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") that shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, (1) the number
of Directors shall be increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock) upon
which these or like voting rights have been conferred and are exercisable (the
"Voting Preferred Stock") with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect such two Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or
at any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall
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<PAGE> 46
be present in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Voting Preferred
Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent of the total number of shares
of Voting Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the President,
a Vice President or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Voting Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Voting Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not later
than 60 days after such order or request or, in default of the calling of such
meeting within 60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the aggregate
not less than ten percent of the total number of shares of Voting Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii),
no such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class,
(x) the Directors so elected by the holders of Voting Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class or classes of stock
which elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a particular class
or classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors
shall be such number as may be provided for in the Restated Certificate of
Incorporation or By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the Restated
Certificate of Incorporation or By-Laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
A-4
<PAGE> 47
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of Series A Junior Participating
Preferred Stock, or to all such holders and the holders of any such
shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to any conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made
A-5
<PAGE> 48
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Series A Junior Participating Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) the Adjustment Number.
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall, subject to the prior rights of all other series of Preferred
Stock, if any, ranking prior thereto, receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Series A Junior Participating Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
that rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6, but the sale, lease or conveyance of all or substantially all the
Corporation's assets shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination, or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
8. Redemption. (A) The Corporation, at its option, may redeem
shares of the Series A Junior Participating Preferred Stock in whole at any
time and in part from time to time, at a redemption price equal to the
Adjustment Number times the current per share market price (as such
A-6
<PAGE> 49
term is hereinafter defined) of the Common Stock on the date of the mailing of
the notice of redemption, together with unpaid accumulated dividends to the
date of such redemption. The "current per share market price" on any date
shall be deemed to be the average of the closing price per share of such Common
Stock for the ten consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the current per share market price of the Common Stock is determined
during a period following the announcement of (A) a dividend or distribution on
the Common Stock other than a regular quarterly cash dividend or (B) any
subdivision, combination or reclassification of such Common Stock and the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, shall not have occurred prior to
the commencement of such ten Trading Day period, then, and in each such case,
the current per share market price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sales price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, or, if
the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other self-regulatory organization or registered securities information
processor (as such terms are used under the Securities Exchange Act of 1934, as
amended) that then reports information concerning the Common Stock, or, if
sales price information is not so reported, the average of the high bid and low
asked prices in the over-the- counter market on such day, as reported by NASDAQ
or such other entity, or, if on any such date the Common Stock is not quoted by
any such entity, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected by
the Board of Directors of the Corporation. If on any such date no such market
maker is making a market in the Common Stock, the fair value of the Common
Stock on such date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Common Stock is listed
or admitted to trading is open for the transaction of business, or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
the Common Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not
authorized or obligated by law or executive order to close.
(B) In the event that fewer than all the outstanding shares of the
Series A Junior Participating Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by mailing to the
holders of the shares of Series A Junior Participating Preferred Stock to be
redeemed a notice of such redemption,
A-7
<PAGE> 50
first class postage prepaid, not later than the fifteenth day and not earlier
than the sixtieth day before the date fixed for redemption, at their last
address as the same shall appear upon the books of the Corporation. Each such
notice shall state: (i) the redemption date; (ii) the number of shares to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the close of
business on such redemption date. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the stockholder received such notice, and failure duly to give such
notice by mail, or any defect in such notice, to any holder of Series A Junior
Participating Preferred Stock shall not affect the validity of the proceedings
for the redemption of any other shares of Series A Junior Participating
Preferred Stock that are to be redeemed. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the redemption price. If fewer than all the
shares represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(D) The shares of Series A Junior Participating Preferred Stock
shall not be subject to the operation of any purchase, retirement or sinking
fund.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as
to the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise, and shall rank senior to the Common
Stock as to such matters.
10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
A-8
<PAGE> 51
IN WITNESS WHEREOF, the undersigned has executed this Certificate and
does affirm the foregoing as true this ___ day of _______, 199_.
----------------------------------------
[Vice] President
A-9
<PAGE> 52
Exhibit B
[Form of Rights Certificate]
Certificate No. R-
________ Rights
NOT EXERCISABLE AFTER September [___], 2006 OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHTS CERTIFICATE
HALTER MARINE GROUP, INC.
This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of September [__,] 1996 as it may from time to
time be supplemented or amended (the "Rights Agreement"), between Halter Marine
Group, Inc., a Delaware corporation (the "Company"), and The Bank of New York,
a New York banking corporation (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 p.m. (New York time) on September [__,] 2006
Expiration at the principal office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-hundredth of a
fully paid, nonassessable share (a "Fractional Share") of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Company, at a
purchase price of $[___] per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate set forth on the reverse
hereof duly executed. The Purchase Price may be paid in cash or by certified
check, cashiers or official bank check or bank draft payable to the order of
the Company or the Rights Agent. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Fractional Share set forth
above, are the number and Purchase Price as of September [__,] 1996, based on
the Preferred Stock as constituted at such date. The Company reserves the
right to require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
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<PAGE> 53
From and after the first occurrence of a Triggering Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by or transferred to (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, concurrently with or
after such transfer, became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, such Rights shall, with certain exceptions, become null
and void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities or assets that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Fractional Shares of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.01 per Right, payable, at the election of the
Company, in cash or shares of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of the close
of business on (a) the tenth day following the first public announcement of the
occurrence of a Flip-In Event (as such time period may be extended or shortened
pursuant to the Rights Agreement) and (b) the Expiration Date (as such term is
defined in the Rights Agreement) or (ii) may be exchanged in whole or in part
for shares of the Company's Common Stock, par value $.01 per share, and/or
other equity securities of the Company deemed to have the same value as shares
of Common Stock,
B-2
<PAGE> 54
at any time prior to a person's becoming the beneficial owner of 50% or more of
the shares of Common Stock outstanding or the occurrence of a Flip-Over Event.
Under certain circumstances set forth in the Rights Agreement, the decision to
redeem the Rights shall require the concurrence of a majority of the Continuing
Directors (as defined in the Rights Agreement).
No fractional shares of Preferred Stock are required to be issued upon
the exercise of any Right or Rights evidenced hereby (other than, except as set
forth above, fractions that are integral multiples of a Fractional Share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment may be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company that may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-3
<PAGE> 55
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Dated as of September [__,] 1996
ATTEST: HALTER MARINE GROUP, INC.
- ------------------------------ By
Secretary ---------------------------------
Title:
Countersigned:
THE BANK OF NEW YORK
By
---------------------------------
Authorized Signature
B-4
<PAGE> 56
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer any Rights evidenced by the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto ____________________
________________________________________________________________________________
_________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the said Rights on the books of the
within-named Company, with full power of substitution.
Dated: _________________, 199__
-------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another eligible guarantor institution (as defined pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-5
<PAGE> 57
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or who is a direct
or indirect transferee of an Acquiring Person or of an Affiliate or Associate
of an Acquiring Person.
Dated: _____________, 199__ ----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another eligible guarantor institution (as defined pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
B-6
<PAGE> 58
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: HALTER MARINE GROUP, INC.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares (or other securities) be
issued in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ____________, 199__
-----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another eligible guarantor institution (as defined pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-7
<PAGE> 59
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: _____________, 199__ ----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another eligible guarantor institution (as defined pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
B-8
<PAGE> 60
Exhibit C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On September [__,] 1996, the Board of Directors of Halter Marine
Group, Inc. (the "Company") declared a dividend of one right to purchase
preferred stock ("Right") for each outstanding share of the Company's Common
Stock, par value $.01 per share ("Common Stock"), to the sole stockholder of
record at the close of business on September [__,] 1996. Each Right entitles
the registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Fractional Share") of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), at a purchase price of $[___] per Fractional Share, subject to
adjustment (the "Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement dated as of September [__,] 1996 as it may from
time to time be supplemented or amended (the "Rights Agreement") between the
Company and The Bank of New York, as Rights Agent.
Initially, the Rights will be attached to all certificates
representing outstanding shares of Common Stock, and no separate certificates
for the Rights ("Rights Certificates") will be distributed. The Rights will
separate from the Common Stock and a "Distribution Date" will occur, with
certain exceptions, upon the earlier of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the date of
the announcement being the "Stock Acquisition Date"), or (ii) ten business days
following the commencement of a tender offer or exchange offer that would
result in a person's becoming an Acquiring Person. Trinity Industries, Inc.,
which prior to consummation of the Company's initial public offering will be
the Company's sole stockholder, will not be deemed to be an Acquiring Person
unless and until Trinity Industries, Inc. first ceases to be the beneficial
owner of 15% or more of the outstanding shares of Common Stock and thereafter
again becomes the beneficial owner of 15% or more of the Common Stock. In
certain circumstances, the Distribution Date may be deferred by the Board of
Directors. Certain inadvertent acquisitions will not result in a person's
becoming an Acquiring Person if the person promptly divests itself of
sufficient Common Stock. Until the Distribution Date, (a) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and
only with such Common Stock certificates, (b) new Common Stock certificates
will contain a notation incorporating the Rights Agreement by reference and (c)
the surrender for transfer of any certificate for Common Stock will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on September [__,] 2006 Expiration, unless
earlier redeemed or exchanged by the Company as described below.
C-1
<PAGE> 61
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Common Stock as of the
close of business on the Distribution Date and, from and after the Distribution
Date, the separate Rights Certificates alone will represent the Rights. All
shares of Common Stock issued prior to the Distribution Date will be issued
with Rights. Shares of Common Stock issued after the Distribution Date in
connection with certain employee benefit plans or upon conversion of certain
securities will be issued with Rights. Except as otherwise determined by the
Board of Directors, no other shares of Common Stock issued after the
Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes an Acquiring
Person (except pursuant to a tender or exchange offer for all outstanding
shares of Common Stock at a price and on terms that a majority of the
independent Continuing Directors (as hereinafter defined) determines to be fair
to and otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of shares of Common Stock (or,
in certain circumstances, cash, property or other securities of the Company)
having a Current Market Price (as defined in the Rights Agreement) equal to two
times the exercise price of the Right. Notwithstanding the foregoing, following
the occurrence of any Triggering Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by or
transferred to an Acquiring Person (or by certain related parties) will be null
and void in the circumstances set forth in the Rights Agreement. However,
Rights are not exercisable following the occurrence of any Flip-In Event until
such time as the Rights are no longer redeemable by the Company as set forth
below.
In the event (a "Flip-Over Event") that, at any time from and after
the time an Acquiring Person becomes such, (i) the Company is acquired in a
merger or other business combination transaction (other than certain mergers
that follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
that are voided as set forth above) shall thereafter have the right to receive,
upon exercise, a number of shares of common stock of the acquiring company
having a Current Market Price equal to two times the exercise price of the
Right. Flip-In Events and Flip-Over Events are collectively referred to as
"Triggering Events."
The Purchase Price payable, and the number of Fractional Shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock
or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock that are not integral multiples
of a Fractional Share are required to be issued and,
C-2
<PAGE> 62
in lieu thereof, an adjustment in cash may be made based on the market price of
the Preferred Stock on the last trading date prior to the date of exercise.
Pursuant to the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock will be issued.
At any time until ten days following the first date of public
announcement of the occurrence of a Flip-In Event, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, payable, at the
option of the Company, in cash, shares of Common Stock or such other
consideration as the Board of Directors may determine. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors. Immediately
upon the effectiveness of the action of the Board of Directors ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the Company, who is not an officer or employee of the Company or
any Subsidiary of the Company and who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a nominee or representative
of an Acquiring Person or of any such Affiliate or Associate, if (i) such
Person was a member of the Board of Directors of the Company prior to the time
a Person becomes an Acquiring Person or (ii) such Person's nomination for
election or election to the Board of Directors of the Company is recommended or
approved by a majority of the then Continuing Directors.
At any time after the occurrence of a Flip-In Event and prior to a
person's becoming the beneficial owner of 50% or more of the shares of Common
Stock then outstanding or the occurrence of a Flip-Over Event, the Company
(with the concurrence of a majority of the Continuing Directors) may exchange
the Rights (other than Rights owned by an Acquiring Person or an affiliate or
an associate of an Acquiring Person, which will have become void), in whole or
in part, at an exchange ratio of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common Stock, per
Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
should not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for the common stock of the acquiring company as set forth above or
are exchanged as provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company (in certain
circumstances, with the concurrence of the Continuing Directors) as long as the
Rights are redeemable. Thereafter, the provisions of the Rights Agreement
other than the redemption price may be amended by the Board
C-3
<PAGE> 63
of Directors (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, defect or inconsistency, to make
changes that do not materially adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or to shorten or
lengthen any time period under the Rights Agreement; provided, however, that no
amendment to lengthen the time period governing redemption shall be made at
such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to the Company Registration Statement on Form
S-1. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
C-4
<PAGE> 1
EXHIBIT 10.7
NON-COMPETITION AGREEMENT
This Agreement is entered into as of ________, 1996, between
Halter Marine Group, Inc., a Delaware corporation ("Halter") and John Dane III
("Dane").
WHEREAS, Halter has filed a Registration Statement on Form S-1
(Commission File No. 333-6967) with the Securities and Exchange Commission in
order to effect the registration of an aggregate of Three Million Four Hundred
and Fifty Thousand (3,450,000) shares (the "Shares") of common stock, par value
$.01 per share ("Common Stock"), for sale in an underwritten public offering
(the "Offering");
WHEREAS, as of the date hereof (prior to giving effect to the
sale of any Shares in the Offering), Trinity Industries, Inc. ("Trinity") owns
all of the issued and outstanding Common Stock of Halter;
WHEREAS, Halter and its subsidiaries (collectively, the
"Company") are engaging in the business and operations formerly conducted by
Trinity and certain of its subsidiaries prior to the commencement of the
Offering which consist of (i) the construction, repair and conversion of
ocean-going and inland vessels (other than inland hopper barges and inland tank
barges and the construction of accessories for such barges) and (ii) the
production of any component of or accessory to any ocean-going or inland vessel
being constructed by the Company (the "Halter Businesses");
WHEREAS, Dane is the President and Chief Executive Officer
of Halter;
WHEREAS, as a result of Dane's position with Halter, Dane will
have unlimited access to and familiarity with all of the business methods and
confidential information of the Company, including, but not limited to,
confidential information concerning the manufacture, sale and marketing of the
products of the Company including customer information, inventories, market
development and research, expansion projects, personnel matters, and customer
and supply relationships;
WHEREAS, the Company would be irreparably injured if Dane were
to leave Halter and engage in competition with the Company of the nature
described herein;
WHEREAS, it is contemplated that Dane will receive upon
commencement of the Offering, stock options for One Hundred and Ten Thousand
(110,000) shares of Common Stock and otherwise will receive substantial
benefits from the Offering;
<PAGE> 2
WHEREAS, it is a condition precedent to the undertaking of the
Offering by Halter and the underwriters participating in the Offering that Dane
enter into this Agreement; and
WHEREAS, as an inducement for Halter and the underwriters
participating in the Offering to carry out and consummate the Offering, Dane
has agreed to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises, the terms
and conditions set forth herein, the mutual benefits to be gained by the
performance thereof, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Confidential Information. Dane acknowledges that
information regarding the businesses of the Company, including all business and
technological information, intellectual property, trade secrets, customer lists
and other information, other than information which Dane can demonstrate is
generally available to the public otherwise than through a breach by Dane of his
obligations hereunder ("Confidential Information"), is of a proprietary and
confidential nature, and hereby agrees that he will not, directly or indirectly,
disclose, or otherwise use, any part of the Confidential Information (except as
is necessary for the conduct of Dane's duties on behalf of Halter) without the
prior written consent of Halter. In the event that Dane is requested or required
(by interrogatory, subpoena, demand or other legal process) to disclose any part
of the Confidential Information, he will give prompt notice to Halter in order
that Halter may take appropriate steps to preserve the confidentiality thereof.
2. Term. The term of this Agreement shall be that
period commencing on the date hereof and ending at 11:59 p.m. on the third
anniversary of the date hereof (provided, however, that Dane's covenants and
obligations under Section 1 hereof shall continue in full force and effect
forever).
3. Dane's Covenant Not to Compete. In order to protect
the goodwill and business interests of the Company, Dane will not, without the
express prior written consent of Halter, during the term of this Agreement:
(a) Directly or indirectly own, engage in,
manage, operate, join, control, or participate in the ownership,
management, operation, or control of, or be connected as a stockholder,
consultant or otherwise with, any business or organization that,
directly or indirectly, engages in any of the Halter Businesses in the
Gulf coast region of the United States (which consists of the States of
Mississippi, Louisiana, Florida, Texas and Alabama), or any one or more
of such States (the "Restricted Area"), except that Dane may own, for
investment purposes only, up to five percent (5%) of the outstanding
common stock of any corporation whose stock is either listed on a
national securities exchange or on the Nasdaq National Market. The
parties agree that the business activities set forth on Exhibit A
hereto do not, in the manner such activities have been conducted by
United States Marine, Inc. (an entity of which Dane is a major
stockholder), constitute activities prohibited by this Agreement.
(b) Directly or indirectly aid, abet, or
otherwise assist any person, firm, association, corporation or other
entity in canvassing, soliciting, or accepting any contracts
2
<PAGE> 3
with present or future or potential customers of the Company in
connection with a business which in any way competes, directly or
indirectly, with any of the Halter Businesses.
(c) Directly or indirectly request or advise any
past, present or future customers of the Company (i) to cancel or not
enter into any contracts for the sale of products or services by the
Company or (ii) to curtail or limit their dealings with the Company.
(d) Directly or indirectly request or advise any
present or future service, supply or financial resource of the Company
to withdraw, curtail, cancel, or limit the furnishing of such services
or resources to the Company.
(e) Directly or indirectly induce or attempt to
influence any current employee (or any former employee employed by the
Company within the prior 12 months) of the Company to terminate his
employment with the Company or accept employment by another person,
firm, association, corporation or other entity.
4. Severability. If for any reason the scope of any of
the agreements contained herein is found to be excessively broad in any action,
suit or proceeding before any court or similar tribunal, such court or tribunal
(a) shall narrow the Restricted Area or the term of this Agreement or otherwise
reform the scope of this Agreement so as to ensure that the application thereof
is not unreasonable or oppressive and (b) to the fullest extent permitted by
law, shall enforce this Agreement as so reformed. If any provision of this
Agreement is held to be invalid, illegal, or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed, and enforced in
such jurisdiction as if such invalid, illegal, or unenforceable provision had
never been contained herein.
5. Benefit Not Impaired. If Dane violates any covenant
contained in this Agreement and Halter brings legal action for injunctive or
other relief, Halter shall not, as a result of the time involved in obtaining
the relief, be deprived of the benefit of the full period of any such covenant.
Accordingly, the covenants of Dane contained in this Agreement shall be deemed
to have durations as specified above, which shall be extended for an amount of
time equal to the period of time that Dane is in breach hereof or that Halter
is unable to enforce this Agreement.
6. Limitations Reasonable. Dane and Halter acknowledge
and agree that the duration, scope, geographic area and other provisions of
Section 3 hereof have been specifically negotiated by sophisticated business
persons and specifically hereby agree that such time, scope, geographic area
and other provisions are reasonable under the circumstances and are necessary
under the circumstances to protect the Company.
7. Complete Agreement. This Agreement and those
documents expressly referred to herein embody the complete agreement and
understanding among the parties with respect to the subject matter hereof and
supersede and preempt any prior understandings, agreements, or
3
<PAGE> 4
representations between the parties, written or oral, which may have related to
the subject matter hereof in any way.
8. Remedies. In addition to such damages or remedies as
either Dane or Halter may be entitled to at law, each party shall be entitled
to temporary and permanent injunctive relief against the other party for any
breach of the terms of this Agreement. Dane acknowledges that a violation or
attempted violation on his part of any agreement in Sections 1 and 3 hereof
will cause irreparable damage to Halter, the measure of which would be
difficult to ascertain and for which there will be no adequate remedy at law.
Accordingly, Dane agrees that Halter shall be entitled as a matter of right to
an injunction out of any court of competent jurisdiction restraining any
further violation of such agreements by him or his employees, partners or
agents.
9. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall constitute an original, and all of
which taken together shall constitute one and the same agreement.
10. Successors and Assigns. Halter may assign its rights
and obligations under this Agreement to any person, firm, association,
corporation or other entity. Dane may not assign any of its rights or
obligations under this Agreement. Any assignment in violation of the foregoing
shall be null and void. Subject to the foregoing, this Agreement is intended
to bind and inure to the benefit of and be enforceable by Halter and its
respective successors and assigns.
11. Choice of Law. All questions concerning the
construction, validity, and interpretation of this Agreement will be governed
by the laws of the State of Mississippi, without giving effect to the choice of
law principles thereof.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HALTER MARINE GROUP, INC.
By:
------------------------------------
Vincent R. Almerico
Senior Vice President
---------------------------------------
John Dane III
5
<PAGE> 1
EXHIBIT 10.8
================================================================================
REVOLVING CREDIT AGREEMENT
Dated as of September ___, 1996
BY AND AMONG
HALTER MARINE GROUP, INC.
as Borrower,
THE BANKS NAMED HEREIN,
as Banks,
and
WHITNEY NATIONAL BANK,
as Agent
================================================================================
<PAGE> 2
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made and entered
into this __th day of September, 1996, by and among HALTER MARINE GROUP, INC.,
a Delaware corporation ("Borrower") and the undersigned Banks, including
Whitney National Bank in its capacity as a Bank hereunder and as agent for the
Banks under this Agreement.
WITNESSETH:
WHEREAS, the Borrower has requested the Banks (as hereinafter defined)
to make revolving loans to the Borrower in an aggregate principal amount not
exceeding One Hundred Thirty-Five Million Dollars ($135,000,000.00) and a Swing
Line available thereunder from Whitney in the maximum principal amount of Five
Million Dollars ($5,000,000.00);
WHEREAS, the Borrower has requested that the Banks issue letters of
credit for the account of the Borrower from time to time prior to the Revolving
Loan Termination Date as part of the aggregate principal amount of the
commitment of the Banks to Borrower hereunder, but such letters of credit shall
not in any event exceed in the aggregate an available amount of Sixty Million
Dollars ($60,000,000.00) at any one time outstanding; and
WHEREAS, the Banks have severally agreed, upon the terms, provisions
and conditions set forth herein, to lend such amounts to, and take
participations in such letters of credit for the account of, Borrower.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually promise and agree as follows:
SECTION l. TERM.
The "Term" of this Agreement shall commence on the date hereof and
shall end on September __, 1999, unless extended from time to time with the
unanimous consent of the Banks as provided in Section 3.6 hereof and unless
earlier terminated pursuant to the terms hereof.
SECTION 2. DEFINITIONS.
2.1 Definitions. In addition to the terms defined elsewhere in
this Agreement or in any Exhibit or Schedule hereto, when used in this
Agreement, the following terms shall have the following meanings (such meanings
shall be equally applicble to the singular and plural forms of the terms used,
as the context requires):
Acquisition shall mean the purchase, merger with or other acquisition
by Borrower or any Subsidiary of (i) the stock or other equity interest (in
whole or in part) in any entity,
<PAGE> 3
which requires, after such acquisition, the Borrower or any such acquiring
Subsidiary to account for such acquired entity on a consolidated or equity
basis as determined in accordance with GAAP, (ii) all or substantially all of
the assets of any such entity, or (iii) a shipyard, shipyard building facility
or any other facility consistent with the Company Business.
Acquisition Indebtedness shall mean, without duplication, any
Indebtedness issued, incurred or provided by the Borrower or any Subsidiary for
Acquisitions.
Affiliate shall mean any Person (a) which directly or indirectly
through one or more intermediaries controls, is controlled by or is under
common control with Borrower or any Subsidiary, (b) which beneficially owns or
holds or has the power to direct the voting power of twenty percent (20%) or
more of any class of capital stock of Borrower or any Subsidiary, (c) which has
twenty percent (20%) or more of any class of its capital stock (or, in the case
of a Person which is not a corporation, twenty percent (20%) or more of its
equity interest) beneficially owned or held, directly or indirectly, by
Borrower or any Subsidiary, or (d) who is a director, officer or employee of
Borrower or any Subsidiary. For purposes of this definition, "control" shall
mean the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
Agent shall mean Whitney National Bank in its capacity as agent for
the Banks hereunder and its successors in such capacity.
Applicable Margin shall mean, the rate of interest per annum shown in
the applicable column below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Level I Level II Level III Level IV
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
If Ratio of Consolidated Total Debt to > 2.0 < 2.0 < 1.5 < 1.0
_
Consolidated EBITDA is > 1.5 > 1.0
_ _
- ------------------------------------------------------------------------------------------
LIBOR LOANS 1.25% 1.00% .750% .625%
- ------------------------------------------------------------------------------------------
</TABLE>
Provided that, so long as Trinity maintains ownership of over 50% of the
outstanding common stock of Borrower (but for a period not to exceed six months
following the initial funding hereunder), the Applicable Margins for Level I,
II, and III will be reduced by .250%. The Applicable Margin shall be adjusted
on the first day of each March, June, September and December (or, if such day
is not a Business Day, on the next succeeding Business Day), based on the ratio
of Consolidated Total Debt to Consolidated EBITDA as of the last day of the
immediately preceding fiscal quarter. If Borrower should fail to deliver in a
timely manner a certificate required under Section 8.1(a)(vii) hereof, then,
until Borrower shall have provided such certificate, it shall be presumed that
the ratio of Consolidated Total Debt to Consolidated EBITDA as of the last day
of the immediately preceding fiscal quarter was greater than 2.0 (and, from the
date of the delivery of such certificate, the Applicable Margin shall be
determined by reference to such certificate).
<PAGE> 4
Assignment Agreement shall mean any of those certain Assignment
Agreements described in Section 11.15 herein.
Assumed Trinity Indebtednessshall mean $25,000,000.00 of indebtedness
of Trinity to be assumed by Borrower.
Bank(s)shall mean each bank listed on the signature pages hereof, and
its successors and assigns.
Base Rate shall mean the interest rate per annum, determined on any
day, equal to the greater of: (i) the Prime Rate then in effect, or (ii) the
Fed Funds Rate then in effect plus One-Half of One Percent (.50%).
Base Rate Loan shall mean any Loan bearing interest at the Base Rate.
Borrower's Obligations shall mean, without duplication, any and all
present and future indebtedness (principal, interest, fees, collection costs
and expenses, attorneys' fees and other amounts), liabilities and obligations
(including, without limitation, reimbursement obligations with respect to
Letters of Credit issued by any one or more Banks under this Agreement for the
account of Borrower) of Borrower to the Agent and/or any one or more of the
Banks evidenced by or arising under this Agreement, the Notes, the Letter of
Credit Application(s), and/or any of the other Transaction Documents.
Business Day shall mean (a) any day except a Saturday, Sunday or legal
holiday observed by the Agent or by commercial banks in New Orleans, Louisiana;
and (b) relative to the making, continuing, prepaying or repaying of any LIBOR
Loans, any day on which dealings in U.S. Dollars are carried on in the London
interbank market.
Capital Expenditure shall mean any expenditure which, as determined in
accordance with GAAP, is required to be capitalized on the balance sheet of the
Person making the same, but excluding (i) expenditures for the restoration or
replacement of fixed assets to the extent funded out of the proceeds of an
insurance policy and (ii) Acquisitions.
Capitalized Lease shall mean any lease of Property, whether real
and/or personal, by a Person as lessee which as determined in accordance with
GAAP is required to be capitalized on the balance sheet of such Person.
Capitalized Lease Obligations of any Person shall mean, as of the date
of any determination thereof, the amount at which the aggregate rental
obligations due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a balance sheet of such
Person as determined in accordance with GAAP.
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<PAGE> 5
CERCLA shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq., and as the
same may from time to time be further amended, and shall include any and all
regulations issued pursuant thereto.
Change in Control shall mean the existence at any time of the board of
directors of Borrower (the "Board of Directors") which does not contain John
Dane III, ____________________________, __________________________________, and
____________________________ as a majority of the voting members of the Board
of Directors (the "Trinity Directors") or such other persons nominated by John
Dane III or the majority of the Trinity Directors to fill any vacancy caused by
the death, resignation or termination of any Trinity Director(s).
Code shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the
Code shall be construed to also refer to any successor sections.
Commitment shall mean, with respect to each Bank, the sum of such
Bank's Revolving Credit Commitment, and its Swing Line Commitment, if any.
Company Business shall mean the (i) construction, repair and
conversion of ocean-going and inland vessels (other than inland hopper barges
and inland tank barges and the construction of accessories for such barges,
except for such barge construction and related work as allowed under the
non-competition covenants of the Separation and Related Agreements) (ii) the
production of any component of or accessory to any such ocean-going or inland
vessel, (iii) any other similar type of production, construction or
manufacturing, (iv) any financing related to the sale of any of the Borrower's
or any Subsidiary's products, and (v) any other activities ancillary to the
foregoing.
Consolidated Current Assets shall mean, as of any date for which it is
being determined, all amounts which would, as determined in conformity with
GAAP, be included under current assets on a consolidated balance sheet of
Borrower as at such date.
Consolidated Current Liabilities shall mean, as of any date for which
it is being determined, all amounts which would, as determined in conformity
with GAAP, be included under current liabilities on a consolidated balance
sheet of Borrower as at such date.
Consolidated Debt Service Coverage Ratio shall mean, for any period,
the ratio of (a) Consolidated EBITDA minus Capital Expenditures during such
period minus all federal, state, local and/or foreign income taxes paid by
Borrower and its Subsidiaries payable with respect of such period, to (b)
Consolidated Interest Expense plus Consolidated Scheduled Principal Payments
plus Capitalized Lease Obligations payable in respect of such period.
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<PAGE> 6
Consolidated EBIT shall mean, for the period in question, the sum of
(a) Consolidated Net Income during such period plus (b) to the extent deducted
in determining Consolidated Net Income, the sum of (i) Consolidated Interest
Expense during such period, plus (ii) all provisions for any federal, state,
local and/or foreign income taxes made by Borrower and its Subsidiaries during
such period (whether paid or deferred), all determined on a consolidated basis
as determined in accordance with GAAP.
Consolidated EBITDA shall mean, for any period, the sum of the
following: (a) Consolidated Net Income during such period plus (b) to the
extent deducted in determining Consolidated Net Income, the sum of (i)
Consolidated Interest Expense during such period, plus (ii) all provisions for
any federal, state, local and/or foreign income taxes made by Borrower and its
Subsidiaries during such period (whether paid or deferred) plus (iii) all
depreciation and amortization expenses and all other non-cash items of Borrower
and its Subsidiaries during such period, all determined on a consolidated basis
as determined in accordance with GAAP.
