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As filed with the Securities and Exchange Commission on November 26,
1997
Registration No. 333-39379
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________
HALTER MARINE GROUP, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 13085 Industrial Seaway Road 75-2656828
(State or other jurisdiction of Gulfport, Mississippi 39503 (I.R.S. Employer
incorporation or organization) (601) 896-0029 Identification No.)
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(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
____________
John Dane III
President and Chief Executive Officer
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
(601) 896-0029
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________
Copies of all communications, including all communications to the agent for
service, should be sent to:
Maureen O'Connor Sullivan R. Jay Tabor
Vice President and General Counsel Baker & Botts, L.L.P.
Halter Marine Group, Inc. 2001 Ross Avenue
13085 Industrial Seaway Road Suite 700
Gulfport, Mississippi 39503 Dallas, Texas 75201
(601) 896-0029 (214) 953-6500
Approximate date of commencement of proposed sale of the securities to the
public: From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [_]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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. [_]
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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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PROSPECTUS
HALTER MARINE GROUP, INC.
835,484 Shares of Common Stock
This Prospectus relates to the offering by certain stockholders (the
"Selling Stockholders") of up to an aggregate of 835,484 shares (the "Shares")
of the common stock, $.01 par value per share (the "Common Stock"), of Halter
Marine Group, Inc., a Delaware corporation ("Halter" or the "Company"). The
Selling Stockholders are acquiring the shares in private transactions in
connection with the Company's acquisition of (i) AmClyde Engineered Products,
Inc. ("AmClyde") pursuant to an asset acquisition (the "AmClyde Acquisition")
and (ii) Utility Steel Fabrication, Inc. ("Utility Steel") pursuant to a merger
with a wholly owned subsidiary of the Company (the "Utility Steel Acquisition").
The Company is registering the Shares in accordance with certain registration
rights granted by the Company to the Selling Stockholders. See "Selling
Stockholders."
The Selling Stockholders may from time to time sell the Shares offered
hereby to or through one or more underwriters, directly to other purchasers or
through agents in ordinary brokerage transactions, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale, prices related to
then prevailing market prices or at negotiated prices. See "Plan of
Distribution." The distribution of the Shares is not subject to any underwriting
agreement. The Company will not receive any of the proceeds from the sale of
any of the Shares offered by the Selling Stockholders hereunder. All expenses
of registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by the Selling Stockholders
will be borne by such Selling Stockholders. None of the Shares offered pursuant
to this Prospectus have been registered prior to the filing of the Registration
Statement of which this Prospectus is a part.
Certain persons who sell Shares covered by this Prospectus, and such
broker-dealers, underwriters or agents who participate with the Selling
Stockholders in the distribution of the Shares may be deemed to be underwriters
under the Securities Act of 1933, as amended (the "Securities Act") with respect
to the sale of such Shares.
The Company's Common Stock is traded on the American Stock Exchange (the
"AMEX") under the symbol "HLX." On November 21, 1997, the closing sale price of
the Common Stock on the AMEX was $30 1/2 per share.
See "Risk Factors" beginning on page 4 for a discussion of certain factors
that should be considered in connection with an investment in the Common Stock
offered hereby.
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_________________
The date of this Prospectus is November 26, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company with
the Commission can be inspected and copied at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy and information statements and other
information can also be inspected at the offices of the American Stock Exchange,
Inc., 86 Trinity Place, New York, New York 10016. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants (including the Company) that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Shares and the Company, reference is made to the Registration Statement.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference. Copies of the Registration Statement and the exhibits may be
inspected, without charge, at the offices of the Commission, or obtained at
prescribed rates from the Public Reference Section of the Commission at the
address set forth above.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT CONTAINED IN THIS PROSPECTUS 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-LOOKING STATEMENTS ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
PROSPECTUS AND UNDER "RISK FACTORS." ALL FORWARD-LOOKING STATEMENTS IN THIS
PROSPECTUS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS IN THIS PARAGRAPH.
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INCORPORATION OF DOCUMENTS BY REFERENCE
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
the Company's General Counsel, 13085 Industrial Seaway Road, Gulfport,
Mississippi 39503 whose telephone number is (601) 896-0029.
The following documents filed with the SEC (File No. 1-12159) are
incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997;
2. The Company's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1997;
3. The Company's Current Report on Form 8-K/A filed July 31, 1997;
4. The Company's Current Report on Form 8-K filed July 31, 1997;
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
6. The Company's Current Report on Form 8-K filed August 27, 1997;
7. The Company's Current Report on Form 8-K filed September 10,
1997;
8. The Company's Current Report on Form 8-K filed September 16,
1997;
9. The Company's Current Report on Form 8-K filed September 30,
1997;
10. The Company's Current Report on Form 8-K filed October 7, 1997;
11. The Company's Current Report on Form 8-K/A filed October 21,
1997;
12. The Company's Current Report on Form 8-K filed November 12,
1997;
13. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997; and
14. The description of the Company's Common Stock contained in Item 1 of
the Registration Statement on Form 8-A/A filed with the Commission on
September 25, 1996, including any amendment or report filed for the
purpose of updating such description filed with the Commission
pursuant to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference and shall be a
part hereof from the date of filing of such documents.