Consolidated Funded Debt shall mean, as of any date of determination
thereof, (a) all Indebtedness, other than Borrower's Obligations, which matures
in not less than twelve months from the date of incurrence whether or not
represented by bonds, debentures, notes or other securities, for the repayment
of money borrowed, (b) all Borrower's Obligations, (c) all Indebtedness for the
payment of the purchase price of property or assets purchased, (d) all
Indebtedness secured by any mortgage, pledge, security interest or lien
existing on property owned by Borrower or any Subsidiary, whether or not the
Indebtedness secured thereby shall have been assumed by the owner thereof, (e)
all Capitalized Lease Obligations, and (f) all obligations of Borrower or any
Subsidiary, contingent or otherwise, relative to the face amount of all
letters of credit (as may be reduced pursuant to their terms), whether or not
drawn.
Consolidated Interest Coverage Ratio shall mean, as of any date for
which it is being determined, the ratio of Consolidated EBIT to Consolidated
Interest Expense.
Consolidated Interest Expense shall mean, for the period in question,
without duplication, all gross interest expense of Borrower and its
Subsidiaries (including, without limitation, all commissions, discounts and/or
related amortization and other fees and charges owed by Borrower and its
Subsidiaries with respect to letters of credit and bankers' acceptance
financing, the net costs associated with interest swap obligations of Borrower
and its Subsidiaries, capitalized interest expense, the interest portion of
Capitalized Lease Obligations and the interest portion of any deferred payment
obligation) during such period, all determined on a consolidated basis as
determined in accordance with GAAP.
Consolidated Net Income and Consolidated Net Loss shall mean, for the
period in question, the after-tax net income or loss of Borrower and its
Subsidiaries during such period, determined on a consolidated basis as
determined in accordance with GAAP, but excluding in any event the following:
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<PAGE> 7
(i) any net gain or net loss (net of expenses and taxes
applicable thereto) for such period resulting from the sale, transfer or other
disposition of fixed or capital assets as determined by GAAP;
(ii) any gains or losses resulting from any reappraisal,
revaluation or write-up or write-down of assets;
(iii) any equity of Borrower or any Subsidiary in the
undistributed earnings of any corporation which is not a Subsidiary and is not
accounted for on the equity method as determined in accordance with GAAP;
(iv) undistributed earnings of any Subsidiary to the extent
that the declaration or payment of dividends or other distributions by such
Subsidiary is not at the time permitted by the terms of its charter documents
or any agreement, document, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Subsidiary;
(v) gains or losses from the acquisition or disposition of
Investments;
(vi) gains from the retirement or extinguishment of Debt;
(vii) gains on collections from insurance policies or
settlements (net of premiums paid or other expenses incurred with respect to
such gains during the fiscal period in which the gain occurs, to the extent
such premiums or other expenses are not already reflected in Consolidated Net
Income for such fiscal period);
(viii)any gains or losses during such period from any change
in accounting principles, from any discontinued operations or the disposition
thereof of from any prior period adjustments;
(ix) any extraordinary gains and/or losses; and
(x) any fees or expenses relating to the Offering;
all determined in accordance with GAAP. If the preceding calculation results
in a number less than zero such amount shall be considered a Consolidated Net
Loss.
Consolidated Scheduled Principal Payments shall mean, for the period in
question, without duplication, all scheduled principal payments of Borrower and
its Subsidiaries on Indebtedness for the applicable period, all determined on a
consolidated basis as determined in accordance with GAAP.
Consolidated Tangible Net Worth shall mean at a particular date, the
excess, if any, of (a) all amounts which would be included under shareholders'
equity on a consolidated balance sheet of the Borrower determined in accordance
with GAAP (including, without
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<PAGE> 8
limitation, capital stock, additional paid-in-capital and retained earnings) at
such date minus (b) all assets of the Borrower, determined on a consolidated
basis at such date, that would be classified as intangible assets in accordance
with GAAP, but in any event including, without limitation, unamortized
organization and reorganization expense, patents, trade or service marks,
franchises, trade names and goodwill.
Consolidated Total Debt shall mean, as of the date of any determination
thereof, all Debt of Borrower and its Subsidiaries as of such date, determined
on a consolidated basis as determined in accordance with GAAP.
Consolidation Transactions shall mean (i) the transfer to Borrower of
the stock of each subsidiary of Trinity that has assets and liabilities related
to the Company Business, including without limitation, the stock of the
Subsidiaries listed on Schedule 7.8 attached hereto, (ii) the transfer to
Subsidiaries of Borrower of certain assets and liabilities of Trinity related
to the Company Business, including without limitation the shipyards and other
property listed on Schedule 7.12 attached hereto, and all related real estate,
leases, equipment, inventory and receivables, and (iii) the assumption by
Borrower of the Assumed Trinity Indebtedness.
Continuing Guarantee shall mean the unlimited continuing guarantee of
all of Borrower's Obligations executed now or at any time hereafter by each
Subsidiary and delivered to Agent, in the form of Exhibit C attached hereto and
incorporated herein by reference.
Default shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default as defined in Section 11 hereof.
Debt of any Person shall mean, as of the date of determination thereof,
the sum of (a) all Indebtedness of such Person for borrowed money or which has
been incurred to acquire Property plus (b) all Capitalized Lease Obligations of
such Person.
Disbursement Date shall have the meaning ascribed thereto in Section
4.3.
Distribution in respect of any corporation shall mean:
(a) dividends or other distributions of cash, stock, assets or
other property on or in respect of any shares of any class of stock of such
corporation; and
(b) the redemption, repurchase or other acquisition of any
shares of any class of any stock of such corporation or of any warrants, rights
or other options to purchase any such stock (except when solely in exchange for
such stock).
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<PAGE> 9
Environmental Claim shall mean any administrative, regulatory or
judicial action, judgment, order, consent decree, suit, demand, demand letter,
claim, Lien, notice of noncompliance or violation, investigation or other
proceeding arising (a) pursuant to any Environmental Law or governmental or
regulatory approval issued under any such Environmental Law, (b) from the
presence, use, generation, storage, treatment, Release, threatened Release,
disposal, remediation or other existence of any Hazardous Substance, (c) from
any removal, remedial, corrective or other response action pursuant to an
Environmental Law or the order of any governmental or regulatory authority or
agency, (d) from any third party seeking damages, contribution,
indemnification, cost recovery, compensation, injunctive or other relief in
connection with a Hazardous Substance or arising from alleged injury or threat
of injury to health, safety, natural resources or the environment or (e) from
any Lien against any Property owned, leased or operated by Borrower or any
Subsidiary in favor of any governmental or regulatory authority or agency in
connection with a Release, threatened Release or disposal of a Hazardous
Substance.
Environmental Law shall mean any federal, state or local statute, law,
rule, regulation, order, consent decree, judgment, permit, license, code, deed
restriction, common law, treaty, convention, ordinance or other governmental
requirement relating to public health, safety or the environment, including,
without limitation, those relating to Releases, discharges or emissions to air,
water, land or groundwater, to the use of groundwater, to the use and handling
of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage
or management of hazardous or solid waste, Hazardous Substances or crude oil,
or any fraction thereof, to exposure to toxic or hazardous materials, to the
handling, transportation, discharge or release of gaseous or liquid Hazardous
Substances, in each case applicable to any of the Property owned, leased or
operated by Borrower or any Subsidiary or the operation, construction or
modification of any such Property, including, without limitation, the
following: CERCLA, the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Hazardous Materials Transportation Act, as amended, the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976,
the Safe Drinking Water Control Act, the Clean Air Act of 1966, as amended, the
Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of
1977, as amended, the Emergency Planning and Community Right-to-Know Act of
1986, the National Environmental Policy Act of 1975, the Oil Pollution Act of
1990 and any similar or implementing state or local law, and any state or local
statute and any further amendments to these laws providing for financial
responsibility for cleanup or other actions with respect to the Release or
threatened Release of Hazardous Substances or crude oil, or any fraction
thereof and all rules and regulations promulgated thereunder.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
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<PAGE> 10
ERISA Affiliate shall mean any corporation, trade or business that is,
along with Borrower and any Subsidiary, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA.
Event of Default shall have the meaning ascribed thereto in Section 9.
Fed Funds Rate shall mean, for any day, the rate per annum (rounded
upwards, if necessary to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Agent on such day on such transactions.
GAAP shall mean generally accepted accounting principles at the time in
the United States.
Governmental Authority shall mean any sovereign state or nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Governmental Contract shall have the meaning ascribed thereto in
Section 7.20.
Guaranteeby any Person shall mean any obligation (other than
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), contingent or otherwise, of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness, liability, dividend
or other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such Indebtedness or obligation or any Property or assets constituting
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, (ii) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, a Guarantee in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the then
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<PAGE> 11
outstanding principal amount of such Indebtedness for borrowed money which has
been guaranteed or such lesser amount to which the maximum exposure of the
guarantor shall have been specifically limited, and a Guarantee in respect of
any other obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend or such lesser amount to which the maximum exposure of
the guarantor shall have been specifically limited. Guarantee when used as a
verb shall have a correlative meaning.
Hazardous Substance shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
Environmental Law, including, without limitation, any material, substance or
waste which is: (a) defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Sections 1317), as amended; (b)
regulated as a hazardous waste under Section 1004 or Section 3001 of the
Federal Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended; (c) defined as a
hazardous substance under Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Sections 9601 et seq.), as
amended; or (d) defined or regulated as a hazardous substance or hazardous
waste under any rules or regulations promulgated under any of the foregoing
statutes.
Indebtedness shall mean, with respect to any Person, without
duplication, all indebtedness, liabilities and obligations of such Person which
are classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such Person for
borrowed money or which have been incurred to acquire Property, (ii)
obligations secured by any Lien on, or payable out of the proceeds of
production from, any Property or assets owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligations,
(iii) indebtedness, liabilities and obligations of third parties, including
joint ventures and partnerships of which such Person is a venturer or general
partner, recourse to which may be had against such Person, (iv) obligations
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person, notwithstanding the
fact that the rights and remedies of the seller, lender or lessor under such
agreement in the event of default are limited to repossession or sale of such
Property, (v) Capitalized Lease Obligations of such Person, (vi) indebtedness,
liabilities and obligations of such Person under Guarantees and (vii)
reimbursement obligations of such Person with respect to letters of credit
issued for the account of such Person.
Indemnities shall have the meaning ascribed thereto in Section 11.4.
Intercompany Note shall mean debt in the aggregate amount of
$25,000,000.00 that Borrower will pay on behalf of Trinity.
Interest Period shall mean with respect to each LIBOR Loan:
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<PAGE> 12
(i) initially, the period commencing on the date of such Loan
and ending 30, 60, 90 or 180 days thereafter (or such other period agreed upon
in writing by Borrower and all of the Banks), as the Borrower may elect in the
applicable Notice of Borrowing; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Loan and ending 30, 60, 90 or
180 days thereafter (or such other period agreed upon in writing by Borrower
and all of the Banks), as Borrower may elect pursuant to Section 5.1;
provided that:
(iii) subject to clause (iv) below, if any Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the immediately next preceding Business Day; and
(iv) no Interest Period for a LIBOR Loan which is a Revolving
Credit Loan shall extend beyond the last day of the Revolving Credit Period.
Investment shall mean any investment by Borrower or any Subsidiary in
any Person, whether payment therefor is made in cash or capital stock of
Borrower or any Subsidiary, and whether such investment is by acquisition of
stock or Indebtedness, or by loan, advance, transfer of property out of the
ordinary course of business, capital contribution, equity or profit sharing
interest, extension of credit on terms other than those normal in the ordinary
course of business, Guarantee or otherwise becoming liable (contingently or
otherwise) in respect of the Indebtedness of any Person, or otherwise.
Issuer and Issuers shall have the meaning ascribed thereto in Section
4.
Letter of Credit and Letters of Credit shall have the meanings ascribed
thereto in Section 4.1(a).
Letter of Credit Application shall mean an application and agreement
for standby letter of credit in the form of Exhibit D attached hereto and
incorporated herein by reference executed by Borrower, as account party, and
delivered to a Bank pursuant to Section 4.1(a), as the same may from time to
time be amended modified, extended or renewed.
Letter of Credit Commitment shall have the meaning ascribed thereto in Section
4.1 (a).
Letter of Credit Commitment Feeshall have the meaning ascribed thereto
in Section 4.1(c).
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<PAGE> 13
Letter of Credit Loan and Letter of Credit Loans shall have the
meaning ascribed thereto in Section 4.3.
Letter of Credit Period shall mean the period commencing on the date
of this Agreement and ending September __, 1999.
Letter of Credit Request shall have the meaning ascribed thereto in
Section 4.1 (a).
LIBOR Base Rate means, for an Interest Period, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
at which deposits in U.S. dollars in immediately available funds are offered to
the Agent at 11:00 a.m. (New Orleans time), or as soon thereafter as
practicable, two (2) Business Days before the beginning of such Interest Period
by two (2) or more major banks in the London interbank market selected by the
Agent for a period equal to such Interest Period and in an amount equal or
comparable to the principal amount of the LIBOR Loan scheduled to be made
available by the Banks. As used herein, "LIBOR Index Rate" means, for any
Interest Period, the London interbank offered rate per annum (rounded upwards,
if necessary, to the next higher one hundred-thousandth of a percentage point)
for deposits in U.S. Dollars for a period equal to such Interest Period, which
appears on the Telerate Page 3750 as of 9:00 a.m. (New Orleans time) on the day
two Business Days before the commencement of such Interest Period.
LIBOR Loan shall mean a loan bearing interest at the LIBOR Rate.
LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus (b) the
Applicable Margin.
LIBOR Reserve Percentage shall mean for any day the percentage
(including any supplemental percentage applied on a marginal basis or any other
reserve requirement having a similar effect), expressed as a decimal, which is
in effect on the first day of the applicable Interest Period, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) under
Regulation D (or any other then applicable regulation of the Board of Governors
(or any successor)) with respect to "Eurocurrency Liabilities". The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change
in the LIBOR Reserve Percentage.
Lien shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract, including, without
limitation, any security interest, mortgage, deed of trust, pledge, assignment,
judgment lien or other lien or encumbrance of any kind or nature whatsoever,
any conditional sale or trust receipt, any consignment or bailment for security
purposes. The term "Lien" shall include reservations, exceptions,
encroachments,
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<PAGE> 14
easements, servitudes, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property.
Loans shall collectively mean the Revolving Credit Loans, the Swing
Loans, and the Letter of Credit Loans, with each being a Loan, and shall
include all principal, interest, attorneys' fees and costs owed thereon.
Material Adverse Effect shall mean a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole.
Moody's shall mean Moody's Investors Service, Inc.
Multi-Employer Plan shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower, any
Subsidiary or any ERISA Affiliate or to which Borrower, any Subsidiary of
Borrower or any ERISA Affiliate has contributed in the past or currently
contributes.
Non-Competition Agreement shall mean the Non-Competition Agreement
between Borrower and John Dane, III, in the form forwarded by Borrower to each
of the Banks.
Notes shall mean any or all of the Revolving Credit Notes and/or the
Swing Line Note.
Notice of Borrowingshall have the meaning ascribed thereto in Section
3.3.
Obligor shall mean Borrower and each other Person who is or shall at
any time hereafter become primarily or secondarily liable on any of Borrower's
Obligations.
Occupational Safety and Health Laws shall mean the Occupational Safety
and Health Act of 1970, as amended, and any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct concerning employee
health and/or safety, as now or at any time hereafter in effect.
Offering shall mean the sale by Borrower of at least 3,000,000 shares
of Common Stock of Borrower.
PBGC shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is established or maintained by Borrower, any
Subsidiary of Borrower or any ERISA Affiliate, and includes, without
limitation, a Multi-Employer Plan.
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<PAGE> 15
Permitted Liens shall mean any of the following:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by Section
8.1(d) and/or Section 8.1(e);
(b) (i) Deposits to secure the performance of bids, tenders or
trade contracts, or to secure statutory obligations, surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money or the acquisition of
inventory or other Property and (ii) Liens (other than any Liens imposed by
ERISA) arising in th ordinary course of business or incidental the ownership of
Properties and assets (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, carrier's,
mechanic's, materialmen's, repairmen's, vendor's, warehousemen's and attorneys'
liens and statutory landlords' liens); provided in each case the obligation
secured is not overdue or, if overdue, is being contested in good faith by
appropriate actions or proceedings being diligently conducted and for which
adequate provisions as determined in accordance with GAAP has been made and if
the obligations secured thereby are in excess of $50,000.00, Agent is provided
written notice of such Lien within twenty days of when the Lien becomes
overdue;
(c) Minor survey exceptions or minor encumbrances, minor
issues with regard to the merchantability of title, easements or reservations,
or rights of others for rights-of-way, servitudes, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary for the conduct of the activities of Borrower and its
Subsidiaries or which customarily exist on properties of corporations engaged
in similar activities and similarly situated and which do not in any event
materially impair the use of such real properties in the operation of the
business of the Borrower and its Subsidiaries;
(d) Liens permitted by the Required Banks in writing;
(e) Liens granted in the ordinary course of business on
vessels under construction in favor of the purchaser or owner of such vessels
(or lenders to such purchasers or owners);
(f) Liens reflected on Schedule 2.1(a) attached hereto in
existence as of the date hereof, and any extensions, renewals and refinancings
thereof (provided that any such refinancing shall not increase the principal
indebtedness secured thereby without the prior written consent of the Required
Banks);
(g) Liens on Properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 8.2(a)(vi);
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(h) Liens in favor of Fireman's Fund Insurance Company
pursuant to a bonding company indemnity agreement in customary form; and
(i) Liens in favor of Trinity to secure its contingent
liability under existing construction contracts of Borrower or any Subsidiary
to the extent such Liens would customarily be required by a bonding company in
like circumstances.
Person shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Prime Rate shall mean the interest rate announced from time to time by
Citibank at its office at ________________ as its "prime rate" on commercial
loans (which rate shall fluctuate as and when said prime rate shall change).
Property shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible. Properties shall
mean the plural of Property. For purposes of this Agreement, Borrower and each
Subsidiary shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes.
Pro Rata Share shall mean with respect to each Bank, the percentage
amount equal to the sum of such Bank's Revolving Credit Commitment, divided by
the sum of all of the Banks' Revolving Credit Commitments.
RCRA shall mean the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Sections 6901 et seq., and any future amendments,
and shall include any and all regulations issued pursuant thereto.
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as amended.
Regulatory Change shall have the meaning ascribed thereto in Section
5.9.
Release shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment, including, without limitation, the abandonment or discarding
of barrels, drums, containers, tanks and/or other receptacles containing or
previously containing any Hazardous Substance.
Reportable Event shall have the meaning given to such term in ERISA.
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Required Banks shall mean at any time Banks having Sixty-Six and Two
Thirds Percent (66 2/3 %) of the aggregate amount of Loans and Letters of
Credit then outstanding or, if no Loans or Letters of Credit are then
outstanding, Sixty-Six and Two Thirds Percent (66 2/3%) of the total
Commitments of all of the Banks.
Responsible Officer shall mean the chief executive officer, president,
chief operating officer, chief financial officer or chief accounting officer of
Borrower or any other officer of Borrower involved in the financial
administration or controllership function of Borrower.
Restricted Investment shall mean any Investment, or any expenditure or
any incurrence of any liability to make any expenditure for an Investment,
other than:
(a) Guarantees, Loans and/or advances by Borrower or a
Subsidiary to any Subsidiary in which all of the issued and outstanding shares
of stock is owned by Borrower and/or any Subsidiaries;
(b) Loans, Guarantees and/or advances by any Subsidiary to
Borrower which are subordinated in writing to the payment of the Borrower's
Obligations in form and substance satisfactory to the Required Banks;
(c) Direct obligations of the United States of America or any
instrumentality or agency thereof, the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof (all of which Investments must mature within twelve (12) months from
the time of acquisition thereof);
(d) Investments in readily marketable commercial paper which,
at the time of acquisition thereof by Borrower or any Subsidiary, is rated
investment grade or better by S&P or Moody's and which matures within 270 days
from the date of acquisition thereof, provided that the issuer of such
commercial paper shall, at the time of acquisition of such commercial paper,
have a senior long-term debt rating of at least A by S&P and Moody's;
(e) Preferred stocks of corporations organized and existing
under the laws of the United States of America or any state thereof having
ratings of investment grade or better from S&P or Moody's;
(f) Negotiable certificates of deposit or negotiable bankers
acceptances issued by (i) any of the Banks or (ii) any other bank or trust
company organized under the laws of the United States of America or any state
thereof, which bank or trust company (other than the Banks to which such
restrictions shall not apply) is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System and is rated B or better by Thompson
Bank Watch Service (all of which Investments must mature within twelve (12)
months from the time of acquisition thereof);
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(g) Repurchase agreements, which shall be collateralized for
at least 100% of face value, issued by (i) any of the Banks or (ii) any other
bank or trust company organized under the laws of the United States or any
state thereof, which bank or trust company (other than the Banks to which such
restrictions shall not apply) is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System and is rated B or better by Thompson
Bank Watch Service (all of which Investments must mature within twelve (12)
months from the time of acquisition thereof);
(h) Investments in mutual funds the investments of which are
limited to direct obligations of the United States of America or any
instrumentality or agency thereof, the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof;
(i) Investments existing as of the date hereof as described in
Schedule 7.17, and any future retained earnings in respect thereof;
(j) Guarantees, Loans or advances other than in the ordinary
course of business to officers or employees of Borrower or a Subsidiary in the
aggregate principal amount of up to $500,000.00 at any one time outstanding;
and
(k) Acquisitions through (i) the issuance of stock (or the use
of the proceeds from the sale of stock) of the Borrower or of any Subsidiary,
(ii) the issuance, incurrence or provision of Indebtedness as allowed by
Sections 8.2(a)(xiii) of this Agreement, (iii) with the consent of the Required
Banks, the use of Loan proceeds or (iv) any combination of the foregoing.
Revolving Credit Loan and Revolving Credit Loans shall have the
meanings ascribed thereto in Section 3.1.
Revolving Credit Notes shall have the meaning ascribed thereto in
Section 3.4(a).
Revolving Credit Period shall mean the period commencing on the date of
this Agreement and ending September __, 1999, unless extended from time to time
with the unanimous consent of the Banks as provided in Section 3.6 hereof.
Revolving Credit Commitment shall mean for each Bank, subject to
termination or reduction as set forth in Section 3.5, the amount set forth as
the Revolving Credit Commitment for such Bank next to its name on the signature
pages hereof.
S&P shall mean Standard and Poor's Ratings Group.
Separation and Related Agreements shall mean the Separation Agreement,
Barge Agreement, Insurance Agreement, Tax Allocation Agreement and the
Trademark License
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Agreement between Borrower and Trinity in the form forwarded by Borrower to
each of the Banks.
Subsidiary shall mean (a) any corporation of which more than fifty
percent (50%) of the issued and outstanding capital stock entitled to vote for
the election of directors (other than by reason of default in the payment of
dividends) is at the time owned directly or indirectly by Borrower or any
Subsidiary of Borrower, (b) any partnership, limited liability company,
business trust, or any other similar entity of which more than fifty percent
(50%) of the voting interests is at the time owned directly or indirectly by
Borrower or any Subsidiary of Borrower.
Swing Loans and Swing Loan shall have the meanings ascribed thereto
in Section 3.2.
Swing Line Note shall have the meaning ascribed thereto in Section
3.2.
Swing Line Commitmentshall mean the commitment of Whitney to make
Swing Loans as set forth herein in an aggregate amount not to exceed
$5,000,000.00 at any one time outstanding.
Telerate Page 3750 means the display designated as "Page 3750" of the
Dow Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar Deposits).
Term shall have the meaning ascribed thereto in Section 1.
Total Revolver Outstandings shall mean the sum of (i) the aggregate
principal amount of all outstanding Revolving Credit Loans, plus (ii) the
aggregate principal amount of the outstanding Swing Loans, plus (iii) the
aggregate principal amount of all outstanding Letter of Credit Loans plus (iv)
the aggregate undrawn face amount of all outstanding Letters of Credit.
Transaction Documents shall mean this Agreement, the Notes, the Letter
of Credit Application(s), the Continuing Guarantees, and all other agreements,
documents and instruments heretofore, now or hereafter delivered to the Agent
or any of the Banks with respect to or in connection with or pursuant to this
Agreement, any Loans made hereunder or thereunder, any Letters of Credit issued
hereunder or thereunder, or any other of Borrower's Obligations, and executed
by or on behalf of Borrower or any Subsidiary, all as the same may from time to
time be amended, modified, extended or renewed.
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Trinity shall mean Trinity Industries, Inc., a Delaware corporation,
with Taxpayer Identification Number ____________, and any subsidiaries thereof
(except for the Borrower and the Subsidiaries).
U. S. Governmental Authority shall mean the United States of America,
any political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to the United States of America.
Whitney shall mean Whitney National Bank, a national banking
association, in its individual corporate capacity as a Bank hereunder and the
lender under the Swing Line Commitment, but not as Agent hereunder.
2.2 Accounting Terms and Determinations. Except as otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared as determined in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for changes accompanied by a concurrence from Borrower's
independent certified public accountants) with the most recent audited
financial statements of Borrower delivered to the Banks.
SECTION 3. THE REVOLVING CREDIT LOANS.
3.1 Revolving Credit Commitments. Subject to the terms and
conditions set forth in this Agreement and so long as no Default or Event of
Default under this Agreement has occurred and is continuing, during the
Revolving Credit Period, each Bank severally agrees to lend to Borrower from
time to time (individually, a "Revolving Credit Loan" and collectively, the
"Revolving Credit Loans") amounts not to exceed, in the aggregate at any one
time outstanding, the lesser of: (a) such Bank's Revolving Credit Commitment,
or (b) such Bank's Pro Rata Share of the sum of the total Revolving Credit
Commitments of all of the Banks minus the aggregate principal amount of all
outstanding Letter of Credit Loans minus the aggregate undrawn face amount of
all outstanding Letters of Credit minus the principal amount of any outstanding
Swing Loans. Each Revolving Credit Loan under this Section 3.1 shall be made
from the several Banks ratably in proportion to their respective Pro Rata
Shares, and may be made as either (x) a Base Rate Loan, (y) a LIBOR Loan, or
(z) any combination thereof, as determined by Borrower with notice thereof to
Agent pursuant to Section 3.3. Each Revolving Credit Loan under this Section
3.1 which is a Base Rate Loan shall be for an aggregate principal amount of at
least $1,000,000.00 or any larger multiple of $100,000.00. Each Revolving
Credit Loan under this Section 3.1 which is a LIBOR Loan shall be for an
aggregate principal amount of at least $1,000,000.00 or any larger multiple of
$100,000.00. Within the foregoing limits, Borrower may borrow under this
Section 3.1, prepay under Section 5.4(a) or 5.4(b) and reborrow at any time
during the Revolving Credit Period under this Section 3.1. The failure of any
Bank to make any Revolving Credit Loan required under this Agreement shall not
release any other Bank from its obligation to make Revolving Credit Loans as
provided herein.
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3.2 The Swing Line. Subject to all of the terms and conditions
hereof and so long as no Default or Event of Default under this Agreement has
occurred and is continuing, Whitney agrees to make loans to Borrower under a
Swing Line (individually, a "Swing Loan" and collectively, the "Swing Loans")
which shall not in the aggregate at any time outstanding exceed the lesser of
(i) the Swing Line Commitment, or (ii) the difference between the Revolving
Credit Commitments of all of the Banks and the amount of the Revolving Credit
Loans, Letter of Credit Loans and the undrawn face amount of Letters of Credit
then outstanding hereunder at the time of computation. The Swing Line
Commitment shall be available to Borrower and may be availed of by Borrower
from time to time, and borrowings thereunder may be repaid and used again
during the period ending on the last day of the Revolving Credit Period. All
Swing Loans shall be made hereunder only as Base Rate Loans. All advances made
by Whitney to Borrower under the Swing Line shall be evidenced by the Swing
Line Note of Borrower dated as of the date hereof (the "Swing Line Note")
payable to the order of Whitney in the amount of the Swing Line Commitment and
being in the form attached hereto as Exhibit B.
3.3 Method of Borrowing.
(a) With respect to each Revolving Credit Loan, Borrower shall
give notice (a "Notice of Borrowing") to the Agent by 11:00 a.m. (New Orleans
time) on the day of each Base Rate Loan, and by 11:00 a.m. (New Orleans Time)
at least two (2) Business Days before each LIBOR Loan, specifying:
(i) the date of such Revolving Credit Loan, which shall be a
Business Day,
(ii) the aggregate principal amount of such Revolving Credit
Loan,
(iii) whether such Loan is to be a Base Rate Loan or a LIBOR
Loan, or a combination thereof,
(iv) in the case of a LIBOR Loan, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period,
(v) that on the date of, and after giving effect to, such
Revolving Credit Loan, no Default or Event of Default under this Agreement has
occurred and is continuing, and
(vi) that on the date of, and after giving effect to, such
Revolving Credit Loan, all of the representations and warranties of Borrower
contained in Section 7 of this Agreement and the other Transaction Documents
are true and correct in all material respects as if made on and as of the date
of such Revolving Credit Loan.
A Notice of Borrowing shall not be required in connection with a Base Rate Loan
pursuant to Section 5.7 or 5.8.
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(b) Upon receipt of a Notice of Borrowing given to it, the
Agent shall notify each Bank by 1:00 noon (New Orleans time) on the date of
receipt of such Notice of Borrowing by the Agent (which must be a Business Day)
of the contents thereof and of such Bank's ratable share of such Revolving
Credit Loan. A Notice of Borrowing shall not be revocable by Borrower.
(c) Not later than 3:00 p.m. (New Orleans time) on the date of
each Revolving Credit Loan, each Bank shall make available its Pro Rata Share
of such Revolving Credit Loan, in federal or other funds immediately available
in New Orleans, Louisiana, to the Agent at its address specified in or pursuant
to Section 11.7. Agent shall not be required to make any amount available to
Borrower hereunder except to the extent it shall have received such amounts
from the Banks as set forth herein, provided, however, that unless the Agent
shall have been notified by a Bank prior to the date a Revolving Credit Loan is
to be made hereunder that such Bank does not intend to make its Pro Rata Share
of such Revolving Credit Loan available to the Agent, the Agent may assume that
such Bank has made such Pro Rata Share available to the Agent on such date, and
the Agent may in reliance upon such assumption make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent by such Bank and the Agent has made such amount
available to the Borrower, the Agent shall be entitled to receive such amount
from such Bank forthwith upon its demand, together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to the Borrower and ending on but excluding the date the Agent
recovers such amount from the Bank at a rate per annum equal to the effective
rate charged to the Agent for overnight federal funds transactions with member
banks of the Federal Reserve System for each day as determined by the Agent (or
in the case of a day which is not a Business Day, then for the preceding day).
Unless the Agent determines that any applicable condition specified in Section
6 has not been satisfied, the Agent will make the funds so received from the
Banks available to Borrower thereafter as of 3:30 p.m. New Orleans time at the
Agent's aforesaid address by crediting such funds to a demand deposit account
(or such other account mutually agreed upon in writing between Agent and
Borrower) of Borrower with the Agent.
(d) With respect to each Swing Loan, Borrower shall give
Whitney prior notice (which may be written or oral but which must be given
prior to 2:00 p.m. New Orleans time on the date of the Swing Loan) of the
amount and date of each Swing Loan and, subject to all of the terms and
conditions hereof, the proceeds of such Swing Loan shall be made available to
Borrower on the date of request at the offices of the Agent in New Orleans,
Louisiana. Anything contained in the foregoing to the contrary
notwithstanding, (i) the obligation of Whitney to make Swing Loans shall be
subject to all of the terms and conditions of this Agreement, (ii) Whitney
shall not be obligated to make more than one Swing Loan to Borrower during any
day, and (iii) Whitney shall make the determination of the amount to be
borrowed or repaid pursuant to the immediately preceding sentence as of a
cutoff hour to be determined by Whitney (which shall generally be in the
mid-morning of each business day), and Whitney shall incur no liability to
Borrower for any interruptions or errors made in connection with
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<PAGE> 23
the foregoing procedures not caused by the gross negligence or willful
misconduct of Whitney.
3.4 Revolving Credit Notes.
(a) The Revolving Credit Loans of each Bank to Borrower during
the Revolving Credit Period shall be evidenced by Revolving Credit Note of
Borrower dated the date hereof and payable to the order of such Bank in a
principal amount equal to its Revolving Credit Commitment in substantially the
form of Exhibit A attached hereto (with appropriate insertions) (as the same
may from time to time be amended, modified extended or renewed, the "Revolving
Credit Notes").
(b) Upon receipt of each Bank's Revolving Credit Note pursuant
to Section 3.l(a), the Agent shall mail such Revolving Credit Note by overnight
express delivery to such Bank. Each Bank shall record, and prior to any
transfer of its Revolving Credit Note shall endorse on the schedules forming a
part thereof, appropriate notations to evidence the date and amount of each
Revolving Credit Loan made by it during the Revolving Credit Period and the
date and amount of each payment of principal made by Borrower with respect
thereto. Each Bank is hereby irrevocably authorized by Borrower so to endorse
its Revolving Credit Note and to attach to and make a part of any such
Revolving Credit Note a continuation of any such schedule as and when required;
provided, however that the obligation of Borrower to repay each Revolving
Credit Loan actually made hereunder shall be absolute and unconditional,
notwithstanding any failure of any Bank to endorse or any mistake by any Bank
in connection with endorsement on the schedules attached to their respective
Revolving Credit Notes. The internal records of each Bank shall constitute for
all purposes prima facie evidence of (i) the amount of principal and interest
owing on the Loans from time to time, (ii) the amount of each Loan made to the
Borrower and (iii) the amount of each principal and/or interest payment
received by the Banks on the Loans.
3.5 Termination or Reduction of Commitments. Borrower may, upon
three (3) Business Days' prior written notice to the Agent, terminate entirely
at any time, or proportionately reduce from time to time on a pro rata basis
among the Banks based on their respective Revolving Credit Commitments by an
aggregate amount of $1,000,000.00 or any larger multiple of $500,000.00 the
unused portions of the Revolving Credit Commitments; provided, however, that
(i) at no time shall the Revolving Credit Commitments be reduced to a figure
less than the Total Revolver Outstandings, (ii) at no time shall the Revolving
Credit Commitments be reduced to a figure less than $5,000,000.00 and (iii) any
such termination or reduction shall be permanent and Borrower shall have no
right to thereafter reinstate or increase, as the case may be, the Revolving
Credit Commitment of any Bank. Borrower agrees to pay to the Agent for the
benefit of and disbursement to the Banks a reduction fee on the effective date
of each reduction in the Revolving Credit Commitments pursuant to this Section
3.5 equal to 1/10 of 1% of the amount of each such reduction.
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3.6 Maturity. All Revolving Credit Loans and all Swing Loans not
paid prior to the last day of the Revolving Credit Period, together with all
accrued and unpaid interest thereon and all fees and other amounts owing by
Borrower to the Banks with respect thereto, shall be due and payable on the
last day of the Revolving Credit Period. On an annual basis, during the period
commencing on each anniversary of the date of execution of this Agreement and
ending 60 days thereafter, Borrower may request that the Revolving Credit
Period be extended for up to one year from the end of the then applicable
Revolving Credit Period. Upon the unanimous consent of the Banks, which
consent may be withheld in the discretion of any of the Banks, the Revolving
Credit Period (and the Term of this Agreement) shall be so extended, provided
that Borrower and the Subsidiaries shall execute such documentation as Banks
shall require to evidence such extension. The Banks agree to provide Borrower
with a response to any such request for an extension of the Revolving Credit
Period within 60 days following receipt thereof; provided that, the failure of
the Banks, or any of them, to provide a response within such 60 day period
shall not be construed to constitute consent to such an extension on the part
of any of the Banks.
3.7 Swing Loan Settlement After Default. Upon the occurrence of
any Event of Default, Agent shall promptly so notify the other Banks pursuant
to Section 9 herein and of the amount of the Swing Loans from Whitney then
outstanding, and each of the other Banks agrees to immediately purchase from
Whitney with immediately available funds its Pro Rata Share of the amount of
all such Swing Loans, plus accrued and unpaid interest calculated on such Pro
Rata Share of such principal amount at a rate per annum equal to the Base Rate.
Following such advance by each Bank to Whitney of its Pro Rata Share of any
such Swing Loans pursuant to the preceding sentence, each such Bank shall
thereafter receive its Pro Rata Share of all principal payments, interest
payments, fees and other amounts due with respect to such Swing Loans when paid
by the Borrower to the Agent hereunder. Such Loans shall thereafter be
evidenced be the Revolving Credit Notes of each of the Banks.
SECTION 4. LETTERS OF CREDIT.
4.1 Letter of Credit Commitment.
(a) Subject to the terms and conditions of this Agreement,
during the Letter of Credit Period of this Agreement, and so long as no Default
or Event of Default under this Agreement has occurred and is continuing
(provided, however, that Issuer shall have no liability to any of the other
Banks for issuing a Letter of Credit after the occurrence of any Default or
Event of Default under this Agreement unless Issuer has previously received
notice in writing to Issuer by Borrower, the Agent or any of the other Banks of
the occurrence of such Default or Event of Default), each Bank hereby agrees,
upon the request of Agent, to issue irrevocable standby letters of credit for
the account of Borrower or any Subsidiary (individually, a "Letter of Credit"
and collectively, the "Letters of Credit") (the "Letter of Credit Commitment")
in an amount and for the term specifically requested by Borrower by notice in
writing to such Bank in the form of Exhibit E attached hereto and
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<PAGE> 25
incorporated herein by reference (a "Letter of Credit Request") at least three
(3) Business Days prior to the requested issuance thereof; provided, however,
that:
(i) Borrower, and if the Letter of Credit is to be issued for
the account of a Subsidiary, such Subsidiary, shall have executed and delivered
to Issuer a Letter of Credit Application with respect to such Letter of Credit;
(ii) the term of any such Letter of Credit shall not extend
beyond the earlier of (A) the last day of the Letter of Credit Period or (B) 36
months from the issuance thereof;
(iii) any Letter of Credit may only be utilized to guaranty or
support the payment of obligations of Borrower or any Subsidiary to third
parties incurred in the ordinary course of business;
(iv) the Total Revolver Outstandings shall not at any one time
exceed the sum of One Hundred Thirty Five Million Dollars ($135,000,000.00);
(v) the sum of (A) the aggregate undrawn face amount of all
outstanding Letters of Credit plus (B) the aggregate principal amount of all
outstanding Letter of Credit Loans shall not at any one time exceed the sum of
Sixty Million Dollars ($60,000,000.00); and
(vi) the text of any such Letter of Credit is provided to
Issuer no less than three (3) Business Days prior to the requested issuance
date, the terms and conditions of which must be acceptable to Issuer.
("Issuer" shall mean the Bank that issues a Letter of Credit and "Issuers"
shall mean all of the Banks that issue a Letter of Credit.)
(b) The Issuer will make available the original of each Letter of
Credit to the beneficiary thereof (and will promptly provide each of the Banks
and the Agent with a copy of such Letter of Credit).
(c) For each Letter of Credit, Borrower (or any Subsidiary that
executed the Letter of Credit Application) hereby further agrees to pay to the
Agent for the account of the Issuer and the Banks a nonrefundable commitment
fee in an amount equal to the rate per annum equal to the then current
Applicable Margin for LIBOR Loans (calculated on an actual day, 360 day year
basis) times the face amount (taking into account any scheduled increases or
decreases therein during the period in question) of each such Letter of Credit
issued hereunder ("Letter of Credit Commitment Fee"), which Letter of Credit
Commitment Fee shall be due and payable in arrears with respect to each Letter
of Credit on the last Business Day of each calendar quarter during the term of
each respective Letter of Credit and on the termination thereof (whether at its
stated maturity or earlier). Borrower further agrees to pay (or cause any
Subsidiary for which the Letter of Credit was issued to pay) to Issuer all
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<PAGE> 26
reasonable administrative fees of Issuer in connection with the issuance,
maintenance, modification (if any) and administration of each Letter of Credit
and standard negotiation charges upon demand from time to time. Each of the
Banks shall be entitled to its Pro Rata Share of any Letter of Credit
Commitment Fees, but the Banks shall have no right to share in any
administrative fees paid by Borrower (or any Subsidiary) to Issuer in
connection with any of the Letters of Credit. In addition to the Letter of
Credit Commitment Fee, for each Letter of Credit, Borrower (or any Subsidiary
that executed the Letter of Credit Application) hereby further agrees to pay to
the Agent, for the account of the Issuer, a nonrefundable commitment fee in an
amount equal to 1/8 of 1% of the face amount of each such Letter of Credit
issued hereunder, which such fee shall be due and payable upon issuance of such
Letter of Credit.
(d) If the proposed beneficiary of a Letter of Credit will not accept
any Bank as the Issuer of such Letter of Credit, Agent will request a financial
institution selected by such beneficiary and acceptable to the Agent to confirm
such Letter of Credit with Borrower responsible for any and all fees incurred
as a result of such confirmation.
4.2 Participation by Other Banks.
(a) Upon the issuance of a Letter of Credit, each Bank shall
share the obligation represented by each such Letter of Credit so issued, in an
amount equal to such Bank's Pro Rata Share. The participation of each Bank in
each Letter of Credit shall be automatic. Each Bank shall make available to
the Issuer, regardless of whether any Default or Event of Default shall have
occurred and is continuing, an amount equal to its respective Pro Rata Share of
each drawing on each Letter of Credit in same day or immediately available
funds not later than 11:00 a.m. New Orleans time on each Disbursement Date (as
hereinafter defined) for each such drawing. In the event that any Bank fails
to make available to the Issuer the amount of such Bank's Pro Rata Share of any
drawing on a Letter of Credit as provided herein, the Issuer shall be entitled
to recover such amount on demand from such Bank together with interest at the
daily average Federal Funds Rate for the first two Business Days after the
Disbursement Date and thereafter at the Base Rate.
(b) The Agent shall distribute to each Bank that has paid all
amounts payable by it under this Section 4.2 with respect to any Letter of
Credit issued by the Issuer such Bank's Pro Rata Share of all payments received
by the Agent from the Borrower in reimbursement of drawings honored by Issuer
under such Letter of Credit when such payments are received.
4.3 Disbursements. The Issuer shall notify the Borrower and the
Agent promptly of the presentment for payment of any Letter of Credit (on the
date of presentment, if possible, and otherwise on the next Business Day, it
being agreed that such notice may be made by phone), together with notice of
the date (the with "Disbursement Date") such payment shall be made, and the
Agent will promptly notify the Banks of such matters. Subject to the terms and
provisions of such Letter of Credit, the Issuer shall make such
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payment to the beneficiary (or its designee) of such Letter of Credit. Prior
to 1:00 p.m. New Orleans time on the Disbursement Date Borrower shall reimburse
(or cause any Subsidiary for which the Letter of Credit was issued to
reimburse) Issuer and the Banks (to the extent each Bank has paid its Pro
Rata Share of such drawing) for all amounts which have been disbursed under
such Letter of Credit. In the event of a payment under a Letter of Credit is
made without same day receipt of payment from Borrower in accordance with this
Section 4.3, such payment shall constitute a loan (individually a "Letter of
Credit Loan" and collectively, the "Letter of Credit Loans") by Issuer and/or
Banks (to the extent each Bank has paid its Pro Rata Share of such drawing) to
Borrower. All shall accrue interest at the Base Rate and shall be payable on
demand.
4.4 Reimbursement. Borrower's obligation under Section 4.3 to
reimburse the Issuer and the Banks with respect to each drawing under each
Letter of Credit (including interest thereon) (to the extent each Bank has paid
its Pro Rata Share of such drawing), and each Bank's obligation to fund each
drawing shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment which Borrower
or any Bank may have or have had against any Bank, the Borrower or any
beneficiary of a Letter of Credit, including, without limitation, any defense
based upon the occurrence of any Default or Event of Default, any draft, demand
or certificate or other document presented under a Letter of Credit proving to
be forged, fraudulent, invalid or insufficient, or any failure to apply or
misapplication by the beneficiary of the proceeds of any disbursement, or the
legality, validity, form, regularity, or enforceability of such Letter of
Credit.
4.5 Replacement or Collateralization of Letters of Credit.
Notwithstanding any provision contained in this Agreement or any of the Letter
of Credit Applications to the contrary, upon the occurrence of any Event of
Default under this Agreement, at Agent's option and without demand or further
notice to Borrower, an amount equal to the aggregate undrawn face amount of all
Letter(s) of Credit then outstanding shall be deemed (as between Issuer and
Borrower) to have been paid or disbursed by Issuer (notwithstanding that such
amounts may not in fact have been so paid or disbursed by Issuer), and Letter
of Credit Loan(s) to Borrower in such amounts to have been made and accepted by
Borrower, which Letter of Credit Loan(s) shall be immediately due and payable.
In lieu of the foregoing, at the election of Agent, Borrower shall, upon
Agent's demand, deliver to Issuer cash or other collateral acceptable to
Issuer, in its sole and absolute discretion, having a value, as determined by
Issuer, at least equal to aggregate undrawn face amount of all outstanding
Letters of Credit issued by Issuer. Any such collateral and/or any amounts
received by Issuer pursuant to this Section 4.5 shall be held by Issuer in a
separate account at Issuer appropriately designated as a cash collateral
account in relation to this Agreement and the Letters of Credit and retained by
Issuer as collateral security for the payment of the Borrower's Obligations.
Cash amounts delivered to Issuer pursuant to the foregoing requirements of this
Section 4.5 shall be invested, at the request and for the account of Borrower,
in investments of a type and nature and with a term acceptable to Issuer. Such
amounts, including in the case of cash amounts invested in the manner set forth
above, any
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investment realized thereon, shall not be used by Issuer to pay any amounts
drawn or paid under or pursuant to any Letter of Credit, but may be applied to
reimburse Issuer for drawings or payments under or pursuant to the Letters of
Credit which Issuer has paid, or if no such reimbursement is required shall be
delivered to the Agent for application to such other of Borrower's Obligations
as Agent shall determine. Any amounts remaining in any cash collateral account
established pursuant to this Section 4.5 after the payment in full of all of
the Borrower's Obligations and the expiration or cancellation of all of the
Letters of Credit shall be returned to Borrower (after deduction of Issuer's
expenses, if any).
4.6 Nature of Reimbursement Obligations. Borrower shall assume
all risks of the acts, omissions, or misuse of any Letter of Credit by the
beneficiary thereof. Except to the extent of its own gross negligence or
wilful misconduct, the Issuer shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit, even if
it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or proceeds
thereof in whole or in part;
(c) failure of the beneficiary to comply fully with conditions
required (except the presentment of any required documents, as set forth in the
applicable Letter of Credit, to the Issuer) in order to demand payment under a
Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or
delivery of any information or messages, by mail, cable, telegraph, telex, or
otherwise;
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a disbursement under a Letter of Credit or
of the proceeds thereof;
(f) errors in interpretation of technical terms;
(g) any misapplication by a beneficiary of the proceeds of any
disbursement under any Letter of Credit; or
(h) any consequences arising from causes beyond the control of the
Issuer including, without limitation, acts of any Governmental Authority.
None of the foregoing shall affect, impair, or prevent the vesting of
any of the rights or powers granted to the Issuer hereunder.
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4.7 Indemnity.
In addition to amounts payable as elsewhere provided in this Section
IV, Borrower hereby agrees to protect, indemnify, pay and save Issuer harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which Issuer
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of the Letters of Credit, other than as a result of (y) the gross
negligence or wilful misconduct of the Issuer or (z) the Issuer's failure to
pay under any Letter of Credit after the presentation to it of a request
complying with the terms and conditions of the Letter of Credit, or (ii) the
failure of the Issuer to honor a drawing under any Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto Governmental Authority.
SECTION 5. GENERAL PROVISIONS FOR ALL LOANS.
5.1 Duration of Interest Periods and Selection of Interest Rates.
(a) The commencement date and duration of the initial Interest
Period for each LIBOR Loan shall be as specified in the applicable Notice of
Borrowing. Borrower shall elect the duration of each subsequent Interest
Period applicable to such LIBOR Loan, and the interest rate to be applicable
during such subsequent Interest Period (and, Borrower shall have the option (x)
in the case of any Base Rate Loan, to elect that such Loan become a LIBOR Loan
and the Interest Period to be applicable thereto or (y) in the case of any
LIBOR Loan, to elect that such Loan become a Base Rate Loan), by giving notice
of such election to the Agent by 11:00 a.m. (New Orleans time) on the day of,
in the case of the election of the Base Rate, by 11:00 a.m. (New Orleans time)
at least two (2) Business Days before, in the case of the election of the LIBOR
Rate, the end of the immediately preceding Interest Period applicable thereto,
if any; provided, however, that notwithstanding the foregoing, in addition to
and without limiting the rights and remedies of the Agent and the Banks under
Section 9 hereof, so long as any Default or Event of Default under this
Agreement has occurred and is continuing, Borrower shall not be permitted to
renew any LIBOR Loan as a LIBOR Loan or to convert any Base Rate Loan into a
LIBOR Loan. By 12:00 noon (New Orleans time) on the date of receipt of each
such notice of conversion or continuation of a Loan from Borrower, Agent shall
notify each Bank of the contents thereof and of such Bank's ratable share of
such Loan. A notice by Borrower under this Section 5.1(a) shall not be
revocable by Borrower. All LIBOR Loans, whether by conversion or by an
advance, shall be in a principal amount of at least $1,000,000.00 or multiples
of $100,000.00 in excess thereof. All Loans which bear interest at a
particular LIBOR Rate for a particular Interest Period shall constitute a
single LIBOR Loan.
(b) If the Agent does not receive a notice of election for the
continuation of a LIBOR Loan for a subsequent Interest Period pursuant to
subsection (a) above within the applicable time limits specified therein,
Borrower shall be deemed to have elected to convert
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such LIBOR Loan on the last day of the current Interest Period with respect
thereto to a Base Rate Loan in the principal amount of such expiring LIBOR Loan
on such date.
(c) Notwithstanding the foregoing, the duration of each
Interest Period shall be subject to the provisions of the definition of
Interest Period.
(d) Borrower hereby authorizes the Agent to rely on
telephonic, telegraphic, telecopy, telex or written instructions believed by
the Agent in good faith to have been sent or delivered by any person
identifying himself or herself as John Dane III, Keith L. Voigts or John J.
Siben II (or any other person from time to time authorized to act on behalf of
Borrower pursuant to a resolution adopted by the Board of Directors of Borrower
and certified by the Secretary of Borrower and delivered to the Agent) with
respect to any request to make a Loan or a repayment hereunder, or to convert
any Base Rate Loan or LIBOR Loan to any other type of Loan available hereunder,
and on any signature which the Agent in good faith believes to be genuine.
Borrower shall be bound thereby in the same manner as if such person were
actually authorized or such signature were genuine. Borrower also hereby
agrees to indemnify the Agent and each of the Banks and to hold the Agent and
each of the Banks harmless from and against any and all claims, demands,
damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) relating to or arising out
of or in connection with the acceptance of instructions for making or
converting Loans or making repayments hereunder.
5.2 Interest Rates; Interest Payments.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate. Such interest shall
be payable on all such Loans quarterly in arrears on the last day of each
quarter (or the immediate subsequent Business Day if any such last day is not a
Business Day), commencing on the first day after such Base Rate Loan is made,
and at maturity. Any overdue principal of and, to the extent permitted by law,
overdue interest on, any Base Rate Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum of two percent
(2%) plus the rate otherwise in effect for such day.
(b) Each LIBOR Loan shall bear interest on the outstanding
principal amount thereof for each Interest Period applicable thereto at a rate
per annum equal to the applicable LIBOR Rate; provided that if any LIBOR Loan
or any portion thereof shall, as a result of clause (iv) of the definition of
Interest Period, have an Interest Period of less than 30 days, such portion
shall bear interest during such Interest Period at the rate applicable to Base
Rate Loans during such period. Interest shall be payable for each Interest
Period on the last day thereof, unless the duration of the applicable Interest
Period exceeds three (3) months, in which case such interest shall be payable
at the end of the first three (3) months of such Interest Period and on the
last day of such Interest Period. Any overdue principal of and, to the extent
permitted by law, overdue interest on, any LIBOR Loan shall bear interest,
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payable on demand, for each day until paid, at a rate per annum equal to the
sum of two percent (2%) plus the higher of (i) the LIBOR Rate for the
immediately preceding Interest Period applicable to such LIBOR Loan or (ii) the
rate applicable to Base Rate Loans for such day; provided that, the rate of
interest shall not exceed the maximum rate of interest permitted under La. R.S.
9:3509.
(c) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to Borrower and the
Banks by telecopy, telex or cable of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
Any change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate shall occur.
5.3 Fees.
(a) Borrower shall pay to Agent for the account of the Banks,
in arrears, on the last day of March, June, September and December in each year
(or, if such day is not a Business Day, in the next succeeding Business Day)
and on the last day of the Revolving Credit Period, a commitment fee (the
"Commitment Fee") determined as set forth herein. The Commitment Fee shall be
a percentage of the unused Revolving Credit Commitments of all of the Banks
during the preceding calendar quarter, or portion thereof, which unused
Revolving Credit Commitments shall be arrived at by dividing the sum of the
unused Revolving Credit Commitments of the Banks for each day of that quarter
as of the close of each day, by 90. The Commitment Fee (i) if Borrower's ratio
of Consolidated Total Debt to Consolidated EBITDA as of the last day of the
immediately preceding calendar quarter is greater than or equal to 2.0, shall
be equal to 1/4 of .50% of the unused Revolving Credit Commitments of all of
the Banks during such calendar quarter, (ii) if Borrower's ratio of
Consolidated Total Debt to Consolidated EBITDA as of the last day of the
immediately preceding calendar quarter is less than 2.0 but greater than or
equal to 1.5, shall be equal to 1/4 of .375% of the unused Revolving Credit
Commitments of all of the Banks during such calendar quarter, (iii) if
Borrower's ratio of Consolidated Total Debt to Consolidated EBITDA as of the
last day of the immediately preceding calendar quarter is less than 1.5 but
greater than or equal to 1.0, shall be equal to 1/4 of .25% of the unused
Revolving Credit Commitments of all of the Banks during such calendar quarter,
or (iv) if Borrower's ratio of Consolidated Total Debt to Consolidated EBITDA
as of the last day of the immediately preceding the calendar quarter is less
than 1.0, shall be equal to 1/4 of .175% of the unused Revolving Credit
Commitments of all of the Banks during such calendar quarter. Upon receipt,
Agent shall promptly pay each Bank its Pro Rata Share of any such Commitment
Fee paid by Borrower. The unused Revolving Credit Commitments shall be defined
as the total of (x) the Revolving Credit Commitments of all of the Banks, minus
(y) (1) all outstanding Revolving Credit Loans, plus (2) all outstanding Swing
Loans, plus (3) all outstanding Letter of Credit Loans, plus (4) the aggregate
undrawn face amount of all outstanding Letters of Credit.
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(b) Borrower shall pay to Agent an agreed upon annual fee.
Borrower shall pay a one time commitment fee to the Banks equal to 1/8 of 1% of
the Revolving Credit Commitments.
5.4 Early Payments.
(a) Borrower may, upon notice to the Agent specifying that it
is paying its Revolving Credit Loans which are Base Rate Loans, pay without
penalty or premium such Base Rate Loans in whole at any time, or from time to
time in part in amounts aggregating $1,000,000.00, or any larger multiple of
$100,000.00; provided, however, that in no event may Borrower make a partial
payment of Base Rate Loans which results in the total outstanding Revolving
Credit Loans which are Base Rate Loans being greater than zero but less than
$1,000,000.00. Each such optional payment shall be applied to pay the Base
Rate Loans of the several Banks in proportion to their respective Revolving
Credit Commitments.
(b) Borrower may, upon at least one (1) Business Day's notice
to the Agent specifying that it is paying its Revolving Credit Loans which are
LIBOR Loans, pay without penalty or premium on the last day of any Interest
Period its LIBOR Loans to which such Interest Period applies, in whole, or in
part in amounts aggregating $1,000,000.00 or any larger multiple of
$100,000.00, by paying the principal amount to be paid together with all
accrued and unpaid interest thereon to and including the date of payment;
provided, however, that in no event may Borrower make a partial payment of
LIBOR Loans which results in the total outstanding Revolving Credit Loans which
are LIBOR Loans with respect to which a given Interest Period applies being
less than $1,000,000.00. Each such optional payment shall, subject to Section
5.6, be applied to pay such LIBOR Loans of the several Banks in proportion to
their respective Revolving Credit Commitments.
(c) Upon receipt of a notice of payment pursuant to any of
Sections 5.4(a) through (b) above, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such payment and such
notice shall not thereafter be revocable by Borrower.
(d) Borrower may, upon notice to the Whitney specifying that
it is paying its Swing Loan, pay without penalty or premium such Swing Loan in
whole at any time, or in part from time to time.
5.5 General Provisions as to Payments. Borrower shall make each
payment of principal of, and interest on, the Loans and of fees and all other
amounts payable hereunder, not later than 12:00 noon (New Orleans time) on the
date when due (2:00 p.m. New Orleans Time in the case of payments on the Swing
Loans), in federal or other funds immediately available in New Orleans,
Louisiana, to the Agent at its address referred to in Section 11.7. The Agent
will promptly distribute to each Bank in immediately available funds its
ratable share of each such payment received by the Agent for the account of the
Banks, provided, however, that except as provided in Section 3.7 above,
payments of principal, interest and
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fees with respect to the Swing Line Note and the Swing Line Commitment shall be
retained by Whitney for its own account. Whenever any payment of principal of,
or interest on, the Loans or of fees shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day, except that in the case of LIBOR Loans such payment
dates shall be subject to the definition of Interest Period. If the date for
any payment of principal is extended by operation of law or otherwise, interest
thereon, at the then applicable rate, shall be payable for such extended time.
5.6 Funding Losses. Notwithstanding any provision contained
herein to the contrary, if Borrower makes any payment of principal with respect
to any LIBOR Loan (pursuant to Sections 3.1, 5.4, 9 or otherwise) on any day
other than the last day of the Interest Period applicable thereto, or if
Borrower fails to borrow or pay any LIBOR Loan after notice has been given to
the Agent in accordance with Section 3.3, 5.1 or 5.4(b), Borrower shall
reimburse each Bank on demand for any resulting losses and expenses incurred by
it, including, without limitation, any losses incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment, provided that such Bank shall
have delivered to Borrower a certificate as to the amount of such losses and
expenses.
5.7 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period, the Agent determines that either adequate
and reasonable means do not exist for ascertaining the LIBOR Rate for any
Interest Period, or it becomes impractical for Agent or any Bank to obtain
funds to make or maintain any borrowing bearing interest at the LIBOR Rate, or
Agent or any Bank shall have determined that the LIBOR Rate will not adequately
and fairly reflect the cost to Agent or any Bank of making, maintaining, or
funding a proposed borrowing that Borrower has requested to bear interest at
the LIBOR Rate, then the Agent shall forthwith give notice thereof to Borrower
and the Banks, whereupon until the Agent notifies Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the
obligations of the Banks to make LIBOR Loans shall be suspended, and (b)
Borrower shall repay in full the then outstanding principal amount of each of
its LIBOR Loans together with all accrued and unpaid interest thereon, on the
last day of the then current Interest Period applicable to such Loan, or
convert the then outstanding principal amount of each of its LIBOR Loans to a
Base Rate Loan on the last day of the then current Interest Period applicable
to each such LIBOR Loan.
5.8 Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency shall
make it unlawful or impossible for any Bank to make, maintain or fund its LIBOR
Loans to Borrower and such Bank shall so notify the Agent, the Agent shall
forthwith give written notice thereof to the other Banks and Borrower. If
Agent provides Borrower with such
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written notice, Borrower shall repay in full the then outstanding principal
amount of each of its LIBOR Loans from such Bank, together with all accrued and
unpaid interest thereon, on either (a) the last day of the then current
Interest Period applicable to such LIBOR Loan if such Bank may lawfully
continue to maintain and fund such LIBOR Loan to such day or (b) within fifteen
(15) days of the receipt of such notice if such Bank may not lawfully continue
to fund and maintain such LIBOR Loan to such day. Concurrently with repaying
each LIBOR Loan of such Bank, Borrower may borrow a Base Rate Loan in an equal
principal amount from such Bank, and, if Borrower so elects, such Bank shall
make such a Base Rate Loan to Borrower.
5.9 Increased Cost.
(a) If after the date hereof, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or
not having the force of law) of any such Governmental Authority, central bank
or comparable agency (a "Regulatory Change"):
(A) shall subject any Bank to any tax, duty or other charge
with respect to its LIBOR Loans, its Revolving Credit Notes or its
obligation to make LIBOR Loans hereunder, or shall change the basis of
taxation of payments to any Bank of the principal of or interest on
its LIBOR Loans or any other amounts due under this Agreement in
respect of its LIBOR Loans or its obligation to make LIBOR Loans
(except for taxes on or changes in the rate of tax on the overall net
income of such Bank); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit, capital or
similar requirement against assets of, deposits with or for the
account of, or credit extended or committed to be extended by, any
Bank or shall, with respect to any Bank or the Interbank Eurodollar
market, impose, modify or deem applicable any other condition
affecting its LIBOR Loans, its Revolving Credit Notes or its
obligation to make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on or increase the cost to) such Bank of
making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement or under its Notes
with respect thereto, by an amount deemed by such Bank, in its good faith
judgment, to be material, and if such Bank is not otherwise fully compensated
for such increase in cost or reduction in amount received or receivable by
virtue of the inclusion of the reference to LIBOR Reserve Percentage in the
calculation of the interest rate applicable to LIBOR Loans, then, within
fifteen (15) days after notice by such Bank to Borrower together with a copy of
the official notice of the applicable change in law
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(if applicable) and a work sheet showing how the change in cost or reduction or
increase in amount received or receivable was calculated (with a copy to the
Agent and all of the other Banks), Borrower shall pay for the account of such
Bank as additional interest, such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. Each Bank will
promptly notify Borrower, the Agent and all of the other Banks of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section. In determining such amount
or amounts, such Bank may use any reasonable averaging and attribution methods.
(b) If any Bank demands compensation under this Section,
Borrower may at any time, upon at least two (2) Business Days' prior notice to
such Bank and the Agent, repay in full its then outstanding LIBOR Loans, as the
case may be, of such Bank, together with all accrued and unpaid interest
thereon to the date of prepayment and any funding losses and other amounts due
under Section 5.6. Concurrently with repaying such LIBOR Loans of such Bank,
Borrower may borrow from such Bank a Base Rate Loan in an amount equal to the
aggregate principal amount of such LIBOR Loans, and, if Borrower so elects,
such Bank shall make such a Base Rate Loan to Borrower.
5.10 Base Rate Loans Substituted for Affected LIBOR Loans. If
notice has been given by a Bank pursuant to Section 5.7 or 5.8 or by Borrower
pursuant to Section 5.9(b) requiring LIBOR Loans of any Bank to be repaid,
then, unless and until such Bank notifies Borrower that the circumstances
giving rise to such repayment no longer apply, all Loans which would otherwise
be made by such Bank to Borrower as LIBOR Loans shall be made instead as Base
Rate Loans. Such Bank shall notify Borrower if and when the circumstances
giving rise to such repayment no longer apply.
5.11 Capital Adequacy. If, after the date of this Agreement, any
Bank shall have determined that the adoption of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or will have the
effect of reducing the rate of return on such Bank's capital in respect of its
obligations hereunder to a level below that which such Bank could have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy), then from time to time
Borrower shall pay to such Bank within fifteen (15) days of a written demand
such additional amount or amounts as will compensate such Bank for such
reduction. In determining such amount or amounts, such Bank may use any
reasonable averaging and attribution methods. Each Bank will promptly notify
the Borrower of any event occurring after the date hereof of which it has
knowledge which will entitle such Bank to compensation pursuant to this section
5.11
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5.12 Survival of Provisions. All indemnities and all provisions
relating to reimbursement to any Bank of amounts sufficient to protect the
yield to such Bank with respect to the Loans, including, without limitation,
Sections 5.7, 5.8 and 5.9 hereof, shall survive the payment of the Notes and
the termination of this Agreement.
5.13 Discretion of Bank as to Manner of Funding. Notwithstanding
any provision contained in this Agreement to the contrary, each of the Banks
shall be entitled to fund and maintain its funding of all or any part of its
LIBOR Loans in any manner it elects, it being understood, however, that for
purposes of this Agreement all determinations hereunder (including, without
limitation, the determination of each Bank's funding losses and expenses under
Section 5.6) shall be made as if such Bank had actually funded and maintained
each LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of the applicable Interest Period relating to the
applicable LIBOR Loan and bearing an interest rate equal to the applicable
LIBOR Rate.
5.14 Computation of Interest. Interest on Base Rate Loans
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day). Interest on LIBOR Loans shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed, calculated as to each
Interest Period from and including the first day thereof but excluding the last
day thereof.
SECTION 6. PRECONDITIONS TO LOANS AND LETTERS OF CREDIT.
6.1 Initial Revolving Credit Loan, Initial Swing Loan or Letter of
Credit. Notwithstanding any provision contained herein to the contrary, none
of the Banks shall have any obligation to make the initial Revolving Credit
Loan hereunder, Whitney shall have no obligation to make the initial Swing Loan
hereunder, and Issuer shall have no obligation to issue the initial Letter of
Credit hereunder unless the Agent shall have received on the date hereof:
(a) This Agreement and the Notes, each executed by a
duly authorized officer or Borrower;
(b) The Continuing Guarantee by each Subsidiary, each
executed by a duly authorized officer of such Subsidiary;
(c) A copy of resolutions of the Board of Directors
of Borrower, duly adopted, which authorize the execution, delivery and
performance of this Agreement, the Notes, the Letter of Credit Application(s)
and the other Transaction Documents delivered at or prior to the closing,
certified by the Chief Executive Officer and the Secretary of Borrower;
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(d) A copy of resolutions of the Board of Directors
of each Subsidiary, duly adopted, which authorize the execution, delivery and
performance of the Continuing Guarantee executed by such Subsidiary, certified
by the Chief Executive Officer and the Secretary of such Subsidiary;
(e) A copy of the Certificate of Incorporation of
Borrower, including any amendments thereto, certified by the Secretary of State
of the State of Delaware;
(f) A copy of the Bylaws of Borrower, including any
amendments thereto, certified by the Secretary of Borrower;
(g) An incumbency certificate, executed by the
Secretary of Borrower, which shall identify by name and title and bear the
signatures of all of the officers of Borrower executing any of the Transaction
Documents delivered at or prior to the closing;
(h) Certificates of corporate good standing of
Borrower issued by the Secretaries of State of the States of Delaware,
Louisiana, Florida, Mississippi and Louisiana;
(i) A copy of the Certificate of Incorporation of
each Subsidiary, including any amendments thereto, certified by the Secretary
of State of the State of incorporation of such Subsidiary;
(j) A copy of the Bylaws of each Subsidiary,
including any amendments thereto, certified by the Secretary of such
Subsidiary;
(k) An incumbency certificate, executed by the
Secretary of each Subsidiary, which shall identify by name and title and bear
the signatures of the officer of such Subsidiary executing the Continuing
Guarantee of such Subsidiary delivered at or prior to the closing;
(l) Certificates of corporate good standing of each
Subsidiary issued by the Secretaries of State of the States of where such
Subsidiary is required to qualify to transact business under applicable law;
(m) An opinion of McGlinchey Stafford Lang, a
Professional Limited Liability Company independent counsel for Borrower in the
form of Exhibit F attached hereto and incorporated herein by reference;
(n) Such evidence as Banks shall require prior to
funding that the transaction does not violate any law, rule or regulation or
otherwise result in Banks' failing to receive any of the benefits contemplated
under this Agreement or any of the other Transaction
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Documents;
(o) Such evidence as Agent shall require prior to
funding that the Consolidation Transactions have been consummated;
(p) Such evidence as Agent shall require prior to
funding that the Separation and Related Agreements have been duly executed;
(q) Such evidence as Agent shall require prior to
funding that the underwriters of the Offering have committed to purchase or
place the shares of stock to be sold pursuant to the Offering at a price and
volume that will net the Borrower, after payment of all direct costs and fees
incurred or to be incurred in connection with the Offering, at least
$30,000,000.00.
(r) A copy of the duly executed Non-Competition
Agreement;
(s) Payment of Agent's costs and expenses as provided
for in Section 11.3 and payment to Agent and Issuer of the fees required under
Sections 5.3(a) and (b) herein; and
(t) All documents executed or submitted pursuant
hereto by or on behalf of Borrower of any of its Subsidiaries shall be
satisfactory in form and substance to the Agent and its counsel; the Agent and
its counsel shall have received all information, approvals, opinions, documents
or other instruments as the Agent or its counsel may reasonably request.
Any one or more of the conditions set forth above which have
not been satisfied by Borrower on or prior to the date hereof shall not be
deemed permanently waived unless Agent and the Banks shall waive the same in a
writing which expressly states that the waiver is permanent, and, in all cases
in which the waiver is not stated to be permanent, Agent and the Banks may at
any time subsequent thereto insist upon compliance and satisfaction of any such
condition as a condition to any new Revolving Credit Loan advance and/or to the
requested conversion of any interest rate on any outstanding Loan hereunder,
and Banks shall have no obligation to make any such advance or to convert any
such interest rate until all such conditions have been satisfied.
6.2 All Loans. Notwithstanding any provision contained
herein to the contrary, none of the Banks shall have any obligation to make any
further Revolving Credit Loan hereunder or to convert any Loan to a LIBOR Loan
or to extend any LIBOR Loan for a new Interest Period, and Whitney shall have
no obligation to make any further Swing Loan hereunder, unless:
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(a) With respect to any new Revolving Credit Loan
advance, the Agent shall have received a Borrowing Notice for such Revolving
Credit Loan as required by Section 3.3;
(b) With respect to any conversion of a Loan to or
continuation of any Loan as a LIBOR Loan, the Agent shall have received the
notice for such conversion or continuation as required by Section 5.1;
(c) On the date of and immediately after giving
effect to such Revolving Credit Loan, such Swing Loan or such interest rate
conversion or extension, no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(d) No change in the Properties, assets, Liabilities,
business, operations, prospects, income or condition (financial or otherwise)
of Borrower and its Subsidiaries taken as a whole and having a Material Adverse
Effect shall have occurred since the date of this Agreement and be continuing;
and
(e) Except for subsequent changes consented to by the
Required Banks after the date hereof, all of the representations and warranties
of Borrower contained in Section 7 of this Agreement shall be true and correct
in all material respects on and as of the date of such Revolving Credit Loan,
such Swing Loan or such interest rate conversion or continuation as if made on
and as of the date of such Revolving Credit Loan, such Swing Loan or such
interest rate conversion or continuation.
Each request for a Revolving Credit Loan by Borrower
hereunder, each request for a Swing Loan by Borrower hereunder (including
automatic requests for Swing Loans pursuant to Section 3.3(d)) and each request
by Borrower to convert any Loan to or continue any Loan as a LIBOR Loan shall
be deemed to be a representation and warranty by Borrower on the date of such
Revolving Credit Loan or such conversion or continuation, as the case may be,
as to the facts specified in clauses (c), (d) and (e) of this Section 6.2.
6.3 All Letters of Credit. Notwithstanding any provision
contained herein to the contrary, Issuer shall have no obligation to issue any
Letter of Credit hereunder unless:
(a) Issuer shall have received a Letter of Credit
Request for such Letter of Credit as required by Section 4.1(a);
(b) Issuer shall have received a Letter of Credit
Application for such Letter of Credit as required by Section 4.1(a), duly
executed by an authorized officer of Borrower as account party;
(c) Borrower shall have complied with all of the
procedures and requirements set forth in Section 4.1;
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(d) On the date of and immediately after the issuance
of such Letter of Credit, no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(e) No change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise)
of Borrower and its Subsidiaries taken as a whole and having a Material Adverse
Effect shall have occurred since the date of this Agreement and be continuing;
(f) All of the representations and warranties of
Borrower contained in Section 7 of this Agreement shall be true and correct in
all material respects on and as of the date of the issuance of such Letter of
Credit as if made on and as of the date of the issuance of such Letter of
Credit; and
(g) Bank shall have received such other documents,
certificates and agreements as it may reasonably request.
Each request for the issuance of a Letter of Credit by Borrower hereunder shall
be deemed to be a representation and warranty by Borrower on the date of the
issuance of such Letter of Credit as to the facts specified in clauses (d), (e)
and (f) of this Section 6.3.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants to each of the Banks that:
7.1 Corporate Existence and Power. Borrower and each Subsidiary:
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization; (b) has all requisite powers and all
governmental and regulatory licenses, authorizations, consents and approvals
required to carry on its business as now conducted; and (c) is qualified to
transact business as a foreign entity in, and is in good standing under the
laws of, all states in which it is required by applicable law to maintain such
qualification and good standing except for those states in which the failure to
qualify or maintain good standing could not reasonably be expected to have a
Material Adverse Effect.
7.2 Corporate Authorization. The execution, delivery and
performance by Borrower of this Agreement, the Revolving Credit Notes the
Letter of Credit Application(s) and the other Transaction Documents are within
the corporate powers of Borrower and have been duly authorized by all necessary
corporate action.
7.3 Binding Effect. This Agreement, the Revolving Credit Notes
and the other Transaction Documents executed contemporaneously with the
execution of this Agreement have been duly executed and delivered by Borrower
and constitute the legal, valid and binding obligations of Borrower enforceable
in accordance with their respective terms, except
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as such enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and the Letter of Credit Application(s) and any future
Transaction Documents not executed contemporaneously with the execution of this
Agreement, when executed and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
7.4 Financial Statements. Borrower has furnished each of the
Banks with the following financial statements: (1) the balance sheets and
statements of income, retained earnings and cash flows of Borrower and its
Subsidiaries as of March 31, 1996, all certified by Borrower's independent
certified public accountants, which financial statements have been prepared as
determined in accordance with GAAP consistently applied; and (2) unaudited
consolidated balance sheets and statements of income, retained earnings and
cash flows of Borrower and its Subsidiaries as of June 30, 1996, certified by
the Vice President of Borrower as being true and correct to the best of his
knowledge and as being prepared in accordance with standard accounting
practices of the Borrower and its Subsidiaries consistently applied. Borrower
further represents and warrants to each of the Banks that: (1) said balance
sheets and their accompanying notes fairly present the condition, respectively,
of Borrower and its Subsidiaries as of the dates thereof; (2) there has been no
material adverse change in the condition or operation, financial or otherwise,
of Borrower or any of its Subsidiaries since June 30, 1996; and (3) neither
Borrower nor any Subsidiaries had, as of the respective dates of such financial
statements, any material direct or contingent liabilities which are not
disclosed on said financial statements or the notes thereto (to the extent such
disclosure is required by GAAP).
7.5 Litigation. There is no action, proceeding or claim pending
or, to the knowledge of Borrower, threatened against Borrower or any Subsidiary
before any court, arbitrator or any governmental, regulatory or administrative
body, agency or official (including, but not limited to, any ERISA plan
administrator) which, if adversely determined against Borrower or any
Subsidiary, could reasonably be expected to have a Material Adverse Effect or
which would need to be disclosed, as determined in accordance with GAAP, in
Borrower's financial statements. Neither Borrower nor any Subsidiary is in
default with respect to any order, writ, injunction, decision or decree of any
court, arbitrator or any governmental, regulatory or administrative body,
agency or official, a default under which could reasonably be expected to have
a Material Adverse Effect. As of the date hereof, there are no outstanding
judgments against Borrower or any Subsidiary.
7.6 ERISA. Borrower and each Subsidiary are in compliance in all
material respects with the applicable provisions of ERISA and the Code
(pertaining to any Pension Plan), and have not engaged in, or permitted to
exist or occur, any condition, event or
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transaction which could result in the incurrence by Borrower or any Subsidiary
or ERISA Affiliate of any liability, fine or penalty which would have a
Material Adverse Effect.
7.7 Tax Payment. There is no proposed, asserted or assessed tax
deficiency against Borrower or any of its Subsidiaries which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
7.8 Subsidiaries. Borrower has no Subsidiaries other than as
identified on Schedule 7.8 attached hereto, as the same may from time to time
be amended, modified or supplemented as provided herein. The capital stock of
each Subsidiary is duly authorized, validly issued and fully paid and
nonassessable and is owned solely by Borrower. Except as disclosed on Schedule
7.8 attached hereto, neither Borrower nor any of its Subsidiaries, individually
or collectively, owns or holds, directly or indirectly, any capital stock or
equity security of, or any equity interest in, any corporation or business
other than Borrower's Subsidiaries. Borrower may at any time amend, modify or
supplement Schedule 7.8 by notifying the Agent in writing of any changes
thereto, including any formation, acquisition, merger or liquidation of
Subsidiaries or any change in the capitalization of any Subsidiary, in each
case, in accordance with the terms of this Agreement and provided that any such
new Subsidiary shall, within thirty (30) days of the creation or acquisition of
such Subsidiary, execute and deliver to Agent for the benefit of all the Banks
a Continuing Guarantee in form of Exhibit C annexed hereto and made a part
hereof.
7.9 Compliance With Other Instruments; None Burdensome. Neither
Borrower nor any Subsidiary is a party to any contract or agreement or subject
to any charter or other corporate or other restriction which could have a
Material Adverse Effect and which is not disclosed on Borrower's financial
statements heretofore submitted to the Banks; none of the execution and
delivery by Borrower and the Subsidiaries of the Transaction Documents, the
consummation of the transactions therein contemplated, the consummation of the
Consolidation Transactions, the execution and delivery by Borrower of the
Separation and Related Agreements, or the consummation of the transactions
therein contemplated, has violated or will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Borrower or any
Subsidiary, or any of the provisions of Borrower's or any Subsidiary's
Certificate of Incorporation or Bylaws or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower or
any Subsidiary is a party or subject, or by which it or its Property is bound,
or conflict with or constitute a default thereunder or result in the creation
or imposition of any Lien pursuant to the terms of any such indenture,
agreement, document, instrument or undertaking (other than in favor of the
Agent and/or the Banks pursuant to the Transaction Documents). No order,
consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision thereof, or any
other Person is required to authorize, or is required in connection with, the
execution, delivery or performance of, or the legality, validity, binding
effect or enforceability of, any of the Transaction Documents that has not
already been obtained.
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7.10 Other Debt, Guarantees, Capitalized Leases. Except as
disclosed on Schedule 7.10 attached hereto as of the date of this Agreement,
and except for Debt incurred or made on or after the date hereof as permitted
under Section 8.2(a) and the other provisions of this Agreement, neither
Borrower nor any Subsidiary of Borrower is a borrower, guarantor or obligor
with respect to any Debt or Guarantees.
7.11 Labor Matters. Neither Borrower nor any Subsidiary is a party
to any labor dispute which could reasonably be expected to have a Material
Adverse Effect. There are no strikes or walkouts relating to any labor
contract to which Borrower or any Subsidiary is subject which could reasonably
be expected to have a Material Adverse Effect. Hours worked and payments made
to the employees of Borrower and its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable law dealing with such
matters which could reasonably be expected to have a Material Adverse Effect.
Except as described on Schedule 7.11 attached hereto, all payments due from
Borrower or any Subsidiary, or for which any claim may be made against any of
them, in respect of wages, employee health and welfare insurance and/or other
benefits have been paid or accrued as a liability on their respective books as
determined in accordance with GAAP.
7.12 Title to Property. Borrower and each Subsidiary has good
recordable and marketable title in fee simple to or valid leasehold interests
in all its real (immovable) property, and good title to or valid leasehold
interests in all its other property (other than property held under Capital
Leases) material to its business and none of such property is subject to any
Lien other than Permitted Liens. Without limitation of the generality of the
foregoing, Borrower or its Subsidiaries has good recordable and marketable
title in fee simple to or valid leasehold interests in all of the shipyards and
other property listed on Schedule 7.12 attached hereto.
7.13 Regulation U. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of The Board of Governors of the Federal Reserve System, as
amended) and no part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately (i) to
purchase or carry margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, U, T or X thereof, as amended. If requested
by any of the Banks, Borrower shall furnish to the Agent a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U.
7.14 Investment Company Act of 1940: Public Utility Holding Company
Act of 1935. Borrower is not an "investment company" as that term is defined
in, and is not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended.
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Borrower is not a "holding company" as that term is defined in, and is not
otherwise subject to regulation under, the Public Utility Holding Company Act
of 1935, as amended.
7.15 Patents, Licenses, Trademarks, Etc. Borrower and each of its
Subsidiaries have all permits, certificates, licenses (including patent and
copyright licenses), approvals and other authorizations required in connection
with the operation of their businesses, except those which do not have a
Material Adverse Effect. There is no pending or, to Borrower's actual
knowledge, threatened litigation, or arbitration in which it is alleged that
Borrower or any Subsidiary has violated or breached any patents, licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights
which could reasonably be expected to have a Material Adverse Effect.
7.16 Environmental and Safety and Health Matters. Except as
disclosed on Schedule 7.16 attached hereto: (i) the operations of Borrower and
each Subsidiary comply in all respects with (A) all applicable Environmental
Laws and (B) all applicable Occupational Safety and Health Laws, which the
failure to comply with could reasonably be expected to have a Material Adverse
Effect; (ii) none of the operations of Borrower or any Subsidiary are subject
to any Environmental Claim or any judicial, governmental, regulatory or
administrative proceeding alleging the violation of any Occupational Safety and
Health Law, which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect; (iii) to Borrower's actual knowledge, none of
the operations of Borrower or any Subsidiary is the subject of any material
federal or state investigation evaluating whether any remedial action is needed
to respond to any unsafe or unhealthful condition at any premises of Borrower
or such Subsidiary; (iv) neither Borrower nor any Subsidiary has filed any
notice under any Environmental Law or Occupational Safety and Health Law
(pertaining to a matter which has not been resolved) reporting (A) any past or
present spillage, disposal or Release into the environment of, or treatment,
storage or disposal of, any Hazardous Substance or any other hazardous, toxic
or dangerous waste, substance or constituent or other substance which could
reasonably be expected to have a Material Adverse Effect, or (B) any unsafe or
unhealthful condition at any premises of Borrower or such Subsidiary which
could reasonably be expected to have a Material Adverse Effect; and (v) neither
Borrower nor any Subsidiary has to its actual knowledge any material contingent
liability in connection with (A) any unlawful spillage, disposal or Release
into the environment of, or otherwise with respect to, any Hazardous Substances
or any other hazardous, toxic or dangerous waste, substance or constituent or
other substance or (B) any unsafe or unhealthful environmental condition at any
premises of Borrower or such Subsidiary.
7.17 Investments. Except as disclosed on Schedule 7.17 attached
hereto neither Borrower nor any Subsidiary has any Restricted Investments.
7.18 No Default. No Default or Event of Default under this
Agreement has occurred and is continuing and no event has occurred which with
the giving of notice or the passage of time would constitute a Default or an
Event of Default. There is no existing default or event of default (and no
event has occurred which with the giving of notice or the
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passage of time would constitute a default or an event of default) under or
with respect to any indenture, contract, agreement, lease or other instrument
to which Borrower or any Subsidiary is a party or by which Borrower, any
Subsidiary or any Property of Borrower or any Subsidiary is bound or affected,
a default under which could reasonably be expected to have a Material Adverse
Effect. Neither Borrower nor any Subsidiary of Borrower is in violation of any
applicable statute, law, rule, regulation or ordinance of the United States of
America, of any state, city, town, municipality, county or of any other
jurisdiction, or of any agency thereof, a violation of which could reasonably
be expected to have a Material Adverse Effect.
7.19 No Burdensome Restrictions. No agreement or obligation of
Borrower or any of its in effect on the date hereof and no statute, law, rule,
regulation or ordinance of the United States of America, of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof, on the date hereof materially adversely affects, or insofar as
Borrower may reasonably foresee may have an Material Adverse Effect.
7.20 Government Contracts. Neither Borrower, any Subsidiary nor
Trinity has ever been barred from contracting (as a first tier or any level of
subcontractor) for or bidding on any contract with or for any U. S.
Governmental Authority (each a "Government Contract" and collectively, the
"Government Contracts") or had a Government Contract canceled or terminated for
default by Borrower or any Subsidiary, as the case may be. Neither Borrower,
any Subsidiary nor Trinity is currently barred from (or has received notice
that it is under investigation with respect to a possible bar or may be barred
from) bidding on or entering into any Government Contract. None of Borrower's
or any Subsidiary's current or backlogged Government Contracts have been
forfeited or canceled for the convenience of any Governmental Authority or for
the default of the Borrower, any Subsidiary or Trinity, as the case may be.
Neither the Borrower, any Subsidiary nor Trinity has been given notice (i) that
any such contract may be or will be canceled for the convenience of any
Governmental Authority or a default by Borrower or any Subsidiary, as the case
may be, (ii) that a major Borrower, Trinity or any Subsidiary program or
contract will be eliminated or substantially reduced or suspended, (iii)
requiring or resulting in, loss of use or substantial impairment or
interference of use by Borrower or any Subsidiary, as the case may be, of any
facilities owned by any Governmental Authority, or (iv) that any relevant
budget authority or contract authority has been exceeded with respect to any
material Government Contract which in any such case is likely to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary has had to
absorb cost overruns on any Government Contracts. Neither the Borrower nor any
Subsidiary anticipates incurring cost overruns on any Government Contracts
which would have a Material Adverse Effect.
7.21 Disclosure. Neither this Agreement nor any of the Exhibits or
Schedules hereto nor any certificate or other data furnished to the Agent or
any of the Banks in writing by or on behalf of Borrower either in connection
with the transactions contemplated by this Agreement or in connection with the
Offering, contains any untrue or incorrect statement of
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a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
SECTION 8. COVENANTS.
8.1 Affirmative Covenants of Borrower. Borrower covenants and
agrees that, so long as (i) any of the Banks has any obligation to make any
Loan hereunder or Issuer has any obligation to issue any Letter of Credit
hereunder, (ii) any Letter of Credit remains outstanding or (iii) any of
Borrower's Obligations (excluding any continuing indemnity obligations beyond
the Term of this Agreement or any earlier termination hereof) remain unpaid:
(a) Information. Borrower will deliver to each of the Banks:
(i) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of Borrower, consolidated
balance sheets of Borrower and its Subsidiaries as of the end of such
fiscal year and the related consolidated statements of income,
stockholders equity and cash flows for such fiscal year, setting forth
in each case, in comparative form, the figures for the previous fiscal
year, all such financial statements to be prepared as determined in
accordance with GAAP and reported on by and accompanied by the
unqualified opinion of independent certified public accountants of
nationally recognized standing selected by Borrower, together with (1)
a certificate from such accountants to the effect that, in making the
examination necessary for the signing of such annual audit report,
such accountants have not become aware of any Default or Event of
Default that has occurred and is continuing, or, if such accountants
have become aware of any such event, describing it and the steps, if
any, being taken to cure it (such accountants, however, shall not be
liable to anyone by reason of their failure to obtain knowledge of any
Default or Event of Default which would not be disclosed in the course
of an audit conducted in accordance with generally accepted auditing
standards) and (2) computations evidencing Borrower's compliance with
the financial covenants contained in Sections 8.1(m)(i) through (iv)
of this Agreement as calculated on a consolidated basis for Borrower
and its Subsidiaries;
(ii) as soon as available and in any event within forty-five
(45) days after the end of each of the first three (3) fiscal quarters
of each fiscal year of Borrower, consolidated balance sheets of
Borrower and its Subsidiaries as of the end of such fiscal quarter and
the related consolidated statements of income, retained earnings and
cash flows for such fiscal quarter and for the portion of Borrower's
fiscal year ended at the end of such fiscal quarter, setting forth in
each case in comparative form, the figures for the corresponding
fiscal quarter and the corresponding portion of Borrower's previous
fiscal year, all in reasonable detail;
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(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as
Borrower or any Subsidiary shall send to its stockholders and copies
of all registration statements (without exhibits) and all reports
which Borrower or any Subsidiary files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate of
the principal financial officer of Borrower in the form attached
hereto as Exhibit G and incorporated herein by reference, accompanied
by supporting financial work sheets where appropriate, (A) evidencing
Borrower's compliance with the financial covenants contained in
Sections 8.l(m)(i) through (v) of this Agreement as calculated on a
consolidated basis for Borrower and its Subsidiaries, (B) stating
whether there exists on the date of such certificate any Default or
Event of Default and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto, (C) certifying that
all of the representations and warranties of Borrower contained in
this Agreement, as the same shall have been from time to time updated
by Borrower in writing to Agent (provided such updating shall not
relieve Borrower from its obligation to comply with all covenants
contained herein), are true and correct in all material respects on
and as of the date of such certificate as if made on the date of such
certificate, and (D) stating the aggregate remaining value of the firm
shipbuilding contracts of Borrower and its Subsidiaries (excluding
intercompany contracts (but including such barge construction and
related work to be subcontracted from Trinity under the Separation and
Related Agreements) and excluding unexercised options or rights under
contracts pursuant to which the other contracting party(s) may require
additional performance by the Borrower or any Subsidiary);
(v) promptly upon receipt thereof, any reports submitted to
Borrower or any Subsidiary (other than reports previously delivered
pursuant to Sections 8.l(a)(i) and (ii) above) by independent
accountants in connection with any annual, interim or special audit
made by them of the books of Borrower or any Subsidiary;
(vi) as soon as possible and in any event within 45 days after
the end of each fiscal quarter, a computation of the ratio of
Consolidated Total Debt to Consolidated EBITDA as of the last day of
the preceding fiscal quarter; and
(vii) with reasonable promptness, such further information
regarding the business, affairs and financial condition of Borrower or
any Subsidiary as Bank may from time to time reasonably request.
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Each of the Banks is hereby authorized to deliver a copy of
any financial statement or other information made available by Borrower to any
regulatory authority having jurisdiction over such Bank, pursuant to any
request therefor.
(b) Payment of Indebtedness. Borrower will, and
it will cause each of its Subsidiaries to pay and discharge any and all
Indebtedness payable or Guaranteed by Borrower or such Subsidiary, as the case
may be, and any interest or premium thereon, when due in accordance with the
agreement, document or instrument relating to such Indebtedness or Guarantee,
provided, however, that neither Borrower nor any Subsidiary shall be required
to pay any such Indebtedness or Guarantee (excluding Borrower' s Obligations)
which is being contested in good faith and by appropriate proceedings being
diligently conducted, except that Borrower or such Subsidiary of Borrower, as
the case may be, shall pay or cause to be paid any such Indebtedness or
Guarantee forthwith upon the commencement of proceedings to foreclose any Lien
which is attached as security therefor, unless such foreclosure is stayed by
the filing of an appropriate bond.
(c) Maintenance of Books and Records, Consultations
and Inspections. Borrower will, and it will cause each of its Subsidiaries to,
maintain books and records as determined in accordance with GAAP and in which
full, true and correct entries shall be made of all dealings and transactions
in relation to its business and activities. Borrower will, and it will cause
each of its Subsidiaries to, permit the Agent and each of the Banks (and any
Person appointed by the Agent or any of the Banks to whom the Borrower does not
reasonably object) to discuss the affairs, finances and accounts of Borrower
and each Subsidiary with the officers of Borrower and each Subsidiary and their
independent public accountants, all at such reasonable times and as often as
the Agent or any of the Banks may from time to time reasonably request.
Subject to any confidentiality and/or security clearance restrictions
applicable to Borrower's or any Subsidiary's records. Borrower will also
permit, and will cause each Subsidiary to permit, inspection of its Properties,
books and records by the Agent during normal business hours and at other
reasonable times. Agent may be accompanied by representatives of any of the
Banks during any such inspections. Borrower will reimburse the Agent upon
demand for all costs and expenses incurred by the Agent in connection with any
such inspection conducted by the Agent while any Default or Event of Default
under this Agreement has occurred and is continuing. A representative of
Borrower may be present during any such inspection, provided that a particular
representative's availability or unavailability shall not inhibit or delay such
inspection. Borrower shall permit the Agent to communicate directly with
Borrower's independent public accountants and to discuss the affairs, finances
and accounts of the Borrower and the Subsidiaries at such reasonable times and
intervals and to such reasonable extent as the Agent may request. A
representative of Borrower may be present and/or participate in any such
communication with Borrower's accountants, provided that a particular
representative's availability or unavailability shall not inhibit or delay such
communication.
(d) Payment of Taxes. Borrower will, and it will
cause each of its Subsidiaries to, duly file all federal, state and local
income tax
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returns and all other tax returns and reports of Borrower or such Subsidiary,
as the case may be, which are required to be filed and duly pay and discharge
promptly all taxes, assessments and other governmental charges imposed upon it
or any of its Property; provided, however, that neither Borrower nor any
Subsidiary shall be required to pay any such tax, assessment or other
governmental charge the payment of which is being contested in good faith and
by appropriate proceedings being diligently conducted and for which adequate
reserves as determined in accordance with GAAP have been provided, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause to be paid
all such taxes, assessments and governmental charges forthwith upon the
commencement of proceedings to foreclose any Lien which is attached as security
therefor, unless such foreclosure is stayed by the filing of an appropriate
bond.
(e) Payment of Claims. Borrower will, and it
will cause each of its Subsidiaries to, promptly pay and discharge (i) all
trade accounts payable in accordance with usual and customary business
practices and (ii) all claims for work, labor or materials which if unpaid
might become a Lien upon of its any Property or assets; provided, however, that
neither Borrower nor any Subsidiary shall be required to pay any such account
payable or claim the payment of which is being contested in good faith and by
appropriate proceedings being diligently conducted and for which adequate
provision as determined in accordance with GAAP has been made, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause to be paid
all such accounts payable and claims forthwith upon the commencement of
proceedings to foreclose any Lien which is attached as security therefor,
unless such foreclosure is stayed by the filing of an appropriate bond.
(f) Corporate Existence. Borrower will, and it
will cause each of its Subsidiaries to, do all things necessary to (i) preserve
and keep in full force and effect at all times its corporate or other existence
and all permits, licenses, franchises and other rights material to its
business, and (ii) be duly qualified to do business in all jurisdictions where
the nature of its business or its ownership of Property requires such
qualification except for those states in which the failure to qualify could not
reasonably be expected to have a Material Adverse Effect.
(g) Maintenance of Property. Borrower will, and
it will cause each of its Subsidiaries to, at all times, preserve and maintain
all of the Property useful and necessary in the conduct of its business in
adequate working order (taking into consideration the condition of any such
Property in existence at the time of the Offering), ordinary wear and tear
excepted.
(h) Compliance with Laws, Regulations, Etc.
Borrower will, and it will cause each of its Subsidiaries to, comply with any
and all laws, ordinances and governmental and regulatory rules and regulations
to which Borrower or such Subsidiary, as the case may be, is subject
(including, without limitation, the Federal Acquisition Regulations, 48 C.F.R.
Chapters 1 through 68) except where noncompliance would not have a Material
Adverse Effect, and maintain any and all licenses, permits, franchises and
other
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governmental and regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its business, which violation or failure to
obtain could reasonably be expected to have a Material Adverse Effect.
(i) Environmental Matters. Borrower will, and it
will cause each of its Subsidiaries to, at all times comply with all
requirements and agreements contained in Section 11.4 hereof. Borrower shall
give the Agent and each of the Banks prompt written notice of (i) any
Environmental Claim or any other action or investigation with respect to the
existence or potential existence of any Hazardous Substances instituted or
threatened with respect to Borrower or any Subsidiary or any of the Properties
or facilities owned, leased or operated by Borrower or any Subsidiary that
could result in liability in excess of $50,000.00 and (ii) any condition or
occurrence on any of the Properties or facilities owned, leased or operated by
Borrower or any Subsidiary which constitutes a material violation by Borrower
or any Subsidiary of any Environmental Laws or which gives rise to a reporting
obligation or requires pursuant to an order of a Governmental Authority (the
"Order") removal or remediation by Borrower or any Subsidiary under any
Environmental Laws. Such notice shall in either case be accompanied by
Borrower's plan with respect to removal or remediation and Borrower agrees to
take all action which is required by the Order or any lawful Environmental Law
in connection with such action, investigation, condition or occurrence in
accordance with such plan with due diligence and to fulfill the requirements of
any Order or lawful Environmental Law as promptly as possible and in all events
within the time required by any Order. Borrower shall promptly provide the
Agent and each of the Banks with copies of all material documentation relating
thereto, and such other material information with respect to environmental
matters as the Agent or any of the Banks may reasonably request from time to
time.
(j) ERISA Compliance. If Borrower, any Subsidiary or
any ERISA Affiliate shall have any Pension Plan, Borrower, such Subsidiary or
such ERISA Affiliate, as the case may be, shall comply with all material
requirements of ERISA and the Code relating to such Pension Plan. Without
limiting the generality of the foregoing, unless Borrower shall have received
the prior written consent of the Required Banks to the contrary (which consent
shall not be unreasonably withheld), Borrower will not, and it will not cause
or permit any Subsidiary or any ERISA Affiliate to:
(i) permit any Pension Plan maintained by Borrower,
any Subsidiary or any ERISA Affiliate to engage in any nonexempt
"prohibited transaction," as such term is defined in Section 4975 of
the Code which could have a Material Adverse Effect;
(ii) permit any Pension Plan maintained by Borrower,
any Subsidiary or any ERISA Affiliate to incur any "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
29 U.S.C. Section 1082, whether or not waived, which could have a
Material Adverse Effect;
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(iii) allow the termination of any Pension Plan in a
manner which could result in the imposition of a Lien on any Property
of Borrower, any Subsidiary or any ERISA Affiliate pursuant to Section
4068 of ERISA, 29 U.S.C. Section 1368; or
(iv) take any action which would constitute a
complete or partial withdrawal from a Multi-Employer Plan within the
meaning of Sections 4203 or 4205 of Title IV of ERISA, which could
have a Material Adverse Effect.
(k) Notices. Borrower will notify the Agent in
writing of any of the following within three (3) Business Days after learning
of the occurrence thereof, describing the same and, if applicable, the steps
being taken by the Person(s) affected with respect thereto:
(i) the occurrence of any Default or Event of Default
under this Agreement:
(ii) the occurrence of any default or event of
default by Borrower, any Subsidiary or any other Obligor under any
note, indenture, loan agreement, mortgage, deed of trust, security
agreement, lease or other similar agreement, document or instrument to
which Borrower, any Subsidiary or any other Obligor, as the case may
be, is a party or by which it is bound or to which it is subject which
evidences or secures Indebtedness in an outstanding principal amount
of $1,000,000.00 or more in the aggregate for all such defaulted
agreements;
(iii) the institution of any litigation, arbitration
proceeding or governmental or regulatory proceeding affecting
Borrower, any other Obligor or any Subsidiary, whether or not
considered to be covered by insurance, in which the prayer or claim
for relief seeks recovery of an amount in excess of $1,000,000.00 (or,
if no dollar amount is specified in the prayer or claim for relief, in
which there is a reasonable likelihood of recovery of an amount in
excess of $1,000,000.00) or any form of equitable relief;
(iv) the entry of any judgment or decree against
Borrower, any other Obligor or any Subsidiary which, when aggregated
with any other such judgments or decrees then entered and unsatisfied,
exceed $1,000,000.00 in the aggregate;
(v) the occurrence of a Reportable Event with respect
to any Pension Plan; the filing of a notice of intent to terminate a
Pension Plan by Borrower, any ERISA Affiliate or any Subsidiary; the
institution of proceedings to terminate a Pension Plan by the PBGC or
any other Person; the withdrawal in a "complete withdrawal" or a
"partial withdrawal" as defined in Sections 4203 and 4205,
respectively, of ERISA by Borrower, any ERISA Affiliate or any
Subsidiary from any Multi-Employer Plan; or the incurrence of any
material increase in the contingent liability of Borrower or any
Subsidiary with respect to any "employee welfare benefit
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plan" as defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;
(vi) the occurrence of any event that is reasonably
likely to have a Material Adverse Effect: and
(vii) any notices required to be provided pursuant to
other provisions of this Agreement that do not otherwise provide a
time frame in which such notice is to be provided and notice of the
occurrence of such other events as the Agent may from time to time
reasonably specify.
(l) Insurance. Borrower will, and it will cause each
of its Subsidiaries to, insure all of its Property of the character usually
insured by corporations engaged in the same or similar businesses with
properties in similar geographic areas , against loss or damage of the kind
customarily insured against by such corporations, and carry adequate liability
insurance and other insurance of a kind and in amount(s) generally carried by
such corporations. All insurance required by this Section 8.1(1) shall be with
insurers rated A-VII or better by A.M. Best Company (or accorded a similar
rating by another nationally or internationally recognized insurance rating
agency of similar standing if A.M. Best Company is not then in the business of
rating insurers or rating foreign insurers) or such other insurers as may from
time to time be reasonably acceptable to the Required Banks, except to the
extent that Borrower may obtain insurance from its Subsidiary, Offshore Marine
Indemnity Company, for (i) workers compensation insurance and (ii) property and
casualty insurance for amounts not in excess of [to be furnished by Borrower].
All such insurance may be subject to reasonable deductible amounts. Borrower
shall deliver to the Agent a certificate of insurance upon the annual renewal
of such policies specifying the details of all insurance then in effect;
together with a certificate of an officer of Borrower that all premiums then
due have been paid.
(m) Financial Covenants.
(i) Minimum Consolidated Interest Coverage. Borrower
will have and maintain a Consolidated Interest Coverage Ratio for each
fiscal quarter of at least 4.00 to 1.
(ii) Minimum Consolidated Debt Service Coverage.
Borrower will have and maintain a Consolidated Debt Service Coverage
Ratio for each fiscal quarter of at least 1.35 to 1.
(iii) Maximum Consolidated Funded Debt to
Consolidated EBITDA. Borrower will at all times have and maintain a
ratio of Consolidated Funded Debt to Consolidated EBITDA which is less
than or equal to 3.50 to 1 for each fiscal quarter.
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(iv) Minimum Current Ratio. Borrower will at all
times have and maintain a ratio of Consolidated Current Assets to
Consolidated Current Liabilities at the end of each fiscal quarter of
at least 1.25 to 1.
(v) Minimum Consolidated Tangible Net Worth.
Borrower will not permit Consolidated Tangible Net Worth at any time
to be less than $75,000,000.00 plus 50% of Consolidated Net Income
(without giving any effect to any losses), excluding any Consolidated
Net Income due to non-cash accounting adjustments, for each fiscal
quarter ending on or after December 31, 1996.
(n) Further Assurances. Borrower will execute and
deliver to the Agent, at any time and from time to time, any and all further
agreements, documents and instruments, and take any and all further actions
which may be required under applicable law, or which the Agent may from time to
time reasonably request, in order to effectuate the transactions contemplated
by this Agreement and the other Transaction Documents.
(o) Accountant. Borrower shall give each of the
Banks prompt notice of any change of Borrower's independent certified public
accountants and a copy of the Form 8-K relating thereto filed with the
Securities and Exchange Commission. Borrower shall at all times utilize
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Required Banks.
(p) Subsidiaries. Borrower shall not create any
Subsidiaries without the prior written consent of Agent; provided that, the
provisions of this Section 8.1(p) shall not require the Agent's consent for the
formation of wholly-owned direct Subsidiaries of Borrower or any Subsidiary.
Borrower covenants and agrees that in the event Borrower or any Subsidiary
shall create or acquire any new Subsidiary or Subsidiaries at any time after
the date hereof, that Borrower shall cause each such Subsidiary to execute a
Continuing Guarantee pursuant to Section 7.8 of this Agreement.
(q) Agreements. Neither Borrower nor any Subsidiary
will default under any indenture, contract, agreement, lease or other
instrument to which Borrower or any Subsidiary is a party or by which Borrower,
any Subsidiary or any Property of Borrower or any Subsidiary is bound or
affected, a default under which could reasonably be expected to have a Material
Adverse Effect.
(r) Offshore Marine Indemnity Company. Offshore
Marine Indemnity Company shall maintain a relationship with Reliance Insurance
Company or other insurance company rated A-VII or better by A.M. Best Company
whereby such insurance company will assume any coverage written above [to be
furnished by Borrower] on each policy written by Ocean Marine Casualty Company.
8.2 Negative Covenants of Borrower. Borrower covenants
and agrees that, so long as (i) any of the Banks has any obligation to make any
Loan hereunder or Issuer has
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any obligation to issue any Letter of Credit hereunder, (ii) any Letter of
Credit remains outstanding or (iii) any of Borrower's Obligations remain
unpaid, unless the prior written consent of the Required Banks is obtained:
(a) Limitation on Indebtedness. Borrower will not,
and it will not cause or permit any of its Subsidiaries to, incur or be
obligated on any Indebtedness, either directly or indirectly, by way of
Guarantee, suretyship or otherwise, other than:
(i) the Borrower's Obligations to the Agent and the
Banks;
(ii) the Swing Loans from Whitney;
(iii) Indebtedness existing as of the date hereof and
listed on Schedule 7.10 attached hereto and Indebtedness relating to the
employee benefit plans;
(iv) Indebtedness described in clause (b) or (c) of
the defined term Restricted Investment of this Agreement;
(v) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 8.1(d) or Section 8.1(e);
(vi) Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period for taking an
appeal and for which adequate provisions in accordance with GAAP have been made
so long as execution is not levied thereunder and in respect of which Borrower
or any Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and a suspensive appeal bond in the full amount of such
judgment or award shall have been obtained by Borrower of such Subsidiary with
respect thereto;
(vii) current liabilities of Borrower or any
Subsidiary of Borrower incurred in the ordinary course of business not incurred
through (A) the borrowing of money, or (B) the obtaining of credit except for
credit on an open account basis customarily extended and in fact extended in
connection with normal purchases of goods and services;
(viii)endorsements for collection, deposits or
negotiation and warranties of products or services, in each case incurred in
the ordinary course of business;
(ix) Indebtedness in respect of performance, surety
or appeal bonds obtained in the ordinary course of Borrower's business and in
connection with transactions in the ordinary course of Borrower's business;
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(x) Indebtedness under commodity price swaps,
commodity price caps and commodity price collar and floor agreements, and
similar agreements or arrangements designed to protect against or manage
fluctuations in commodity prices with respect to any steel commodities bought
and consumed in the ordinary course of business of Borrower and its
Subsidiaries in amounts and on terms consistent with industry standard
practices for hedging such future commodities requirements of Borrower and its
Subsidiaries;
(xi) Indebtedness for any permitted declared and
unpaid Distributions on Borrower's stock;
(xii) Indebtedness in respect of the Separation
Agreement and Related Agreements;
(xiii) Acquisition Indebtedness not otherwise
permitted by this Section 8.2(a) with the consent of the Required Banks;
(xiv) Indebtedness, other than Acquisition
Indebtedness, not otherwise permitted by this Section 8.2(a) in an amount not
to exceed $10,000,000.00 in the aggregate at any one time outstanding for
Borrower and all Subsidiaries of Borrower; and
(xv) Indebtedness in respect of guarantees issued in
support of customer financing of down payments and other similar amounts
relating to Exim Bank or other similar construction financing, which guarantees
do not exceed 20% of the purchase of the subject vessel.
(b) Limitation on Liens. Borrower will not, and will not
cause or permit any of its Subsidiaries to, create, incur or assume, or suffer
to be incurred or to exist, any Lien on any of its or their Property or assets,
whether now owned or hereafter acquired, or upon any income or profits
therefrom, except for Permitted Liens.
(c) Consolidation. Merger, Sale of Assets, Dissolution, Etc.
Borrower will not, and will not cause or permit any of its Subsidiaries to, (i)
directly or indirectly, merge into or with or consolidate with any other Person
or permit any other Person to merge into or with or consolidate with it, or
(ii) sell, assign, lease, transfer, abandon or otherwise dispose of any of its
Property (including, without limitation, any shares of capital stock of a
Subsidiary owned by Borrower or another Subsidiary), except for (A) sales of
inventory or vessels in the ordinary course of business, (B) sales of
Restricted Investments in the ordinary course of business, (C) sales of fixed
assets having a book value in an aggregate amount not to exceed ten percent
(10%) of the book value of Borrower's total assets as of the end of the fiscal
quarter immediately preceding any such sale, so long as such asset sales shall
be sold to third party buyers in arms-length transactions on reasonable terms
and so long as the net proceeds thereof are used solely to purchase other fixed
assets which are consistent with the Company Business within a reasonable time
or to pay any principal due on the Loans, or (D)
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other sales of fixed assets having a book value not to exceed [$2,000,000.00 -
$5,000,000.00] in the aggregate in any fiscal year.
(d) Sale and Leaseback Transactions. Borrower will not, and
it will not cause or permit any of its Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby Borrower or such Subsidiary of
Borrower shall in one or more related transactions sell, transfer or otherwise
dispose of any Property owned by Borrower or such Subsidiary of Borrower and
then rent or lease, as lessee, such Property or any part thereof for a period
or periods which in the aggregate would exceed twelve (12) months from the date
of commencement of the lease term.
(e) Sale or Discount of Accounts. Borrower will not, and it
will not cause or permit any of its Subsidiaries to, sell or discount any of
its receivables (whether represented by a note, account, general intangible or
chattel paper) other than in the ordinary course of its business.
(f) Transactions with Affiliates. Except for the Separation
and Related Agreements, any transactions required thereby, and any transactions
required by the Consolidation Transactions, Borrower will not, and it will not
cause or permit any of its Subsidiaries to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of Property with, or the rendering of
any service by or for, any Affiliate), except in the ordinary course of
business and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
(g) Changes in Nature of Business. Borrower will not, and it
will not cause or permit any of its Subsidiaries to, engage in any business if,
as a result, the general nature of the business which would then be engaged in
by Borrower and its Subsidiaries, considered as a whole, would be substantially
changed from the Company Business.
(h) Fiscal Year. Borrower will not, and it will not cause or
permit any of its Subsidiaries to, change its fiscal year.
(i) Distributions. Borrower will not, and it will not cause
or permit any of its Subsidiaries to, declare or incur any liability to make
any Distribution.
(j) Pension Plans. Borrower will not, and it will not cause
or permit any of its Subsidiaries to, (a) permit any condition to exist in
connection with any Pension Plan which might constitute grounds for the PBGC to
institute proceedings to have such Pension Plan terminated or a trustee
appointed to administer such Pension Plan or (b) engage in, or permit to exist
or occur, any other condition, event or transaction with respect to any Pension
Plan which could result in the incurrence by Borrower, any Subsidiary or any
ERISA Affiliate of
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any liability, fine or penalty which could reasonably be expected to have a
Material Adverse Effect.
(k) Change in Management. Borrower will not terminate or make
any substantial change in the duties of John Dane III, without the approval of
the Required Banks.
(l) Restricted Investments. Borrower will not, and it will
not cause or permit any of its Subsidiaries to, directly or indirectly, make
any Restricted Investments.
(m) Ownership of Subsidiaries. Borrower will not cause or
permit any of its Subsidiaries to (i) authorize or issue any new types,
varieties or classes of capital stock or any bonds or debentures, subordinated
or otherwise, or any stock warrants or options, (ii) authorize or issue any
additional shares of any existing class of capital stock, (iii) declare any
stock dividends or stock splits or (iv) take any other action which could,
directly or indirectly, decrease Borrower's ownership interest in any of its
Subsidiaries.
(n) Capital Expenditures. Borrower and its Subsidiaries will
not incur Capital Expenditures in excess of $12,000,000.00 in the aggregate for
Borrower and its Subsidiaries taken as a whole, in any one fiscal year.
(o) Change in Control. Borrower shall not allow any Change in
Control to occur.
8.3 Use of Proceeds. Borrower covenants and agrees that (i)
the proceeds of the Revolving Credit Loans and Swing Loans will be used solely
(A) to pay the Assumed Trinity Indebtedness and the Intercompany Note and (B)
for working capital purposes, any specific purposes permitted under this
Agreement, and other general corporate purposes of Borrower; (ii) the proceeds
of the Offering payable to Borrower shall only be used to pay any income tax
liabilities of Borrower with the balance to used to pay the Loan; (iii) no part
of the proceeds of any Loan will be used in violation of any applicable law or
regulation; and (iv) no part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately (A)
to purchase or carry margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (B) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, U, T or X thereof, as amended.
SECTION 9. EVENTS OF DEFAULT.
If any of the following (each of the following herein sometimes called
an "Event of Default" shall occur and be continuing:
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9.1 Borrower shall fail to pay any of Borrower's Obligations other
than principal or interest within fifteen (15) Business Days after the date the
same shall first become due and payable, whether by reason of demand, maturity,
acceleration or otherwise;
9.2 (a) Borrower shall fail to pay any of Borrower's Obligations
for the repayment of interest five (5) days after the date the same shall become
due and payable, whether by reason of demand, maturity, acceleration or
otherwise;
(b) Borrower shall fail to pay any of Borrower's Obligations
for the repayment of principal as and when the same shall become due and
payable, whether by reason of demand, maturity, acceleration or otherwise;
9.3 Any representation or warranty of Borrower made in this Agreement,
in any other Transaction Document to which Borrower is a party or in any
certificate, agreement, instrument or statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall prove
to have been untrue or incorrect in any material respect when made or effected;
9.4 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 8.1(l), Section 8.1(m), Section 8.2 or Section
8.3;
9.5 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 8.1(a) and any such failure shall remain
unremedied for five (5) Business Days after the earlier of (i) notice of such
default is given to Borrower by the Agent or (ii) a Responsible Officer of
Borrower obtaining knowledge of such default;
9.6 Borrower shall fail to perform or observe any other term,
covenant or provision contained in this Agreement (other than those specified
in Sections 9.1, 9.2, 9.3, 9.4 or 9.5 above or elsewhere in this Section 9) and
any such failure shall remain unremedied for thirty (30) days after the earlier
of (i) written notice of default is given to Borrower by the Agent or any of
the Banks or (ii) a Responsible Officer of Borrower obtaining knowledge of such
default;
9.7 This Agreement or any of the other Transaction Documents shall at
any time for any reason cease to be in full force and effect or shall be
declared to be null and void by a court of competent jurisdiction, or if the
validity or enforceability thereof shall be contested or denied by Borrower, or
if the transactions completed hereunder or thereunder shall be contested by
Borrower or if Borrower shall deny that it has any or further liability or
obligation hereunder or thereunder.
9.8 Borrower, any Subsidiary or any other Obligor shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (ii) consent
to the institution of, or fail to contravene in a timely and appropriate
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manner, any such proceeding or the filing of any such petition, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official of itself, himself or herself or of a substantial part of
its Property or assets, (iv) file an answer admitting the material allegations
of a petition filed against itself in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii)
take any corporate or other action for the purpose of effecting any of the
foregoing;
9.9 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Borrower, any Subsidiary or any other Obligor, or of a
substantial part of the Property or assets of Borrower, any Subsidiary or any
other Obligor, under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency, receivership, liquidation or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or
similar official of Borrower, any Subsidiary or any other Obligor or of a
substantial part of the Property or assets of Borrower, any Subsidiary or any
other Obligor or (iii) the winding-up or liquidation of Borrower, any
Subsidiary or any other Obligor; and such proceeding or petition shall continue
undismissed for sixty (60) consecutive days or an order or decree approving or
ordering any of the foregoing shall be entered;
9.10 Any of the Letter of Credit Applications shall at any time for
any reason cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability of any of the Letter of Credit Applications shall be contested
or denied by Borrower or any Subsidiary, or if Borrower or any Subsidiary shall
deny that it has any further liability or obligation under any of the Letter of
Credit Applications or if Borrower or any Subsidiary shall fail to comply with
or observe any of the terms, provisions or conditions contained in any of the
Letter of Credit Applications;
9.11 Borrower, any Subsidiary or any other Obligor shall be declared
by any of the Banks to be in default on, or pursuant to the terms of, (1) any
other present or future obligation to such Bank(s), including, without
limitation, any other loan, line of credit, revolving credit, guaranty or letter
of credit reimbursement obligation, or (2) any other present or future agreement
purporting to convey to such Bank(s) a Lien upon any Property or assets of
Borrower, such Subsidiary, or such other Obligor, as the case may be;
9.12 The occurrence of any default or event of default under or within
the meaning of any agreement, document or instrument evidencing, securing,
guaranteeing the payment of or otherwise relating to any Indebtedness of
Borrower or any Subsidiary for borrowed money (other than the Borrower's
Obligations) having an aggregate outstanding principal balance in excess of One
Million Five Hundred Thousand Dollars ($1,500,000.00);
9.13 One or more judgments, decrees, arbitration awards or rulings
(including without limitation, rulings of the Board of Contract Appeals, the
General Accounting Office the Defense Contract Audit Agency or the appropriate
Contracting Office of the United
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States Navy) shall be entered against the Borrower or any Subsidiary involving
in the aggregate a liability (not paid or fully covered by insurance) of
$1,500,000.00 or more and all such judgments, decrees, awards, and rulings
shall not have been vacated, paid, discharged, stayed or suspensively appealed
within thirty days from the entry thereof;
9.14 Any of the following events shall occur with respect to any
Pension Plan (a) the institution by Borrower, any ERISA Affiliate or any
Subsidiary of steps to terminate any Pension Plan if, as a result of such
termination, Borrower, such ERISA Affiliate or such Subsidiary, as the case may
be, could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan or any of its participants
or beneficiaries, in the aggregate in excess of Two Million Five Hundred
Thousand Dollars ($2,500,000.00), (b) the institution by the PBGC of steps to
terminate any Pension Plan, or (c) a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under Section 302 (f) of
ERISA;
9.15 At any time, Borrower and its Subsidiaries fail to have firm
shipbuilding contracts (excluding intercompany contracts (but including such
barge construction and related work to be subcontracted from Trinity under the
Separation and Related Agreements) and excluding unexercised options or rights
under contracts pursuant to which the other contracting party(s) may require
additional performance by the Borrower or any Subsidiary) with an aggregate
remaining value of at least $200,000,000.00, for at least forty-five (45) days;
9.16 If (i) Borrower or any of its Subsidiaries is debarred or
suspended from contracting (as a first tier or any level of subcontractor) for,
bidding on, or entering into a Government Contract, or receives notice of a
proposed suspension of or disbarment from acquiring or performing a Government
Contract, or (ii) if a current or backlogged Government Contract is forfeited
or terminated for the default by Borrower or any Subsidiary, as the case may
be; or
9.17 If Borrower and its Subsidiaries are unable to obtain performance
bonds to secure new or proposed vessel construction contracts;
THEN, and in each such event (other than an event described in Sections
9.8 or 9.9), the Agent shall, if requested in writing by the Required Banks, and
may, in its sole and absolute discretion, upon the oral request of the Required
Banks, declare that the obligation of the Banks to make Loans under this
Agreement and the obligation of Issuer to issue Letters of Credit under this
Agreement have terminated, whereupon such obligations of the Banks and Issuer
shall be immediately and forthwith terminated, and the Agent shall, if requested
in writing by the Required Banks, and may, in its sole and absolute discretion,
upon the oral request of the Required Banks, declare the entire outstanding
principal balance of and all accrued and unpaid interest on the Notes and all of
the other Loans under this Agreement and all of the other Borrower's Obligations
to be forthwith due and payable, whereupon all of the unpaid principal balance
of and all accrued and unpaid interest on the
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Notes and all of the other Loans under this Agreement and all such other
Borrower's Obligations shall become and be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, and the Agent and each of the Banks may
exercise any and all other rights and remedies which they may have under any of
the other Transaction Documents or under applicable law; provided, however,
that upon the occurrence of any event described in Sections 9.8 or 9.9, the
obligation of the Banks to make Loans under this Agreement and the obligation
of Issuer to issue Letters of Credit under this Agreement shall automatically
terminate and the entire outstanding principal balance of and all accrued and
unpaid interest on the Notes and all of the other Loans under this Agreement
and all of the other Borrower's Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
the Agent and each of the Banks may exercise any and all other rights and
remedies which they may have under any of the other Transaction Documents or
under applicable law.
Notwithstanding any provision in this Agreement to the contrary, if
Agent or any of the Banks sent written notice of an Event of Default to
Borrower, such Bank or Agent shall send a copy of such written notice to
Trinity and notwithstanding any provision in this Agreement to the contrary,
Trinity shall have three (3) Business Days from the receipt of such notice to
cure any such Event of Default.
SECTION 10. AGENT.
10.1 Appointment. Whitney is hereby appointed by the Banks as Agent
under this Agreement, the Notes and the other Transaction Documents. The Agent
agrees to act as such upon the express conditions contained in this Agreement.
10.2 Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms of this
Agreement and the other Transaction Documents, together with such powers as are
reasonably incidental thereto. The Agent shall have no implied duties to the
Banks, nor any obligation to the Banks to take any action under this Agreement
or any of the other Transaction Documents, except any action specifically
provided by the this Agreement or any of the other Transaction Documents to be
taken by the Agent. Without limiting the generality of the foregoing, the
Agent shall not be required to take any action with respect to any Default or
Event of Default, except as expressly provided in Section 9.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, employees, agents or advisors shall be liable to any of the Banks for
any action taken or not taken by it (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or
willful misconduct.
10.4 No Responsibility for Loans, Recitals, Etc. Neither the Agent
nor any of its directors, officers, employees, agents or advisors shall (i) be
responsible for or have any
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duty to ascertain, inquire into or verify any recitals, reports, statements,
representations, warranties or representations contained in this Agreement or
any of the other Transaction Documents or furnished pursuant hereto or thereto;
(ii) be responsible for any Loans or Letters of Credit hereunder (except in
Agent's capacity as a Bank hereunder with respect to its Pro Rata Share thereof
pursuant to the terms of this Agreement), (iii) be bound to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement or any of the other Transaction Documents; (iv) be responsible for
the satisfaction of any condition specified in Section 6, except receipt of
items required to be delivered to the Agent; or (v) be responsible for the
validity, effectiveness, genuineness or enforceability of this Agreement or any
of the other Transaction Documents; or (vi) be responsible for the creation,
attachment or perfection of any security interests or liens purported to be
granted to the Agent or any of the Banks pursuant to this Agreement or any of
the other Transaction Documents. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, telex, telecopy or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.
10.5 Right to Indemnity. Notwithstanding any other provision
contained in this Agreement to the contrary, to the extent Borrower fails to
reimburse the Agent pursuant to Section 11.3, Section 11.4 or Section 11.5, or
if any Default or Event of Default shall occur under this Agreement, the Banks
shall ratably in accordance with their respective Pro Rata Shares of the
aggregate amount of Loans and Letters of Credit then outstanding, or if no
Loans or Letters of Credit are then outstanding, their respective Pro Rata
Shares of the total Commitments of all of the Banks, indemnify the Agent and
hold it harmless from and against any and all liabilities, losses (except
losses occasioned solely by failure of Borrower to make any payments or to
perform any obligations required by this Agreement (other than those described
in Sections 11.3, 11.4 and 11.5), the Notes, the Letter of Credit Applications
or any of the other Transaction Documents), costs and/or expenses, including,
without limitation, any liabilities, losses, costs and/or expenses arising from
the failure of any Bank to perform its obligations hereunder or in respect of
this Agreement and also including, without limitation, reasonable attorneys'
fees and expenses, which the Agent may incur, directly or indirectly, in
connection with this Agreement, the Notes or any of the other Transaction
Documents, or any action or transaction related hereto or thereto; provided
only that the Agent shall not be entitled to such indemnification for any
losses, liabilities, costs and/or expenses directly and solely resulting from
its own gross negligence or willful misconduct. This indemnity shall be a
continuing indemnity, contemplates all liabilities, losses, costs and expenses
related to the execution, delivery and performance of this Agreement, the Notes
and the other Transaction Documents, and shall survive the satisfaction and
payment of the Loans, the expiration or other termination of the Letters of
Credit and the termination of this Agreement.
10.6 Action Upon Instructions of Required Banks. The Agent agrees,
upon the written request of the Required Banks, to take any action of the type
specified in this Agreement or any of the other Transaction documents as being
within the Agent's rights,
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duties, powers or discretion. Notwithstanding the foregoing, the Agent shall
be fully justified in failing or refusing to take any action hereunder, unless
it shall first be indemnified to its satisfaction by the Banks pro rata against
any and all liabilities, losses, costs and expenses (including, without
limitation, attorneys' fees and expenses) which may be incurred by it by reason
of taking or continuing to take any such action, other than any liability which
may arise out of Agent's gross negligence or willful misconduct. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with written instructions signed by the Required Banks,
and such instructions and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks and on all holders of the Notes. In the
absence of a request by the Required Banks, the Agent shall have authority, in
its sole discretion, to take or not to take any action, unless this Agreement
or any of the other Transaction Documents specifically requires the consent of
the Required Banks or of all of the Banks.
10.7 Reliance on Documents; Employment of Agents and Counsel. The
Agent shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons. The Agent may execute any of its duties as Agent hereunder by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Banks for the default or misconduct of any such agents or attorneys-in-fact
selected by it in good faith and with reasonable care, except as to money or
securities received by it or its authorized agents. The Agent shall be
entitled to advice and opinion of legal counsel concerning all legal matters
and all matters pertaining to the duties of the Agent.
10.8 May Treat Payee as Owner. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent pursuant to Section 11.15. Any request, authority or consent of any
person, firm or corporation who at the time of making such request or giving
such authority or consent is the holder of any such Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note issued in exchange therefor.
10.9 Agent's Reimbursement. Each Bank agrees to reimburse the Agent
pro rata in accordance with its Pro Rata Share for any out-of-pocket expenses
not reimbursed by Borrower (a) for which the Agent is entitled to reimbursement
by the Borrower under this Agreement or any of the other Transaction Documents
and (b) for any other out-of-pocket expenses incurred by the Agent on behalf of
the Banks, in connection with the preparation, execution, delivery, amendment,
modification, extension, renewal, administration and/or enforcement of this
Agreement and/or any of the other Transaction Documents.
10.10 Rights as a Bank. With respect to its commitment, the Loans
made by it and the Notes issued to it, the Agent shall have the same rights and
powers hereunder as any
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Bank and may exercise the same as though it were not the Agent, and the terms
"Bank" and "Banks" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend
money to and generally engage in any kind of banking or trust business with the
Borrower as if it were not the Agent.
10.11 Independent Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank and
based on the financial statements referred to in Section 7.4 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Transaction
Documents. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Transaction Documents.
10.12 Resignation of Agent. Subject to the appointment of a successor
Agent, the Agent may resign as Agent for the Banks under this Agreement and the
other Transaction Documents at any time by thirty (30) days notice in writing
to the Banks. Such resignation shall take effect upon appointment of such
successor Agent. The Required Banks shall have the right to appoint a
successor Agent (and if no Default or Event of Default then exists hereunder,
such appointment shall be with the consent of the Borrower, which consent shall
not be unreasonably withheld), and the successor Agent shall be entitled to all
of the rights of, and vested with the same powers as, the original Agent under
this Agreement and the other Transaction Documents. Resignation by the Agent
shall not affect or impair the rights of the Agent under Sections 10.5 and 10.9
hereof with respect to all matters preceding such resignation. Any successor
Agent must be a national banking association or a bank chartered in any State
of the United States and having at least $200,000,000.00 in capital and
surplus.
10.13 Removal of Agent. Subject to the appointment of a successor
Agent, the Banks (by a unanimous vote of all Banks other than the Bank then
acting as the Agent hereunder), may remove the Agent for the Banks under this
Agreement and the other Transaction Documents at any time by thirty (30) days'
notice in writing to the Agent. Such removal shall take effect upon
appointment of such successor Agent. The Required Banks shall have the right
to appoint a successor Agent who shall be entitled to all of the rights of, and
vested with the same powers as, the original Agent under this Agreement and the
other Transaction Documents. If no Default or Event of Default then exists
hereunder, then the decision to remove the Agent and the subsequent appointment
of a successor Agent shall both be made only with the consent of the Borrower
(which consent will not be unreasonably withheld). The removal of the Agent
shall not affect or impair the rights of the Agent under Sections 10.5 and 10.9
hereof with respect to all matters preceding such removal. Any successor Agent
must be a national banking association or a bank chartered in any State of the
United States and having at least $200,000,000.00 in capital and surplus.
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10.14 Duration of Agency. The agency established by Section 10.1
hereof shall continue, and Sections 10.1 through and including this Section
10.14 shall remain in full force and effect, until all of the Borrowers'
Obligations shall have been paid in full and the Banks' commitments to make
Loans, issue Letters of Credit and/or extend credit to or for the benefit of
the Borrower shall have terminated or expired.
SECTION 11. GENERAL.
11.1 No Waiver. No failure or delay by the Agent or any of the Banks
in exercising any right, remedy, power or privilege hereunder or under any
other Transaction Document shall operate as a waiver thereof; nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
remedies provided herein and in the other Transaction Documents are cumulative
and not exclusive of any remedies provided by law. Nothing herein contained
shall in any way affect the right of any of the Banks to exercise any statutory
or common law right of banker's lien or setoff.
11.2 Right of Setoff. Upon the occurrence and during the continuance
of any Event of Default, each of the Banks is hereby authorized at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived by Borrower) and to the fullest extent permitted by law, to setoff and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by such Bank(s) and any and all other indebtedness at
any time owing by such Bank(s) to or for the credit or account of Borrower
against any and all of Borrower's Obligations irrespective of whether or not
such Bank(s) shall have made any demand hereunder or under any of the other
Transaction Documents and although such obligations may be contingent or
unmatured. Each of the Banks agrees to promptly notify Borrower after any such
setoff and application made by such Bank(s), provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Banks under this Section 11.2 are in addition
to any other rights and remedies (including, without limitation, other rights
of setoff) which the Banks may have. Nothing contained in this Agreement or
any other Transaction Document shall impair the right of any of the Banks to
exercise any right of setoff or counterclaim it may have against Borrower and
to apply the amount subject to such exercise to the payment of indebtedness of
Borrower unrelated to this Agreement or the other Transaction Documents.
11.3 Cost and Expenses. Borrower agrees, whether or not any Loan is
made hereunder or any Letter of Credit is issued hereunder, to pay the Agent
upon demand (i) all out-of-pocket costs and expenses and all reasonable
attorneys' fees of the Agent in connection with the preparation, documentation,
negotiation, execution, amendment, modification, extension and/or renewal of
this Agreement, the Notes, the Letter of Credit Application(s) and the other
Transaction Documents, (ii) all out-of-pocket costs and expenses and all
reasonable attorneys' fees of the Agent in connection with the preparation of
any waiver or consent hereunder or under any other Transaction Documents, (iii)
if an Event of Default
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occurs, all out-of-pocket costs and expenses and all reasonable attorneys' fees
incurred by the Agent and each of the Banks in connection with such Event of
Default and collection and other enforcement proceedings resulting therefrom,
(iv) all out-of-pocket costs and expenses and all reasonable attorneys' fees
of the Agent in connection with the enforcement of any rights and/or remedies
of the Agent or any of the Banks to collect any of the Borrower's Obligations,
and (v) all other reasonable attorneys' fees incurred by the Agent relating to
or arising out of or in connection with this Agreement or any of the other
Transaction Documents. Borrower further agrees to pay or reimburse the Agent
and each of the Banks for any stamp or other taxes which may be payable with
respect to the execution, delivery, recording and/or filing of this Agreement,
the Notes, the Letter of Credit Application(s) or any of the other Transaction
Documents. All of the obligations of Borrower under this Section 11.3 shall
survive the satisfaction and payment of Borrower's Obligations and the
termination of this Agreement.
11.4 Environmental Indemnity. Environmental Indemnity. Borrower
hereby agrees to indemnify the Agent and each of the Banks and hold the Agent
and each of the Banks and any holder(s) of the Notes, and the officers,
directors, employees, agents and affiliates of the Agent, each of the Banks and
such holder(s) (collectively, the "Indemnities") harmless from and against any
and all losses, liabilities, damages, injuries, costs, expenses and claims of
any and every kind whatsoever (including, without limitation, reasonable court
costs and attorneys' fees and expenses) which at any time or from time to time
may be paid, incurred or suffered by the Agent or any of the Banks for, with
respect to or as a direct or indirect result of the violation by Borrower or
any Subsidiary of any Environmental Laws; or with respect to, or as a direct or
indirect result of the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or Release from, properties owned or operated by
Borrower and/or any Subsidiary of any Hazardous Substances or any other
hazardous or toxic waste, substance or constituent or other substance
(including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under the Environmental Laws);
and the provisions of and undertakings and indemnification set out in this
Section 11.4 shall survive the satisfaction and payment of Borrower's
Obligations and the termination of this Agreement; provided that Borrower shall
have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of that
Indemnitee.
11.5 General Indemnity. In addition to the payment of expenses
pursuant to Section 11.3, whether or not the transactions contemplated hereby
shall be consummated, Borrower hereby agrees to indemnify, pay and hold
Indemnities harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnities in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnities shall be
designated a party thereto), that may be imposed on, incurred by or asserted
against the Indemnities, in any manner relating to or arising out of this
Agreement, any of the other Transaction Documents or any other
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agreement, document or instrument executed and delivered by Borrower or any
other Obligor in connection herewith or therewith, the statements contained in
any commitment letters delivered by the Agent or any of the Banks, the
agreement of any of the Banks to make the Loans hereunder, the agreement of
Issuer to issue the Letters of Credit hereunder or the use or intended use of
the proceeds of any Loan hereunder (collectively, the "Indemnified
Liabilities"); provided that Borrower shall have no obligation to an Indemnitee
hereunder with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of that Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
indemnified liabilities incurred by the Indemnities or any of them. The
provisions of the undertakings and indemnification set out in this Section 11.5
shall survive satisfaction and payment of Borrower's Obligations and the
termination of this Agreement. No provision contained in this Section 11.5
shall affect any rights the Borrower may have against any Bank which defaults
under this Agreement or is intended to indemnify any such Agent or Bank which
defaults under this Agreement (but only such Agent or Bank that defaults under
this Agreement) for any such Indemnified Liabilities arising from such
defaulting Bank's action.
11.6 Authority to Act. The Agent shall be entitled to act on any
notices and instructions (telephonic or written) believed by the Agent in good
faith to have been sent or delivered by any person identifying himself or
herself as John Dane III, John J. Siben II or Keith L. Voigts (or any other
person from time to time authorized to act on behalf of Borrower pursuant to a
resolution adopted by the Board of Directors of Borrower and certified by the
Secretary of Borrower and delivered to the Agent), regardless of whether such
notice or instruction was in fact delivered by such person, and Borrower hereby
agrees to indemnify the Agent and hold the Agent harmless from and against any
and all losses and expenses, if any, ensuing from any such action.
11.7 Notices. Any notice, request, demand, consent, confirmation or
other communication hereunder shall be in writing and delivered in person or
sent by telecopy or registered or certified mail, return receipt requested and
postage prepaid, to the applicable party at its address or telecopy number set
forth on the signature pages hereof, or at such other address or telecopy
number as any party hereto may designate as its address for communications
hereunder by notice so given. Such notices shall be deemed effective on the
day on which delivered or sent if delivered in person or sent by telecopy, or
on the third (3rd) Business Day after the day on which mailed, if sent by
registered or certified mail; provided, however, that notices to the Agent
under Section 3 shall not be effective until actually received by the Agent.
11.8 CONSENT TO JURISDICTION. BORROWER IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY LOUISIANA STATE COURT OR ANY UNITED STATES OF
AMERICA COURT SITTING IN THE EASTERN DISTRICT OF LOUISIANA, AS THE AGENT MAY
ELECT, IN ANY SUIT, ACTION OR
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PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT. BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
OF SUCH COURTS. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND
BORROWER FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY REGISTERED MAIL
SENT TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION 11.7.
11.9 Sharing of Payments. The Banks agree among themselves that
except as otherwise expressly set forth herein, in the event that any of the
Banks shall directly or indirectly obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien or
counterclaim, through the realization, collection, sale or liquidation of any
collateral or otherwise) on account of or in respect of any of the Loans or
other Borrower's Obligations in excess of its Pro Rata Share of all such
payments, such Bank(s) shall immediately purchase from the other Bank(s)
participations in the Loans or other Borrower's Obligations owed to such other
Bank(s) in such amounts, and make such other adjustments from time to time, as
shall be equitable to the end that the Banks share such payment ratably in
accordance with their respective Pro Rata Shares of the outstanding Loans and
other Borrower's Obligations. The Banks further agree among themselves that if
any such excess payment to a Bank shall be rescinded or must otherwise be
restored, the other Bank(s) which shall have shared the benefit of such payment
shall, by repurchase of participation theretofore sold, or otherwise, return
its share of that benefit to the Bank whose payment shall have been rescinded
or otherwise restored. Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in
any of the Borrower's Obligations, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of setoff, banker's lien or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of Borrower in the amount
of such participation. If under any applicable bankruptcy, insolvency or other
similar law any of the Banks receives a secured claim in lieu of a setoff to
which this Section 11.9 would apply, such Bank(s) shall, to the extent
practicable, exercise their rights in respect of such secured claim in a manner
consistent with the rights of the Bank(s) entitled under this Section 11.9 to
share in the benefits of any recovery of such secured claim.
11.10 Governing Law. This Agreement, the Notes, the Letter of Credit
Application(s) and all of the other Transaction Documents shall be governed by
and construed in accordance with the internal laws of the State of Louisiana.
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11.11 Amendments and Waivers. Any provision of this Agreement, the
Notes, the Letter of Credit Application(s) or any of the other Transaction
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by Borrower and the Required Banks (and, if the rights
or duties of the Agent in its capacity as Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by all
of the Banks, (i) increase the Commitment of any Bank, (ii) reduce the
principal amount of or rate of interest on any Loan or any fees hereunder
(other than any fees relating to the Letters of Credit other than Letter of
Credit Commitment Fees), (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv) change the Pro
Rata Share of the Commitments or of the aggregate principal amount of Loans or
Letters of Credit of any Bank, (v) release any collateral for Borrower's
Obligations, or (vi) change the number of Banks which shall be required for the
Banks or any of them to take any action or obligations under this Section or
any other provision of this Agreement including this Section 11.11.
11.12 References: Headings for Convenience. Unless otherwise
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibits A, B, C, D, E, F.
G and H refer to annexed Exhibits A, B, C, D, E, F, G and H which are hereby
incorporated herein by reference and all references herein to Schedules 2.1(a),
7.8, 7.10, 7.11, 7.12, 7.16, and 7.17 refer to annexed Schedules 2.1(a), 7.8,
7.10, 7.11, 7.12, 7.16, and 7.17 which are hereby incorporated herein by
reference. The Section headings are furnished for the convenience of the
parties and are not to be considered in the construction or interpretation of
this Agreement.
11.13 Subsidiary or Property Reference. Any reference herein to a
Subsidiary of Borrower, and any financial definition, ratio, restriction or
other provision of this Agreement which is stated to be applicable to Borrower
and its Subsidiaries or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower has any
Subsidiaries, where applicable, to the extent any such Subsidiaries are
consolidated with Borrower for financial reporting purposes. Each covenant,
representation and warranty which is stated to be applicable to any Subsidiary
or any Property of Borrower or any Subsidiary shall be construed to apply to
any Subsidiary or Property which Borrower or any Subsidiary acquired pursuant
to the Consolidation Transactions.
11.14 Successors and Assigns, Participations.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not assign or otherwise transfer any of its
rights or delegate any of its obligations under this Agreement. Any Bank may
sell participations in its Notes and its rights under this Agreement in whole
or in part to any commercial bank organized under the laws of the United States
or any state thereof that is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System without the consent of Borrower or
the Agent so long as each agreement pursuant to which any such participation is
granted provides that
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no such participant shall have any rights under this Agreement or any other
Transaction Document (the participants' rights against the Bank granting its
participation to be those set forth in the Participation Agreement between the
participant and such Bank), and such selling Bank shall retain the sole right
to approve or disapprove any amendment, modification or waiver of any provision
of this Agreement or any of the other Transaction Documents. Each such
participant shall be entitled to the benefits of the yield protection
provisions hereof to the extent such Bank would have been so entitled had no
such participation been sold.
(b) Any Bank which, in accordance with Section 11.14(a), grants a
participation in any of its rights under this Agreement or its Notes shall give
prompt notice thereof to the Agent and Borrower.
(c) Unless otherwise agreed to by Borrower in writing, no Bank shall,
as between Borrower and that Bank, be relieved of any of its obligations under
this Agreement as a result of such Bank's granting of a participation in all or
any part of such Bank's Notes or all or any part of such Bank's rights under
this Agreement.
11.15 Assignment Agreements. Each Bank may, from time to time, with
the consent of the Borrower and Agent (which will not in any instance be
unreasonably withheld), sell or assign to other banking institutions rated "B"
or better by Thompson Bank Watch Service a pro rata part of all of the
indebtedness evidenced by the Notes then owed by it together with an equivalent
proportion of its obligation to make Loans hereunder and the credit risk
incidental to the Letters of Credit pursuant to an Assignment Agreement
substantially in the form of Exhibit H attached hereto, executed by the
assignor, the assignee and the Borrower, which agreements shall specify in each
instance the portion of the indebtedness evidenced by the Notes which is to be
assigned to each such assignor and the portion of the Commitments of the
assignor and the credit risk incidental to the Letters of Credit (which
portions shall be equivalent) to be assumed by it (the "Assignment
Agreements"), provided that the Borrower may in its sole discretion withhold
its consent to any assignment by a Bank to any assignee which has total capital
and surplus of less than $200,000,000.00 or to any assignment by a Bank of less
than all of its Commitments if as a result thereof the assignor will have
Commitments hereunder of less than one half of its assigned Commitments or the
assignee will have Commitments hereunder of less than $3,500,000.00 or, after
giving effect thereto, there would be more than 10 Banks, further provided that
nothing herein contained shall restrict, or be deemed to require any consent as
a condition to, or require payment of any fee in connection with, any sale,
discount or pledge by any Bank of any Note or other obligation hereunder to a
Federal reserve bank. Upon the execution of each Assignment Agreement by the
assignor, the assignee and the Borrower and consent thereto by the Agent (i)
such assignee shall thereupon become a "Bank" for all purposes of this
Agreement with a Commitment in the amount set forth in such Assignment
Agreement and with all the rights, powers and obligations afforded a Bank
hereunder, (ii) the assignor shall have no further liability for funding the
portion of its Commitments assumed by such other Bank and (iii) the address for
notices to such Bank shall be as specified in the Assignment Agreement, and the
Borrower shall execute and deliver Notes to the assignee Bank in the amount of
its
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Commitments and new Notes to the assignor Bank in the amount of its Commitments
after giving effect to the reduction occasioned by such assignment, all such
Notes to constitute "Notes" for all purposes of this Agreement, and there shall
be paid to the Agent, as a condition to such assignment, an administration fee
of $2,500 plus any out-of-pocket costs and expenses incurred by it in effecting
such assignment, such fee to be paid by the assignor or the assignee as they
may mutually agree, but under no circumstances shall any portion of such fee be
payable by or charged to the Borrower.
11.16 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that Borrower may not assign or delegate any of its
rights or obligations under this Agreement.
11.17 NO ORAL AGREEMENTS, ENTIRE AGREEMENT. ORAL AGREEMENTS OR
COMMITMENT TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT
ENFORCEABLE. TO PROTECT BORROWER, THE AGENT AND THE BANKS FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENT REACHED BY BORROWER, THE
AGENT AND THE BANKS COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND OTHER TRANSACTION
DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT AMONG
BORROWER, THE AGENT AND THE BANKS, EXCEPT AS BORROWER, THE AGENT AND THE BANKS
MAY LATER AGREE IN WRITING TO MODIFY THEM. THIS AGREEMENT EMBODIES THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDES ALL
PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR WRITTEN) RELATING TO THE SUBJECT
MATTER HEREOF.
11.18 Severability. In the event any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.20 Resurrection of Borrower's Obligations. To the extent that any
of the Banks receives any payment on account of any of Borrower's Obligations,
and any such payment(s) or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated and/or
required to be repaid to a trustee, receiver or any other Person under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the
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extent of such payment(s) received, Borrower's Obligations or part thereof
intended to be satisfied and any and all Liens upon or pertaining to any
Property or assets of Borrower and theretofore created and/or existing in favor
of such Bank(s) as security for the payment of such Borrower's Obligations
shall be revived and continue in full force and effect, as if such payment(s)
had not been received by such Bank(s) and applied on account of Borrower's
Obligations.
11.21 Independence of Covenants. All of the covenants contained in
this Agreement and the other Transaction Documents shall be given independent
effect so that if a particular action, event or condition is prohibited by any
one of such covenants, the fact that it would be permitted by an exception to,
or otherwise be in compliance within the provisions of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken, such event occurs or such condition exists.
11.22 Confidentiality. The Agent and each of the Banks shall keep
confidential any information delivered, made available or otherwise conveyed by
the Borrower, any of its Subsidiaries or Trinity in connection with this
Agreement and the transactions contemplated hereby.
11.23 Certain Indemnification Procedures. Notwithstanding any
provision to the contrary contained in this Agreement, in the event Borrower is
obligated to defend the Agent or any of the Banks under the terms of this
Agreement, Borrower shall be entitled, at is option, to assume the defense of
such action on behalf of such indemnified party or parties with counsel which
is selected by Borrower and reasonably acceptable to such indemnified parties.
In no event shall Borrower: (i) be required to employ more than one (1) firm of
attorneys in defense of any matter where Borrower is required to defend the
Agent or any of the Banks, but nothing contained herein shall prevent Borrower
from employing multiple firms of attorneys, at its option; or (ii) be liable
for any legal fees and expenses in excess of the reasonable fees and expenses
of the one (1) firm of attorneys whether or not selected by Borrower pursuant
to clause (i) of this Section 11.23 (provided that Borrower shall not have the
right to challenge the reasonableness of the fees of any firm of attorneys
selected by Borrower), and the fees and expenses of any additional firms
employed by Borrower pursuant to said clause (i).
IN WITNESS WHEREOF, Borrower, the Agent and the Banks have executed
this Revolving Credit Agreement this ___, day of September, 1996.
HALTER MARINE GROUP, INC.
By:
----------------------------
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EXHIBIT 10.9
INLAND BARGE AGREEMENT
THIS INLAND BARGE AGREEMENT (this "Agreement"), is made and entered
into as of the ___ day of _________, 1996, by and between Trinity Marine
Products, Inc., a _________ corporation ("Trinity"), and Halter Marine, Inc., a
Nevada corporation ("Halter Marine").
WITNESSETH:
That Trinity and Halter Marine, each in consideration of the agreements on the
part of the other herein contained, hereby contract as follows:
ARTICLE 1 - SCOPE OF WORK
In accordance with, and subject to, the terms and conditions of this Agreement,
Halter Marine shall furnish all labor, supervision, machinery, supplies,
consumables, materials (excluding the Supplied Materials, as defined in Article
4), plant and facilities required to manufacture the number of barges (the
"Barges") set forth in Exhibit 1 pursuant to the specifications (constituting
both general arrangements and detailed drawings) set forth in Exhibit 1 (the
"Specifications"). Halter Marine shall perform all work in accordance with
good commercial practice.
From time to time during the term of this Agreement, Trinity may increase or
decrease the quantity and type of Barges ordered pursuant to this Agreement.
Any such change shall be evidenced by a written amendment to this Agreement
duly signed by each party which equitably adjusts the price, delivery schedule
or both. To the extent that it is necessary to decrease the number of Barges
such that production manhours of Halter Marine will decline, Trinity shall give
Halter Marine at least one hundred and eighty (180) days prior written notice
of such anticipated decline.
ARTICLE 2 - PRICE
Trinity shall pay or cause to be paid to Halter Marine for the Barges completed
in accordance with and subject to the terms of this Agreement, the fixed prices
in United States Dollars identified in the Pricing Matrix set forth on Exhibit
2 to this Agreement (the "Price"). The Price is firm and does not include any
sales taxes. If Halter Marine is required, after appropriate notice to
Trinity, review and protest in which Trinity may participate, if applicable, to
pay sales taxes on the basis of this Agreement, the sales tax so paid will be
passed on to Trinity.
ARTICLE 3 - ALTERATIONS
Trinity shall have the right to request minor alterations, deductions from, or
additions to the Specifications on giving due notice in writing to Halter
Marine, and Halter Marine will comply with such requests and will be
compensated by an equitable adjustment in price, delivery schedule or both.
<PAGE> 2
Any changes in this Agreement or the Specifications required by changes in any
applicable laws, rules or regulations, or interpretations thereof, after the
date of this Agreement shall be treated as alterations within the meaning of
this Article, and in such event, and prior to implementation, an equitable
adjustment based upon mutual agreement shall be made to the Price and the
delivery schedule.
Payment for any such alteration shall be made upon acceptance of the related
Barges as specified herein.
ARTICLE 4 - COMPLETION, INSPECTION, DELIVERY, ACCEPTANCE AND TITLE
A. Completion - The Barges shall be constructed by Halter Marine at its
Gulfport, Mississippi shipyard, and shall be completed in accordance with this
Agreement and the schedule set forth in Exhibit 3. Trinity shall furnish (1)
the quantity and grade of steel for each Barge as set forth in Exhibit 3 and
(2) other specified materials of the types and in the quantities set forth in
Exhibit 3 (collectively, the "Supplied Materials") in accordance with the
schedule set forth in Exhibit 3. Upon receipt of any such Supplied Materials,
Halter Marine shall execute a bill of landing or other written document
evidencing the receipt by Halter Marine of such quantity of Supplied Materials.
Upon receipt, Halter Marine shall inspect such Supplied Materials and shall
promptly notify Trinity in writing of any damage thereto. All Supplied
Materials shall remain the exclusive property of Trinity, and Halter Marine
shall keep all separate and apart from Halter Marine's other materials. If any
Barge with respect to which any Supplied Materials have been furnished is not
manufactured for any reason, such Supplied Materials will be returned to
Trinity, but Trinity will bear all costs and expenses of transportation of such
Barge from Halter Marine's facility.
B. Inspection - Halter Marine shall give Trinity, or its designated
agent, full opportunity to inspect the Barges during construction at Halter
Marine's plant during normal operating hours or at such other time as may be
mutually agreed. Upon completion of each Barge, Trinity may arrange to conduct
a final inspection at Halter Marine's plant. If requested by Halter Marine,
Trinity shall execute an Acceptance Certificate, the form of which is attached
to this Agreement as Exhibit 4, covering all Barges found to be completed in
accordance with the Specifications, and Trinity shall deliver the executed
Acceptance Certificates to Halter Marine.
C. Delivery - The time of delivery of any Barge is the physical movement
of such Barge from Halter Marine's plant by truck, rail, or water
transportation and is conditioned upon Halter Marine's not encountering delays
due to strikes, fires, accidents or any causes or contingencies beyond Halter
Marine's control. Delay in delivery of any Barge that is due to a strike,
fire, accident or cause beyond Halter Marine's control shall not constitute a
default under this Agreement. Trinity shall bear all costs and expenses of
transportation of each Barge from Halter Marine's facility.
D. Acceptance and Terms of Payment - Halter Marine shall deliver each
Barge to Trinity FOB Halter Marine's plant. Trinity agrees to accept delivery
of each Barge as it is completed and
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delivered to Trinity in accordance with the delivery schedule set forth in
Exhibit 2. It is anticipated that Halter Marine may complete Barges in advance
of Trinity's need for delivery of such Barges. Accordingly, Halter Marine
agrees to store such Barges at its plant for a reasonable period of time not to
exceed seven (7) days following the receipt by Trinity of notice of completion
(provided that Trinity shall not be required to remove any Barge from Halter
Marine's facility prior to the time for delivery of such Barge described in the
delivery schedule set forth in Exhibit 2). Trinity shall pay the full amount
of the Price of each item of the Barge following delivery and within fourteen
(14) days after presentation by Halter Marine of an invoice, accompanied by an
inspection or acceptance certificate (if any) and/or bill of lading showing
delivery of such Barges.
E. Title and Risk of Loss - Halter Marine shall bear all risks of
physical loss of each Barge while such Barge is at Halter Marine's plant
(including any stored Barge) until delivery of the Barge to Trinity, except
that Halter Marine shall not be responsible for any loss or damages with
respect to any Barge caused by Trinity's employees, agents, subcontractors or
representatives.
ARTICLE 5 - HALTER MARINE LIMITED WARRANTY
Halter Marine agrees to build the Barges in accordance with the applicable
Specifications, and warrants that each Barge will be free of defects in
material and workmanship; provided, that Halter Marine's obligation under this
warranty shall be limited to repairing or replacing, at Halter Marine's
facility or at a facility jointly selected by Halter Marine and Trinity, any
part or parts of any Barge which shall, within the period negotiated by Trinity
to its customer (such period not to exceed thirteen (13) months, after delivery
of any such Barge by Trinity to its customer) be disclosed by Halter Marine's
and Trinity's examination to have been defective.
THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT ANY BARGE IS FIT FOR ANY
PARTICULAR PURPOSE OR USE, AND SPECIFICALLY IN LIEU OF ALL INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGE.
ARTICLE 6 - INSURANCE
Halter Marine shall carry insurance, at its expense, with reliable insurance
companies or through Halter Marine's approved self-insurance program and cause
certificates of insurance to be issued to Trinity in the following amounts: (i)
Worker's Compensation in compliance with the statutory requirements of the
State of Mississippi with Longshore & Harbor Workers' Compensation Act coverage
endorsement and Employer's Liability Insurance in the amount of at least One
Million Dollars ($1,000,000) with; (ii) Auto liability (including bodily
injury and physical damage) and Comprehensive General Liability Insurance
(including contractual liability), with combined single limits for bodily
injury and property damage liability of at least Five Million Dollars
($5,000,000).
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Certificates of insurance issued to Trinity shall contain notification
provisions whereby the insurance company agrees to give thirty (30) days notice
to Trinity of any change or cancellation of said policy. Halter Marine hereby
waives any and all rights of recovery, claims, actions or causes of action,
against Trinity, its agents, representatives, servants, partners, shareholders,
directors, officers or employees, for any loss or damage that may occur to any
Barge due to Halter Marine's fault and which is insured against under the terms
of any insurance policies.
ARTICLE 7 - INDEMNIFICATION
A. Claims for Alleged Infringement of Patents
Trinity will protect, defend and hold Halter Marine harmless from all claims,
expenses, loss or damage resulting from actual infringement of patents of third
persons that result from Halter Marine's compliance with Trinity's
specifications.
B. Other Claims
Halter Marine hereby indemnifies and agrees to defend and hold harmless
Trinity, its affiliated corporations, and the agents, employees and
representatives of Trinity and its affiliated corporations from and against any
liability with respect to third parties, including against any claim, demand,
loss, damage, cost and expense, including reasonable attorney's fees and
litigation costs, relating to any claim of injury or damage of any kind, which
occurs before delivery of a Barge to Trinity by Halter Marine asserted to be
caused by, resulting from or attributable to the negligence of Halter Marine
and relating in any way to such Barge. Where any such injury or damage arises
out of or results from the joint or concurrent negligent acts or omissions or
the willful misconduct of Trinity and Halter Marine, Halter Marine's duty of
indemnification shall be in proportion to its share of such joint or concurrent
negligence, omission, or willful misconduct.
Trinity agrees to indemnify, defend and hold harmless Halter Marine, its
affiliated companies, agents, employees and representatives from and against
any claim, demand, liability, loss, damage, cost and expense, including
reasonable attorney fees and litigation costs, which arise from or relate to
any claim by a third party or employee, agent or representative of Trinity
caused by, resulting from or related to the negligence or other misconduct of
Trinity. Where any such claim arises out of or results from the joint or
concurrent negligent acts, omissions or willful misconduct of Halter Marine and
Trinity, Trinity's duty of indemnification shall be in proportion to its share
of such joint or concurrent negligence, omission or willful misconduct.
In case of any claim for indemnification, Halter Marine shall undertake to
conduct any proceedings which Halter Marine deems necessary to defend Trinity
in respect of such matter. Trinity shall have the right to participate in
those proceedings, at its own expense, but control of the defense, the
litigation, the negotiation, and any settlement shall remain with Halter
Marine. This indemnity shall be void if Trinity fails to provide reasonable
cooperation in connection with any such defense or
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shall take any action without the prior written consent of Halter Marine that
materially prejudices the defense of any such matter in any way.
Notwithstanding the foregoing, Trinity shall have the right at all times to
take over and assume the control of the defense, the litigation, the
negotiation and any settlement upon written notice to Halter Marine, but upon
doing so, the amount of Halter Marine's indemnity shall be limited to the
amount which Halter Marine has prior to such time offered in settlement of such
matter.
ARTICLE 8 - DEFAULT AND TERMINATION
If either party hereto shall be adjudicated a bankrupt or an order appointing a
receiver of it or of the major part of its property shall be made, or an order
shall be made approving a petition or answer seeking its reorganization under
the Federal Bankruptcy Act, as amended, or either party should institute
proceedings in bankruptcy (or shall have instituted against it an involuntary
bankruptcy proceeding and such proceeding is not dismissed within 60 days of
such filing) or apply for or consent to the appointment of a receiver of itself
or of its property, or shall make an assignment for the benefit of its
creditors, or shall submit in writing its inability to pay its debts generally
as they become due, for the purpose of seeking a reorganization under the
Federal bankruptcy laws or otherwise, then in any one or more of such events,
the other party to this Agreement shall have the option forthwith to terminate
this Agreement to all intents and for all purposed, by giving written notice of
its intentions to do so. Any termination of this Agreement made pursuant to
the provisions of this paragraph shall not relieve the party receiving such
notice from any accrued obligations hereunder due and owing at the date of such
terminations.
ARTICLE 9 - EFFECT OF WAIVER
No waiver by either party hereto of any default by the other in the strict and
literal performance of or compliance with the provision, condition, or
requirement herein shall be deemed to be a waiver of strict and literal
performance of and compliance with any other provision, condition, or
requirement herein, nor to be a waiver of, or in any manner release such other
from, strict compliance with any provision, condition, or requirement in the
future.
ARTICLE 10 - TRINITY TRADE SECRETS
In connection with the performance by Halter Marine of its obligations to
construct Barges pursuant to this Agreement, Halter Marine acknowledges that
Trinity may deliver or impart to Halter Marine, its directors, officers,
agents, employees or affiliates information proprietary to, used by or in the
possession of Trinity and not generally known in the industry, including,
without limitation, trade secrets which relate to the business, products or
work of Trinity or its affiliates, including, without limitation, trade secrets
relating to such matters in relation to Trinity's construction of barges as
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welding, jigs, fit-ups, handling, procedures, methods, know-how, techniques,
devices, formulas, designs, processes and other similar information and
materials, and (ii) of a business or commercial nature, such as information or
compilation of data about costs, pricing, profits, compensation, sales, product
plans, markets, marketing plans and strategies, Barges and operational
requirements, operating policies or plans, finances, financial records, methods
of operation and competition, management organization, customers and suppliers,
and other similar information and materials of Trinity (collectively, "Trinity
Trade Secrets"). The parties acknowledge that the Trinity Trade Secrets derive
independent economic value from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from the disclosure or use thereof. Halter Marine agrees that it will
not, and that its directors, officers, agents, employees and affiliates will
not, directly or indirectly, (A) disclose any of the Trinity Trade Secrets to
any person or entity (other than Halter Marine's directors, officers, agents
and employees on a need- to-know basis in connection with the performance of
Halter Marine's obligations under this Agreement, or (B) use any of the Trinity
Trade Secrets for any purpose other than the performance of Halter Marine's
obligations under this Agreement. Halter Marine agrees to advise its
directors, officers, agents, employees or affiliates to which Trinity Trade
Secrets are disclosed of the confidential nature of such information and to
remind them of their obligations with respect thereto. Halter Marine agrees to
maintain physical security of the buildings, shipyard and Barges used to
construct Barges, and shall, at reasonable times during usual business hours
and upon at least 48 hours' prior written notice from Trinity, allow Trinity to
review all security procedures in effect or implemented by Halter Marine with
respect hereto.
ARTICLE 11 - INJUNCTIVE RELIEF
The parties hereto acknowledge that the breach of the provisions set forth in
Article 10 hereof by Halter Marine cannot readily or adequately be compensated
for in damages and that the breach thereof may cause Trinity irreparable
injury. Therefore, Trinity shall be entitled (without any requirement of
posting of a bond or other security), in addition to all other rights or
remedies that it may have, in law or at equity, to injunctive and other
equitable relief to prevent any violation of such provisions.
ARTICLE 12 - NOTICES
Any notice required or permitted to be given to either party hereto by or under
the provisions of this Agreement shall be deemed properly given when mailed by
certified mail, return receipt requested, postage thereon fully prepaid,
addressed in the case of Trinity to:
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Trinity Marine Group, Inc.
2525 Stemmons Freeway
Dallas, Texas 75207
Attention: Mr. F. Dean Phelps, Vice President
Telephone: 214/689-0592
Facsimile: 214/589-8824
and in the case of Halter Marine to:
Halter Marine, Inc.
13085 Industrial Seaway
Gulfport, Mississippi 39503
Attention: Mr. John Dane III
Telephone: 601/896-0029
Facsimile: 601/897-4803
All such notices shall be deemed given when so mailed. Notice shall also be
deemed to be properly given when sent by telefax to the numbers identified
above.
ARTICLE 13 - LOST OR DAMAGED MATERIAL
In the event any material provided by Trinity is lost or damaged after receipt
by Halter Marine, Halter Marine agrees to replace the material in a timely
manner after identification by Halter Marine of the lost or damaged item.
Where possible, Trinity agrees to make such materials available to Halter
Marine for its purchase at cost.
ARTICLE 14 - SCRAP
The parties agree that any scrap resulting from production cannot be readily
segregated, nor separately processed in an economic manner by Halter Marine.
Accordingly, scrap resulting from this Agreement will become the property of
Halter Marine.
ARTICLE 15 - SHIPPING ACT OF 1916
Trinity warrants that it is a citizen of the United States within the meaning
of the Shipping Act of 1916, as amended (46 U.S. Code 801 et seq.), and that it
is qualified to enter into this Agreement and to take title to the Barges to be
constructed hereunder and that the provisions of said Shipping Act of 1916, as
amended, imposing restrictions upon transfers to persons not citizens of the
United States and any proclamations, orders or regulations thereunder, are
inapplicable.
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ARTICLE 16 - MERGER, INTEGRATION AND ALTERATION OF TERMS AND CONDITIONS
All negotiations are deemed to be merged, incorporated and integrated into this
Agreement.
No terms and conditions other than the terms and conditions set forth in this
Agreement shall be binding upon Halter Marine or Trinity unless agreed to in
writing by an authorized officer of the party against whom the term or
condition is to be enforced.
No waiver, alteration, addition or modification of any of the provisions of
this Agreement (i) shall be effective against Halter Marine unless made in
writing and signed by a duly authorized representative of Halter Marine, or
(ii) shall be effective against Trinity unless made in writing and signed by a
duly authorized representative of Trinity.
Requests for changes to the terms and conditions set forth in this Agreement
and any other notice that the parties may give to each other for any reason
shall be made in writing at the address set forth in this Agreement.
ARTICLE 17 - APPLICABLE LAWS
This Agreement shall be governed by, subject to, and construed in accordance
with the laws of the State of Texas.
ARTICLE 18 - SEVERABILITY
The clauses of this Agreement are severable. In the event that a court of
competent jurisdiction declares any clause or clauses of the document to be
null and void for any reason, the remaining clauses shall continue in full
force and effect.
ARTICLE 19 - ASSIGNMENT
Any assignment by Trinity of any of its rights or obligations under this
Agreement shall not be binding on Halter Marine unless consented to in writing
by Halter Marine's, which consent shall not be unreasonably withheld. Any
assignment by Halter Marine of any of its rights or obligations under this
Agreement shall not be binding on Trinity unless consented to in writing by
Trinity, which consent shall not be unreasonably withheld.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year written above.
Trinity Marine Products, Inc.
By:
------------------------------------
Name:
----------------------------------
Halter Marine, Inc.
By:
------------------------------------
Name:
----------------------------------
9
<PAGE> 10
EXHIBIT 1
BARGES AND SPECIFICATIONS
[TO COME]
<PAGE> 11
EXHIBIT 2
PRICES
[TO COME]
<PAGE> 12
EXHIBIT 3
DELIVERY SCHEDULE
[TO COME]
<PAGE> 13
EXHIBIT 4
ACCEPTANCE CERTIFICATE
The undersigned, being a duly authorized inspector and representative of
Trinity, hereby certifies that the barge(s) or barge component(s) (the
"Barge(s)") built by Halter Marine set forth below has been inspected,
approved, delivered, received and accepted on behalf of Trinity or its assigns
and found to be in apparent good order and condition and in apparent
conformance with applicable specifications and drawings. The execution of this
Certificate of Acceptance shall not relieve Halter Marine of its duty or
decrease its responsibility to produce and deliver the Barge(s) in accordance
with the terms, including warranties, contained in the Inland Barge Agreement
dated ________ ___, 1996 executed by and between Trinity and Halter Marine.
Date Barge Description Quantity Numbers
- ---- ----------------- -------- -------
IN WITNESS WHEREOF, Trinity has caused this instrument to be signed at Halter
Marine's plant by its duly authorized inspector and representative.
-------------------------------------
<PAGE> 1
EXHIBIT 10.10
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and JOHN DANE III (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
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<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
John Dane III
738 W. Beach
Pass Christian, MS 39571
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
Vincent R. Almerico
Senior Vice President
EXECUTIVE
By:
-----------------------------------
John Dane III
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<PAGE> 1
EXHIBIT 10.11
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and VINCENT R. ALMERICO (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two- thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
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<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Vincent R. Almerico
5699 Diamonhead Dr. E.
Diamonhead, Mississippi 39525
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Vincent R. Almerico
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<PAGE> 1
EXHIBIT 10.12
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and HARVEY B. WALPERT (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
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<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Harvey B. Walpert
463 Topaz Street
New Orleans, Louisiana 70124
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Harvey B. Walpert
9
<PAGE> 1
EXHIBIT 10.13
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and WAYNE BOURGEOIS (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
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<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Wayne Bourgeois
19386 Windward Cove
Gulfport, Mississippi 39503
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Wayne Bourgeois
9
<PAGE> 1
EXHIBIT 10.14
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and SIDNEY C. MIZELL (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
6
<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
7
<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Sidney C. Mizell
9328 Mohonua Pl.
Diamonhead, Mississippi 39525
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Sidney C. Mizell
9
<PAGE> 1
EXHIBIT 10.15
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and ANIL RAJ (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
4
<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
5
<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
6
<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
7
<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Anil Raj
407 Christian Lane
Slidell, Louisiana 70458
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Anil Raj
9
<PAGE> 1
EXHIBIT 10.16
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this "Agreement"), is dated as of
______________ ____, 1996, between Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and KEITH L. VOIGTS (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and Trinity Industries, Inc. ("Trinity")
heretofore have been parties to that certain Executive Severance Agreement
dated as of June 8, 1989 (the "Old Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is selling 3,000,000 shares of its capital stock pursuant to a
registered public offering (the "Offering") and (ii) the Executive and Trinity
are terminating the Old Agreement;
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company (as
hereinafter defined);
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances described
herein following a Change in Control of the Company.
1. TERM. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid as of such time, upon
the earliest of
(i) ten years from the date hereof if a Change in Control of
the Company has not occurred within such ten-year period;
(ii) the termination of the Executive's employment with the
Company based on death, Disability (as defined in Section 3(b) hereof),
Retirement (as defined in Section 3(c) hereof) or Cause (as defined in
Section 3(d) hereof) or by the Executive other than for Good Reason (as
defined in Section 3(e) hereof); and
(iii) two years from the date of a Change in Control of the
Company if the Executive has not terminated his employment for Good
Reason as of such time.
<PAGE> 2
2. CHANGE IN CONTROL. No compensation shall be payable under this
Agreement unless and until (a) there shall have been a Change in Control of the
Company while the Executive is still an employee of the Company and (b) the
Executive's employment by the Company thereafter shall have been terminated in
accordance with Section 3. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if:
(i) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), of thirty percent (30%) or more
of the Company's outstanding Common Stock; provided, however, that no
Change in Control shall occur as a result of Trinity's beneficial
ownership of the Company's outstanding Common Stock unless and until
Trinity first ceases to be the beneficial owner of 15% or more of the
Company's outstanding Common Stock and thereafter becomes the beneficial
owner of 30% or more of the Company's outstanding Common Stock; or
(iii) during any period of two consecutive fiscal years of the
Company, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 hereof upon the subsequent termination of the Executive's
employment with the Company by the Executive or by the Company unless such
termination is as a result of:
(i) the Executive's death;
(ii) the Executive's Disability (as defined in Section (3)(b)
below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below);
(iv) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or
(v) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section 3(e) below).
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<PAGE> 3
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for one year and within thirty
days after written Notice of Termination (as hereinafter defined) is thereafter
given by the Company, the Executive shall not have returned to the full-time
performance of the Executive's duties, the Company may terminate this Agreement
for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement
shall mean termination by the Company or the Executive of the Executive's
employment based on the Executive having reached age 70 or such other age as
shall have been fixed in any arrangement established with the Executive's
consent with respect to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness and other than in respect of any duties
inconsistent with, or more burdensome than, the Executive's duties with
the Company immediately prior to a Change in Control of the Company);
(ii) the willful engagement by the Executive in continued
misconduct which is materially injurious to the Company after having
been advised in writing of the particular misconduct deemed by the
Company to be materially injurious to the Company and instructed in such
writing to cease any further misconduct of a similar nature;
(iii) misappropriation or embezzlement from the Company or any
other act or acts of dishonesty by the Executive constituting a felony
that results, or is intended to result, directly or indirectly, in gain
to or personal enrichment of the Executive at the Company's expense; or
(iv) the conviction of the Executive of a felony involving the
moral turpitude of the Executive.
For purposes of this Section 3(d), no act or failure to act on the part of the
Executive shall be considered "willful" unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that the action
or omission of the Executive was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with
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<PAGE> 4
the Executive's counsel, to be heard before the Board), finding that the
Executive was guilty of conduct set forth in this Section 3(d) and specifying
the particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's
employment for Good Reason at any time after a Change in Control of the
Company. For purposes of this Agreement "Good Reason" shall mean any of the
following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal
of the Executive from or any failure to reelect the Executive to any of
such positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of the
Executive's death or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary
as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure
to increase (within 12 months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of the
Company in an amount which at least equals, on a percentage basis, the
average percentage increase in base salary for all officers of the
Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the
Company's pension plan, profit sharing plan, supplemental retirement
plan, supplemental profit sharing plan, group life insurance plan, and
medical, dental, accident and disability plans) in which the Executive
is participating at the time of a Change in Control of the Company (or
any other plans providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans") or the taking of
any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any
such Benefit Plan or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in Control of
the Company;
(iv) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the
Company's 1996 Stock Option and Incentive Plan) in which the Executive
is participating at the time of the Change in Control of the Company (or
any other plans or arrangements providing him with substantially similar
benefits) (hereinafter referred to as "Incentive Plan") or the taking of
any action by the Company which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan, expressed as a percentage of his
base salary, in any fiscal year as compared to the immediately preceding
fiscal year;
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<PAGE> 5
(v) any failure by the Company to continue in effect any plan
or arrangement to receive securities of the Company (including, without
limitation, the Company's 1996 Stock Option and Incentive Plan, and any
other plan or arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which the
Executive is participating at the time of the Change in Control of the
Company (or plans or arrangements providing him with substantially
similar benefits) (hereinafter referred to as "Securities Plans") or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
to a location outside of Gulfport, Mississippi, or the Executive's
relocation to any place other than the location at which the Executive
performed the Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the time of a Change in Control of the
Company;
(vii) any failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled at
the time of a Change in Control of the Company;
(viii) any material breach by the Company of any provision of
this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f) below, and for purposes of this Agreement,
no such purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if
this Agreement is terminated by the Company for Disability, thirty days after
Notice of Termination is given to the Executive (provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period) or (b) if the Executive's employment
is terminated by the Company for any other reason, the date on which a Notice
of Termination is given.
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<PAGE> 6
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. The
Company may terminate the Executive's employment at any time; however, if the
Company shall terminate the Executive's employment (following a Change in
Control) other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive
shall terminate his employment (following a Change in Control) for Good Reason,
then as severance pay and as the Executive's sole remedy for such termination:
(i) the Company shall pay to the Executive in a lump sum, in
cash, on or before the fifth day following the Date of Termination, an
amount equal to three hundred percent (300%) of the aggregate base
salary and bonuses paid by the Company and any of its subsidiaries to
the Executive during the twelve months immediately preceding the Notice
of Termination or, if higher, the twelve months immediately preceding
the Change in Control of the Company;
(ii) the Company shall provide, at the Company's sole expense,
all benefits to which the Executive and anyone entitled to claim under
or through the Executive would be entitled under the Company's group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, or other present or future similar
group employee benefit plan or program of the Company for which key
executives are eligible, to the same extent as if the Executive had
continued in the employment of the Company during the thirty-six (36)
months period following the Date of Termination;
(iii) the Company shall pay to the Executive and, if applicable,
to his beneficiaries a supplemental benefit equal to the excess of (A)
the benefit that the Executive would have been paid under the provisions
of the Company's Pension Plan in effect immediately prior to the Change
in Control had the Executive continued to be employed for an additional
thirty-six (36) months following the Date of Termination over (B) the
benefit actually payable under such plan. This supplemental benefit
shall be paid in a series of cash payments coinciding with payments of
benefits under such plan.
The foregoing payments shall be subject to withholding of federal, state and
local income, FICA and similar taxes, if required by law. If all or any
portion of any payment to which the Executive is or becomes entitled under this
Section 4 would constitute an "excess parachute payment" (as defined in Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code")), subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive as additional amount (the "Gross-Up
Payment") at the time of each such payment so that the net amount retained by
the Executive (after reduction for the Excise Tax applicable thereto and the
portion of any federal, state and local income, FICA and similar taxes
applicable to the Excise Tax) shall be equal to the amount that would otherwise
be payable to the Executive if there was no Excise Tax thereon. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rates of taxation
in any state and locality that is entitled to tax
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<PAGE> 7
such amounts, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTS.
(a) The Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any other agreement, contract, plan
or arrangement with the Company.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company by written agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Any failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such devisee, legatee or other designee, to
executor or administrator of the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
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<PAGE> 8
If to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: President
If to the Executive:
Keith L. Voigts
[108 SWEETBAY]
Pass Christian, MS [39571]
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Mississippi.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees
and expenses which the Executive may incur as a result of the Company's
contesting the validity, enforceability or the Executive's interpretation of,
or determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By:
-----------------------------------
John Dane III
President and Chief Executive
Officer
EXECUTIVE
By:
-----------------------------------
Keith L. Voigts
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<PAGE> 1
EXHIBIT 10.17
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and John Dane III ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
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<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
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<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
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<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
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<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:________________________________
Name: Vincent R. Almerico
Title: Senior Vice President
AGREED TO AND ACCEPTED:
INDEMNITEE
___________________________________
Name: John Dane, III
-7-
<PAGE> 1
EXHIBIT 10.18
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Vincent R. Almerico ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:________________________________
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
___________________________________
Name: Vincent R. Almerico
-7-
<PAGE> 1
EXHIBIT 10.19
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Harvey B. Walpert ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:________________________________
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
___________________________________
Name: Harvey B. Walpert
-7-
<PAGE> 1
EXHIBIT 10.20
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Wayne Bourgeois ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
----------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- --------------------------------
Name: Wayne Bourgeois
-7-
<PAGE> 1
EXHIBIT 10.21
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Sidney C. Mizell ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
---------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- ---------------------------------
Name: Sidney C. Mizell
-7-
<PAGE> 1
EXHIBIT 10.22
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Anil Raj ("Indemnitee"), a director
and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
--------------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- ---------------------------------
Name: Anil Raj
-7-
<PAGE> 1
EXHIBIT 10.23
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Keith L. Voigts ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
---------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- ---------------------------------------
Name: Keith L. Voigts
-7-
<PAGE> 1
EXHIBIT 10.24
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and F. Dean Phelps ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of _______________, 1996.
HALTER MARINE GROUP, INC.
By:
---------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- -------------------------------------
Name: F. Dean Phelps
-7-
<PAGE> 1
EXHIBIT 10.25
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Kenneth W. Lewis ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or
penalties actually or reasonably incurred by him in the investigation, defense,
appeal, or settlement of any civil or criminal action, suit, or proceeding, but
not, however, for the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion of such expenses, judgments, fines, or
penalties to which Indemnitee is entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
----------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- -----------------------------------------------
Name: Kenneth W. Lewis
-7-
<PAGE> 1
EXHIBIT 10.26
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Rick S. Rees ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
---------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- --------------------------------
Name: Rick S. Rees
-7-
<PAGE> 1
EXHIBIT 10.27
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and John T. Sanford ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
------------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- ----------------------------------
Name: John T. Sanford
-7-
<PAGE> 1
EXHIBIT 10.28
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and Timothy R. Wallace ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
---------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- --------------------------------
Name: Timothy R. Wallace
-7-
<PAGE> 1
EXHIBIT 10.29
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______
day of _________________, 1996, by and between Halter Marine Group, Inc., a
Delaware corporation (the "Company"), and W. Ray Wallace ("Indemnitee"), a
director and/or officer of the Company.
WHEREAS, it is essential to the Company to attract and retain the
services of highly qualified individuals to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, the Bylaws of the Company provide for the indemnification of
the officers, directors, agents, and employees of the Company to the fullest
extent authorized by the General Corporation Law of the State of Delaware;
WHEREAS, such Bylaws and state statute specifically provide that they
are not exclusive and thereby contemplate that contracts may be entered into
between the Company and its directors and/or officers with respect to
indemnification of such persons;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and of Indemnitee's
reliance on the aforesaid Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Bylaws will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws), and in order to induce Indemnitee to continue to
provide services to the Company as a director or officer thereof, the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors and officers liability insurance policies;
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and Indemnitee's
service to the Company, after the date hereof, the parties hereto agree as
follows:
1. Indemnification
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or
in the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with such action, suit, or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee, or agent of the Company or any subsidiary of the
Company, is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership,
-2-
<PAGE> 3
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue, or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for expenses and the payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any action, suit, or proceeding referred to in Subsections (a) and
(b) of this Section 1 or in defense of any claim, issue, or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys' fees)
and any costs of settlement actually and reasonably incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred by
Indemnitee in defending a civil or criminal action, suit, or proceeding
referenced in Sections 1(a) and 1(b) hereof shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding at the
written request of Indemnitee, provided that Indemnitee undertakes to repay
such amount to the extent that it is ultimately determined that Indemnitee is
not entitled to indemnification.
-3-
<PAGE> 4
(b) Indemnification Procedure. Any indemnification and
advancement of expenses provided for in Section 1 and this Section 2 shall be
made no later than 30 days after receipt of the written request of Indemnitee,
and Indemnitee shall be deemed to have met the applicable standard of conduct
required for indemnification, unless a determination is made within said 30-day
period by (i) the Board of Directors by a majority vote of a quorum consisting
of directors who are not parties to such action, suit, or proceeding, (ii) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the Company's stockholders, that the Indemnitee has not met
the applicable standard of conduct set forth in Sections 1(a) or 1(b) hereof,
as the case may be. Indemnitee may contest a determination that Indemnitee has
not met the applicable standard of conduct for indemnification by petitioning a
court to make an independent determination respecting the right of
indemnification, in accordance with the terms of Section 4 hereof.
3. Enforcement of Indemnification Rights. The right to
indemnification or advancement of expenses as provided by this Agreement shall
be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or stockholders)
to have made a determination prior to the commencement of such action that
indemnification or advancement of expenses is proper under the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advancement of expenses, in whole or in part, in
any civil or criminal action, suit, or proceeding shall also be indemnified by
the Company.
4. Additional Indemnification Rights; Non-Exclusivity.
-4-
<PAGE> 5
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Bylaws, or by statute. In the
event of any changes after the date of this Agreement in any applicable law,
statute, or rule which expand the right of a Delaware corporation to indemnify
its officers or directors, it is the intent of the parties to this Agreement
that Indemnitee shall enjoy, pursuant to this Agreement, the greater benefits
afforded by such change or changes. In the event of any changes in any
applicable law, statute, or rule which narrow the right of a Delaware
corporation to indemnify its officers or directors, such changes, to the extent
not otherwise required by such law, statute, or rule to be applied to this
Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
(b) Non-exclusivity. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, the Bylaws,
any agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually or reasonably
incurred by him in the investigation, defense, appeal, or settlement of any
civil or criminal action, suit, or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines, or penalties to which Indemnitee is
entitled.
6. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors and officers
-5-
<PAGE> 6
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
7. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
8. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original.
9. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Amendment and Termination. No amendment, modification,
termination, or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
11. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives, and assigns.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
13. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which
-6-
<PAGE> 7
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to Halter Marine Group, Inc., 13085 Industrial
Seaway, Gulfport, Mississippi 39503, Attention: President (or such other
address as the Company shall designate in writing to Indemnitee). Notice shall
be deemed received three business days after the date postmarked or on the date
received, if sent by certified or registered mail, properly addressed. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the ___ day of ___ ____________, 1996.
HALTER MARINE GROUP, INC.
By:
------------------------------------------
Name: John Dane, III
Title: President
AGREED TO AND ACCEPTED:
INDEMNITEE
- -----------------------------------
Name: W. Ray Wallace
-7-
<PAGE> 1
EXHIBIT 10.30
INDEMNITY AND SECURITY AGREEMENT
THIS INDEMNITY AND SECURITY AGREEMENT (this "Agreement") is
entered into as of the _____ day of __________, 1996, by and among Trinity
Industries, Inc. (the "Indemnitee") and Halter Marine Group, Inc., Halter
Marine, Inc., a Nevada corporation, Equitable Shipyards, Inc., Gretna Machine
and Ironworks, Inc., Gulf Coast Fabrication, Inc., Halter Marine, Inc., a
Louisiana corporation, Halter Marine Services, Inc., Halter Gulf Repair, Inc.,
Halter Marine Gulfport, Inc., Halter Marine Panama City, Inc., Halter Marine
Pascagoula, Inc., Trinity Yachts, Inc. and Washington Marine Fabricators, Inc.
(each being referred to individually herein as an "Indemnitor").
WITNESSETH
WHEREAS, the Indemnitee has guaranteed (the "Indemnitee
Guarantees") certain obligations of certain Indemnitors with respect to bid,
performance or other obligations of such Indemnitors with respect to contracts
for the construction or repair of inland or ocean-going vessels or components
thereof or accessories thereto ("Vessel Contracts");
WHEREAS, the Indemnitee has certain liabilities (the
"Indemnitee Bond Obligations" and, collectively with the Indemnitee Guarantees,
the "Indemnitee Obligations"), contingent or otherwise, relating to bonds (or
letters of credit or other obligations of sureties or other third parties in
lieu of bonds) in respect of bid, performance or other obligations of certain
Indemnitors with respect to Vessel Contracts;
WHEREAS, the Indemnitees heretofore have been direct or
indirect wholly owned subsidiaries of the Indemnitor;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Indemnitee is permitting Halter Marine Group, Inc. to sell three
million (3,000,000) shares of its common stock pursuant to a registered public
offering (the "Offering");
WHEREAS, it is a condition to the Indemnitee's willingness to
permit the Offering to occur that each of the Indemnitors shall have executed
and delivered this Agreement;
NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE> 2
1. Indemnity. The Indemnitors jointly and severally
shall indemnify the Indemnitee against any and all liability, loss, costs,
damages, fees of attorneys and other expenses of any nature which the
Indemnitee may sustain or incur by reason of any Indemnitee Obligations.
2. Deposit of Funds. The Indemnitors jointly and
severally agree that, as soon as any liability is asserted by any third party
against the Indemnitee with respect to any Indemnitee Obligation, the
Indemnitors will, immediately upon demand and whether or not the Indemnitee
shall have made any payment therefor, deposit with the Indemnitee a sum of
money equal to the amount of the Indemnitee Obligation being asserted against
the Indemnitee, as security on such Indemnitee Obligation. Such funds shall be
available, in the discretion of the Indemnitee, as collateral security with
respect to any Indemnitee Obligations, and such funds may be used by the
Indemnitee in payment or settlement of any liability, loss or expense for which
any Indemnitor is obligated to indemnify the Indemnitee under the terms of this
Agreement. The Indemnitee shall have no obligation to invest, or to pay to
any Indemnitor any earnings from, any portion of such funds.
3. Grant of Security Interest. Each Indemnitor hereby
assigns and grants to the Indemnitee a security interest in each of the
following (whether existing as of the date hereof or hereafter acquired or
arising) (collectively, the "Collateral"), to secure all obligations of each
Indemnitor to which the Indemnitee Obligations relate and to secure all
obligations of the Indemnitors under this Agreement:
(a) all Vessel Contracts and all other contracts or
agreements which relate to Vessel Contracts or the subject matter of Vessel
Contracts to which such Indemnitee Obligation relates (including but not
limited to subcontracts);
(b) all amounts that at any time may be paid or payable
to any Indemnitor pursuant to any Vessel Contracts or any other contracts to
which such Indemnitee Obligation relates or agreements which relate to such
Vessel Contracts;
(c) all machinery, plant, equipment, tools and materials
which shall be upon the site or sites of any work with respect to any Vessel
Contracts to which such Indemnitee Obligation relates or elsewhere for the
purposes of such Vessel Contracts, including but not limited to all materials
ordered for such Vessel Contracts and all items of property that constitute the
subject matter of such Vessel Contracts;
(d) all actions, causes of action, claims and demands
whatsoever which any Indemnitor may have in any way arising out of or relating
to any Vessel Contract to which such Indemnitee Obligation relates or any
Indemnitee Obligation; and
(e) all proceeds of any of the foregoing (other than
proceeds that represent funds received under Vessel Contracts, which proceeds
shall be dealt with as described in Section 4 of this Agreement).
2
<PAGE> 3
4. Funds Under Vessel Contracts. The Indemnitors hereby
agree and expressly declare that all funds due or to become due under any
Vessel Contract to which an Indemnitee Obligation relates are trust funds,
whether in the possession of an Indemnitor or another, for the benefit and
payment of all persons to whom an Indemnitor incurs obligations in the
performance of such Vessel Contract. If the Indemnitee discharges any such
obligation, the Indemnitee shall be entitled to assert the claim of such person
to the trust funds. Any Indemnitor shall, upon demand of the Indemnitee and in
implementation of the trust or trusts hereby created, open an account or
accounts with a bank or similar depository designated by the such Indemnitor
and approved by the Indemnitee, which account or accounts shall be designated
as a trust account or accounts for the deposit of such trust funds, and shall
deposit therein all monies received pursuant to said Vessel Contract or Vessel
Contracts. Withdrawals from such account shall be by check or similar
instrument signed by such Indemnitor and countersigned by a representative of
the Indemnitee. Said trust or trusts shall terminate on the fulfillment by the
Indemnitees of all obligations for which the trust or trusts are hereby created
or upon the expiration of twenty (20) years from the date of this Agreement,
whichever occurs first.
5. Financing Statements. To the extent permitted by
law, a photographic or other reproduction of this Agreement shall be sufficient
as a financing statement under the Uniform Commercial Code. Each Indemnitor
agrees that it will, from time to time as requested by the Indemnitee, execute
and deliver to the Indemnitee such financing statements and similar documents
as shall be requested by the Indemnitee in order to perfect the security
interest of the Indemnitee granted hereunder under the Uniform Commercial Code
or any other applicable statute or regulation.
6. Access to Facilities and Equipment. If any liability
is asserted by any third party against the Indemnitee in respect of any
Indemnitee Obligation, then the Indemnitee (together with its agents,
subcontractors and representatives) shall have full access to the premises, and
full use of the equipment and materials, of any Indemnitor that has obligations
under the Vessel Contract to which such Indemnitee Obligation relates, in order
that the Indemnitee may, if it so elects in its sole discretion, complete
performance under such Vessel Contract, if it so elects in its sole discretion.
Such access and use shall be provided without any charge or expense to the
Indemnitee.
7. Rights and Remedies. Without limiting any other
provision of this Agreement, the Indemnitee may exercise any one or more of
the rights and remedies with respect to the Collateral as are provided by
applicable law.
8. No Transfer of Collateral. No Indemnitor shall,
without the prior written consent of the Indemnitee, assign or otherwise
transfer any of its interest in any Collateral, except that (i) any Collateral
which constitutes the subject matter of a Vessel Contract may be sold to the
buyer under such Vessel Contract as contemplated by such Vessel Contract and
(ii) any Collateral which constitutes equipment may be disposed of in the
ordinary course of business in connection with normal replacement of equipment.
3
<PAGE> 4
9. Waiver. No delay of the Indemnitee in exercising any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude other or further exercise
thereof or the exercise of any other power or right. No waiver by the
Indemnitee of any right hereunder or of any default by any Indemnitor shall be
binding the Indemnitee unless in writing, and no failure by the Indemnitee to
exercise any power or right hereunder or waiver of any default by any
Indemnitor shall operate as a waiver of any other or further exercise of such
right or power or of any further default. Each right, power and remedy of the
Indemnitee as provided for herein, which shall now or hereafter exist at law or
in equity or by statute or otherwise, shall be cumulative and concurrent and
shall be in addition to every other such right, power or remedy. The exercise
or beginning of the exercise by the Indemnitee of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later
exercise by the Indemnitee of any or all other such rights, powers or remedies.
10. Amendments. No provision hereof shall be modified or
limited except by a written agreement expressly referring hereto and to the
provisions so modified or limited and signed by the Indemnitors and the
Indemnitee. The provisions of the Agreement shall not be modified or limited
by course of conduct or usage of trade.
11. Miscellaneous. This Agreement has been delivered in
the State of Texas and shall be construed in accordance with the substantive
laws of that State, without giving effect of principles of conflict of laws.
Wherever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement. The invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
TRINITY INDUSTRIES, INC.
By:
-------------------------------------
F. Dean Phelps,
Vice President
4
<PAGE> 5
HALTER MARINE GROUP, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EQUITABLE SHIPYARDS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
GULF COAST FABRICATION, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE, INC., a Nevada corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HALTER MARINE SERVICES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
5
<PAGE> 6
HALTER GULF REPAIR, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HALTER MARINE GULFPORT, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HALTER MARINE PANAMA CITY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HALTER MARINE PASCAGOULA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
TRINITY YACHTS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
6
<PAGE> 7
WASHINGTON MARINE FABRICATORS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
HALTER MARINE, INC., a Louisiana corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
GRETNA MACHINE AND IRONWORKS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
7
<PAGE> 1
EXHIBIT 10.31
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered
into as of the 20th day of September, 1996, by and between Trinity Industries
Inc., a Delaware corporation ("Trinity"), and Halter Marine Group, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Company has filed with the Securities and
Exchange Commission a registration statement on Form S-1 (the "Registration
Statement") in order to effect the registration of the initial public offering
(the "Offering") of 3,450,000 shares of Common Stock under the Securities Act
of 1933; and
WHEREAS, in connection with and pursuant to the Offering, the
Company and Trinity will consummate certain consolidation transactions
including, among other things, (i) the transfer to the Company of the stock of
each subsidiary of Trinity that has assets and liabilities related to the
Company Businesses (collectively, the "Transfer of Subsidiary Stock"), (ii) the
transfer to the Company of certain assets and liabilities of Trinity related to
the Company Businesses (the "Transfer of Divisional Assets") and (iii) the
assumption by the Company of certain indebtedness of Trinity associated with
the Company Businesses; and
WHEREAS, in consideration for the contributions of Trinity to
the Company including, among other things, the Transfer of Subsidiary Stock and
the Transfer of Divisional Assets, the Company will issue to Trinity 15,000,000
shares of the Company's common stock, par value $0.01 per share.
NOW THEREFORE, in consideration of the mutual undertakings
described herein, the parties agree as follows:
1. Transfer of Subsidiary Stock. Trinity hereby agrees
to transfer to Halter Marine, Inc., a Nevada corporation all of the issued and
outstanding stock of the following wholly owned subsidiaries of Trinity:
(a) Equitable Shipyards, Inc.;
(b) Gretna Machine & Ironworks, Inc.;
(c) Gulf Coast Fabrication, Inc.;
(d) Halter Marine, Inc., a Louisiana corporation;
(e) Halter Marine Gulf Repair, Inc.;
(f) Halter Marine Gulfport, Inc.;
(g) Halter Marine Panama City, Inc.;
(h) Halter Marine Pascagoula, Inc.;
(i) Halter Marine Services, Inc.;
(j) Trinity Yachts, Inc.;
(k) Washington Marine Fabricators, Inc.; and
(l) Offshore Marine Indemnity Company.
2. Transfer of Stock of Halter Marine, Inc. Trinity
hereby agrees to transfer to the Company all of the issued and outstanding
stock of Halter Marine, Inc., a Nevada corporation.
<PAGE> 2
3. Transfer of Divisional Assets. Trinity hereby agrees
to transfer to the Company, following the Transfer of Subsidiary Stock
described in Section 1 hereof, the assets and liabilities of Trinity
associated with the Company Businesses (the "Divisional Assets"), as described
in the Registration Statement. Trinity further agrees that the transfer of
such assets will be made directly to a wholly owned subsidiary of the Company,
at the direction of the Company, which subsidiary is named in the Direction to
Transfer Assets, executed by the Company and dated as of the date hereof.
4. Assumption of Indebtedness. Trinity and the Company
hereby agree to enter into an Assumption Agreement whereby the Company will
assume certain indebtedness of Trinity, as more fully described in the
Assumption Agreement.
5. Issuance of Stock. In consideration of the transfers
of stock and assets and assumption of liabilities as described in Sections 1
through 3 hereof, the Company hereby agrees to issue to Trinity 15,000,000
shares of the Company's common stock, par value $0.01 per share.
6. Governing Law. Unless otherwise specified therein,
this Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware and the United States of America.
7. Captions. The headings and captions appearing in
this Agreement have been included solely for convenience and shall not be
considered in construing this Agreement.
8. Definitions. Terms used herein and not defined
herein, but which are defined in the Registration Statement, shall have the
meanings herein assigned to them in the Registration Statement.
9. Amendments. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the parties hereto.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
HALTER MARINE GROUP, INC.
By:/s/ JOHN DANE III
----------------------------------------
John Dane III
President and Chief Executive Officer
TRINITY INDUSTRIES, INC.
By:/s/ F. DEAN PHELPS
----------------------------------------
F. Dean Phelps
Vice President
<PAGE> 1
EXHIBIT 10.32
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Agreement") is entered into
as of the 20th day of September, 1996, between Trinity Industries, Inc.
("Trinity") and Halter Marine Group, Inc. ("Halter").
For good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assumption of Liabilities
Pursuant to the provisions of the Exchange Agreement of even
date herewith between Trinity and Halter (the "Exchange Agreement"), and as
part of the Consolidation Transactions (as defined in the Exchange Agreement),
Halter hereby assumes the Specified Trinity Liabilities. As used in this
Agreement, "Specified Trinity Liabilities" means the liabilities for borrowed
money owed by Trinity to the two financial instructions listed on Exhibit A in
the aggregate amount of $50,000,000, which amount will be adjusted to take into
account the actual amount of indebtedness of Trinity associated with the
Company Business (as defined in Halter's Registration Statement on Form S-1,
filed with the U.S. Securities and Exchange Commission, Registration No.
333-6967 (the "Registration Statement")) existing as of the date of the closing
of Halter's public offering of common stock which is being effected pursuant to
the Registration Statement. The aggregate amount of indebtedness being
assumed, as so adjusted, will be set forth in a certificate to be executed by
Trinity and Halter as soon as practicable following the closing date of such
offering (the "Certificate"). The aggregate Specified Trinity Liabilities
shall be allocated as Trinity shall elect between indebtedness to each of the
financial institutions listed on Exhibit A, and such allocation shall be set
forth in the Certificate.
2. Governing Law.
This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Delaware, without giving
effect to principles of conflict of laws.
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TRINITY INDUSTRIES, INC.
By: /s/ F. DEAN PHELPS
-----------------------------------
F. Dean Phelps
Vice President
HALTER MARINE GROUP, INC.
By: /s/ JOHN DANE III
------------------------------------
John Dane III
President and Chief Executive Officer
<PAGE> 3
EXHIBIT A
The Bank of Tokyo, Ltd.
Mitsubishi, Ltd.
<PAGE> 1
EXHIBIT 21
HALTER MARINE GROUP, INC.
Listing of Subsidiaries of the Registrant
The Registrant has no parent.
The subsidiaries of the Registrant are:
<TABLE>
<CAPTION>
Percentage of
voting securities
Organized owned, directly or
under the indirectly, by the
Name of Subsidiary laws of Registrant
- ------------------------------------ ---------- -----------------
<S> <C> <C>
Equitable Shipyards, Inc. Louisiana 100%
Gretna Machine and Iron Works, Inc. Louisiana 100%
Gulf Coast Fabrication, Inc. Mississippi 100%
Halter Marine, Inc. Louisiana 100%
Halter Marine, Inc. Nevada 100%
Halter Marine Services, Inc. Mississippi 100%
Halter Marine Gulf Repair, Inc. Delaware 100%
Halter Marine Gulfport, Inc. Nevada 100%
Halter Marine Panama City, Inc. Delaware 100%
Halter Marine Pascagoula, Inc. Delaware 100%
Offshore Marine Indemnity Company Vermont 100%
Trinity Yachts, Inc. Delaware 100%
Washington Marine Fabricators, Inc. Washington 100%
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated September 20, 1996, in the Registration Statement
(Form S-1) and related Prospectus of Halter Marine Group, Inc. for the
registration of 3,450,000 shares of its common stock.
ERNST & YOUNG LLP
Dallas, Texas
September 20, 1996
<PAGE> 1
EXHIBIT 99.3
Draft 9/20/96
AGREEMENT
__________, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin &
Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Concurrently with the execution and delivery of this Agreement, Halter
Marine Group, Inc., a Delaware corporation (the "Company"), and the several
underwriters named in Schedule I hereto (the "Underwriters") are entering into
an Underwriting Agreement dated of even date herewith (the "Underwriting
Agreement"). Pursuant to the Underwriting Agreement, the Company has agreed,
among other things, (a) to issue and sell 3,000,000 shares of its Common Stock,
$.01 par value (the "Firm Shares"), to the several Underwriters and (b) to
issue and sell to the several Underwriters not more than an additional 450,000
shares of its Common Stock (the "Additional Shares"), if requested by the
Underwriters as provided in Section 2 of the Underwriting Agreement. The Firm
Shares and the Additional Shares are herein collectively called the Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively called the "Act"), a registration statement
on Form S-1 (Registration No. 333-6967) including a prospectus relating to the
Shares, which may be amended. The registration statement as amended at the
time when it becomes effective, including a registration statement (if any)
filed pursuant to Rule 462(b) under the Act increasing the size of the offering
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act, is hereinafter referred to as the Registration Statement; and the
prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the Prospectus.
<PAGE> 2
You have requested that Trinity Industries, Inc. ("Trinity") enter
into this Agreement, and Trinity is willing to do so for the purposes set forth
herein. It is understood and agreed that Trinity is entering into this
Agreement to induce the Underwriters to execute and deliver the Underwriting
Agreement and consummate the transactions contemplated thereby. Accordingly,
in consideration of the mutual promises and covenants contained herein, and
other good and valuable consideration, including the benefits to be received by
Trinity in connection with the transactions contemplated by the Underwriting
Agreement, the receipt and sufficiency of which are hereby acknowledged,
Trinity and the several Underwriters hereby agree as follows:
1. Representations and Warranties of Trinity. Trinity hereby
represents and warrants to each Underwriter that:
(a) Trinity has (i) reviewed the Registration Statement
and any amendments thereto and, to the knowledge of Trinity, such
documents do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii)
reviewed the Prospectus and any amendments or supplements thereto and,
to the knowledge of Trinity, such documents do not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this paragraph (a) do
not apply to statements or omissions in the Registration Statement or
the Prospectus (or any amendments or supplements to them) based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(b) Trinity has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(c) The execution, delivery and performance by Trinity of
this Agreement and the Separation and Related Agreements (as defined
in the Prospectus), compliance by Trinity with all the provisions
hereof and thereof and the consummation of the transactions
contemplated by the Underwriting Agreement will not require any
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
(except as such may be required under (i) the Act, (ii) the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or (iii) the
securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of Trinity or any of
its subsidiaries or any agreement, indenture or other instrument to
which it or any of its subsidiaries is a party or by which it or any
of its subsidiaries or their respective property is bound, or violate
or conflict with any laws, administrative regulations or rulings or
court decrees applicable to Trinity, any of its subsidiaries or their
respective property.
(d) The Consolidation Transactions (as defined in the
Prospectus) have been consummated at the time and in the manner
contemplated by the Prospectus, and Trinity
- 2 -
<PAGE> 3
has duly and validly transferred to the Company the assets and
operations of the Company Businesses as defined in, and as
contemplated by, the Prospectus.
2. Lock-Up Agreement. Trinity hereby agrees not to offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
Common Stock of the Company or any securities convertible into or exercisable
or exchangeable for such Common Stock or in any other manner transfer all or a
portion of the economic consequences associated with the ownership of any such
Common Stock, for a period of 180 days after the date of the Prospectus without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation. Notwithstanding the foregoing, during such 180-day period Trinity
may dispose of shares of Common Stock of the Company pursuant to the Separation
(as defined in the Prospectus).
3. Indemnification. (a) Trinity hereby agrees, and the Company
has agreed pursuant to the Underwriting Agreement, jointly and severally, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments caused by, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by, arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by, arise out of or are based upon any such untrue statement or omission
or alleged untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities and judgments purchased Shares, or
any person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment; and provided, further,
that the maximum aggregate liability of Trinity to the Underwriters under or in
connection with this Agreement (including, but not limited to, Sections 1 and 3
hereof) shall not exceed an amount equal to the aggregate public offering price
(based on the per share price to the public set forth in the table on the cover
page of the Prospectus) of the Firm Shares and, if and to the extent that the
Over- Allotment Option (as defined in the Prospectus) is exercised, the
Additional Shares, less (i) the aggregate underwriting discounts and
commissions with respect to the Firm Shares and, if and to the extent that the
Over-Allotment Option is exercised, the Additional Shares (as reflected in the
table on the cover page of the Prospectus) and (ii) the amount of any damages
that Trinity has paid by reason of any untrue statement or alleged untrue
statement or omission or alleged omission in the Registration Statement, the
Prospectus or any preliminary prospectus, which
- 3 -
<PAGE> 4
payment directly reduced the liability of the Underwriters under Section 11 of
the Act or otherwise.
Notwithstanding the foregoing, the Underwriters agree that, in the
case of any loss, claim, damage, liability or judgment for which they may claim
indemnification hereunder, they will first make demand for indemnification from
the Company pursuant to the Underwriting Agreement, and will not seek to
enforce any right or remedy granted under this Section 3(a) against Trinity,
unless and until (i) the Underwriters shall have delivered a written demand for
indemnification to the Company and (ii) the Company shall have failed to
observe or comply in all material respects with any of its obligations under
the Underwriting Agreement in respect of such loss, claim, damage, liability or
judgment for a period of at least 90 days following the delivery of such
written demand. In the event that Trinity fails to comply with its obligations
hereunder in respect of any such loss, claim, damage, liability or judgment,
the Underwriters further agree that (x) they will not commence any legal
proceeding against Trinity to recover such loss, claim, damage, liability or
judgment unless, prior to or concurrently therewith, they shall have commenced,
in the same legal proceeding, an action against the Company to recover the
same, (y) they will diligently prosecute any such legal proceeding against the
Company for as long as Trinity is a party thereto and (z) in the event that
judgments are entered in favor of the Underwriters against both the Company and
Trinity in any such legal proceeding, (1) during the period from the date of
such judgments until the earlier of a Subject Event (as defined below) or the
first anniversary of the date on which the judgment against the Company becomes
final and is not subject to appeal, the Underwriters will diligently take all
reasonably necessary steps to enforce and collect the judgment entered against
the Company, including abstracting the judgment, levying execution of the
judgment against the Company and pursuing other commercially reasonable steps
to collect the judgment from the Company, and will not seek to enforce or
collect the judgment entered against Trinity, and (2) after the expiration of
the period referred to in clause (1) of this sentence, the Underwriters may
seek to enforce and collect the judgment entered against Trinity, but will
continue to take commercially reasonable steps to enforce and collect the
judgment entered against the Company for so long as they are seeking to enforce
and collect the judgment entered against Trinity; provided that any amounts
collected by the Underwriters from the Company under the judgment entered
against the Company shall reduce the amount of the judgment entered against
Trinity. As used in this Agreement, "Subject Event" means any of the
following: (i) the Company or any significant subsidiary (as defined under the
Act except that the percentage reference in such definition shall be deemed to
be 20% rather than 10%) thereof ("significant subsidiary") files a petition for
relief under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an
order or decree for relief is entered against the Company or any significant
subsidiary in an involuntary case under the Bankruptcy Code and such order or
decree remains in effect for 60 consecutive days, (iii) the consent by the
Company or any significant subsidiary to the entry of an order or decree for
relief in an involuntary case under the Bankruptcy Code, (iv) the Company or
any significant subsidiary makes an assignment for the benefit of its
creditors, (v) any court orders or approves the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) for the Company or any significant subsidiary or any substantial
portion of its respective assets, or orders or approves the winding up or
liquidation of the Company, and such order or approval continues in effect for
60 consecutive days, (vi) the consent by the Company or any significant
subsidiary to the appointment of a receiver,
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<PAGE> 5
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) for the Company or any significant subsidiary or any substantial
portion of its respective assets, or (vii) the dissolution, liquidation or
winding up of the affairs of the Company.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against Trinity, such
Underwriter shall promptly notify Trinity in writing. Unless the Company is or
becomes a party to such action and has assumed the defense of such action on
behalf of the indemnified party (including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses)
within 90 days of its receipt of written notice of such action pursuant to
Section 7(b) of the Underwriting Agreement and unless the Company is continuing
to defend such action on behalf of the indemnified party (including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses), Trinity shall assume the defense of such
action on behalf of such indemnified party, including the employment of counsel
reasonably satisfactory to such indemnified party and the payment of all fees
and expenses. Any Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the Company and Trinity, (ii) the Company and Trinity shall have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Underwriter or such
controlling person and Trinity, and such Underwriter or such controlling person
shall have been advised in writing by such counsel that representation of such
indemnified party and Trinity by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to an actual or
reasonably anticipated material conflict of interest between them (in which
case Trinity shall not have the right to assume the defense of such action on
behalf of such Underwriter or such controlling person, it being understood,
however, that (x) Trinity and the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) for all such Underwriters and
controlling persons, which firm shall be designated in writing by Donaldson,
Lufkin & Jenrette Securities Corporation and, in the case of clause (iii)
above, such firm shall be reasonably satisfactory to Trinity and (y) all such
reasonable fees and expenses shall be reimbursed as they are incurred except in
the case of clause (iii) above, in which case the reimbursement obligation of
Trinity for such reasonable fees and expenses shall be subject to the
limitations set forth in the second paragraph of Section 3(a) hereof). Trinity
shall not be liable for any settlement of any such action effected without its
written consent but if settled with its written consent, Trinity agrees
(subject to the limitations set forth in Section 3(a) hereof) to indemnify and
hold harmless any Underwriter and any such controlling person from and against
any loss or liability by reason of such settlement. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as contemplated
by the second sentence of this
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<PAGE> 6
paragraph and such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request within 30 business days after receipt by
such indemnifying party of the aforesaid request, the indemnifying party agrees
that it shall pay interest on such unreimbursed amount from the date of such
request at the indemnifying party's borrowing rate for funds borrowed from its
principal lender plus 2% per annum. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless Trinity to the same extent as the foregoing indemnity from
Trinity to each Underwriter but only with reference to information relating to
such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus. In case any action shall be brought against
Trinity based on the Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to the
Company and Trinity (except that if the Company or Trinity shall have assumed
the defense thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such Underwriter),
and Trinity shall have the rights and duties given to the Underwriter, by
Section 3(b) hereof.
(d) If the indemnification provided for in this Section 3 and in
Section 7 of the Underwriting Agreement is unavailable to an indemnified party
in respect of any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party under this Agreement and the Underwriting
Agreement, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
Trinity on the one hand, and the Underwriters on the other hand, from the
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and Trinity on the one hand, and the
Underwriters on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and Trinity on the one hand, and the Underwriters on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company, Trinity, and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the
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<PAGE> 7
Company, Trinity or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
Trinity and the Underwriters hereby agree, and the Company has agreed
pursuant to the Underwriting Agreement, that it would not be just and equitable
if contribution pursuant to this Section 3(d) and Section 7(d) of the
Underwriting Agreement were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 3(d) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
The obligations of Trinity to contribute pursuant to this Section 3(d)
shall be subject to the limitation contained in Section 3(a) hereof with
respect to the maximum aggregate liability of Trinity under or in connection
with this Agreement. In addition, as and to the extent set forth in Section
3(a) hereof, the Underwriters agree not to seek to enforce any right of
contribution from Trinity in respect of any loss, claim, damage, liability or
judgment without first seeking contribution from the Company and to observe the
provisions set forth in such Section 3(a) with respect to the commencement and
conduct of any action against Trinity relating to such right of contribution
and the enforcement against Trinity of any judgment obtained in any such
action.
4. Effective Date of Agreement. This Agreement shall become
effective upon the later of (i) execution of this Agreement and (ii) when
notification of the effectiveness of the Registration Statement has been
released by the Commission.
5. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to Halter
Marine Group, Inc., 13085 Industrial Seaway Road, Gulfport, Mississippi 39503,
Attention: John Dane III, (b) if to Trinity, to Trinity Industries, Inc., 2525
Stemmons Freeway, Dallas, Texas 75207-2401, Attention: John T. Sanford, and
(c) if to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
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<PAGE> 8
The respective indemnities, contribution agreements, representations,
warranties and other statements of Trinity and the several Underwriters set
forth in this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Shares under the Underwriting
Agreement, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter or by or on behalf of the
Company or Trinity, the officers or directors of the Company or any controlling
person of the Company, (ii) acceptance of the Shares and payment for them under
the Underwriting Agreement and (iii) termination of the Underwriting Agreement.
If the Underwriting Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of the Underwriting Agreement,
Trinity hereby agrees, and the Company has agreed pursuant to the Underwriting
Agreement, jointly and severally, to reimburse the several Underwriters for all
out-of-pocket expenses (including the fees and disbursements of counsel)
reasonably incurred by them in connection with the proposed offering of the
Shares.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon Trinity, the Underwriters,
any controlling persons referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement.
The term "successors and assigns" shall not include a purchaser of any of the
Shares from any of the several Underwriters merely because of such purchase.
In the event there is any litigation between the parties hereto with
respect to this Agreement, the prevailing party in such litigation shall be
entitled to recover all attorneys' fees and costs incurred by such party in
connection with such litigation.
The Underwriters agree that, upon and only upon, full, final and
irrevocable payment and performance of all obligations of Trinity and the
Company to the Underwriters under Section 3 of this Agreement and Section 7 of
the Underwriting Agreement (the "Obligations"), Trinity shall have all rights
of subrogation against or from the Company that may exist under applicable law
with respect to any of the Obligations paid or performed by Trinity on behalf
of the Company. If any of the Obligations are paid or performed by Trinity on
behalf of the Company, and if all of the Obligations shall be finally and
irrevocably paid and performed in full, the Underwriters will, at Trinity's
reasonable request and at its expense, cooperate with Trinity in the transfer
by subrogation to Trinity (without recourse, representation or warranty) of any
rights of the Underwriters against the Company in respect of the Obligations
paid or performed by Trinity on behalf of the Company. TRINITY SHALL NOT HAVE,
AND HEREBY WAIVES, ANY RIGHTS OF SUBROGATION, REIMBURSEMENT, EXONERATION,
CONTRIBUTION OR INDEMNIFICATION AGAINST OR FROM THE COMPANY WITH RESPECT TO THE
OBLIGATIONS UNLESS AND UNTIL ALL THE OBLIGATIONS HAVE BEEN FINALLY AND
IRREVOCABLY PAID AND PERFORMED IN FULL.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York without giving effect to the choice of law
provisions thereof.
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<PAGE> 9
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between Trinity and the several Underwriters.
Very truly yours,
TRINITY INDUSTRIES, INC.
By
-----------------------------
Name:
-----------------------
Title:
-----------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
------------------------
Name:
-------------------
Title:
-----------------
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<PAGE> 10
SCHEDULE I
Number of Firm Shares
to be Purchased
Underwriters Under Underwriting Agreement
- ------------ ----------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Dean Witter Reynolds Inc.
Howard, Weil, Labouisse, Friedrichs
Incorporated
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
----------------------------
Total 3,000,000