Any statement contained in this Prospectus or in documents incorporated by
reference or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus, or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
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The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered, upon written
or oral request of any such person, a copy of any or all of the documents
incorporated by reference herein, other than exhibits to such documents not
specifically incorporated by reference. Requests for such copies should be
directed to the Company's General Counsel, 13085 Industrial Seaway Road,
Gulfport, Mississippi 39503 whose telephone number is (601) 896-0029.
THE COMPANY
The Company is a leading provider of new construction, modification and
repair services for ocean-going vessels and mobile offshore rigs used for oil
and gas drilling and production and offshore construction. The Company is the
seventh largest shipbuilder, and 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 has recently entered the
construction, modification and repair market for mobile offshore rigs as a
result of its acquisition of Texas Drydock, Inc. ("TDI"), which was completed in
May 1997.
The Company has 20 shipyards (including one that is idle but that is
scheduled to be reopened) which are strategically located along the Gulf Coast
from Texas 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 September 1996, the Company was a wholly owned subsidiary of
Trinity Industries, Inc. ("Trinity"). On September 26, 1996, the Company
completed an initial public offering (the "IPO") of Common Stock pursuant to
which approximately 18.7% of the Common Stock, after the exercise of the
underwriters' overallotment option, was sold to the public. On March 31, 1997,
Trinity distributed to its stockholders, in a tax-free transaction (the "Trinity
Distribution"), all of the Common Stock held by Trinity (approximately 81.3% of
the Common Stock). In connection with the IPO and the Trinity Distribution
(collectively, the "Separation from Trinity"), the Company and Trinity entered
into various agreements for the purpose of establishing the terms governing
their on-going arrangements and relationships after the IPO.
The Company's corporate offices are located at 13085 Industrial Seaway
Road, Gulfport, Mississippi 39503, and its telephone number at such offices is
(601) 896-0029.
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RISK FACTORS
Prospective investors should carefully consider and evaluate the following
factors, together with the information and financial data set forth elsewhere in
this Prospectus, before making an investment in the Shares.
RISKS ASSOCIATED WITH LEVERAGE
The Company's recent acquisitions have significantly increased the
Company's leverage. At September 30, 1997, the Company had (i) total long-term
indebtedness of $188.7 million, (ii) stockholders' equity of $106.5 million and
(iii) available borrowing capacity of approximately $127 million (subject to
customary borrowing conditions) under the Company's prior senior credit facility
(the "Old Credit Facility"). The Old Credit Facility was replaced by a new
credit facility (the "New Credit Facility") as of October 31, 1997, which
provides for borrowings of up to $150 million. The degree to which the Company
is leveraged could have important consequences, including (i) the ability of the
Company to obtain any necessary financing in the future for working capital,
capital expenditures, debt service requirements or other purposes may be
limited; (ii) a substantial portion of the Company's cash flows from operations
must be dedicated to the payment of the principal and interest on its
indebtedness and will not be available for other purposes; (iii) the Company's
level of indebtedness could limit its flexibility in planning for, or reacting
to, changes in its business or in economic conditions; and (iv) the Company's
level of indebtedness will make it more vulnerable in the event of a downturn in
its business.
The Company's ability to satisfy its debt obligations, including the
$185,000,000 of 4 1/2% Convertible Subordinated Notes due 2004 (the "Notes")
initially sold by the Company on September 15, 1997, will depend upon its future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond its
control, as well as the availability of revolving credit borrowings under the
New Credit Facility. The Company anticipates that its net cash provided by
operating activities, together with the balance of the net proceeds from the
sale by the Company of the Notes, funds available under the New Credit Facility
and the potential issuance of industrial revenue bonds, will be sufficient to
meet its operating expenses, and working capital, capital expenditures and debt
service requirements, through at least fiscal 1999. However, if the Company is
unable to service its debt, it will be forced to pursue one or more alternative
strategies such as selling assets, curtailing any expansion, restructuring or
refinancing its indebtedness or seeking additional equity capital. There can be
no assurance that any of these strategies could be effected on terms
satisfactory to the Company, if at all.
DEPENDENCE ON CONDITIONS IN THE OFFSHORE OIL AND GAS DRILLING INDUSTRY
A significant portion of the Company's current contracts relate to the
construction of offshore support vessels and the construction, repair and
conversion of mobile offshore rigs. Customer demand for offshore support
vessels and mobile offshore rigs is dependent on, among other things, the level
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 and the substantial majority of the mobile offshore
rigs modified or repaired 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 and mobile offshore rigs, the Company cannot predict future
levels of activity in offshore oil and gas exploration, development and
production.
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RISKS ASSOCIATED WITH CONTRACTUAL PRICING IN THE SHIPBUILDING AND MOBILE
OFFSHORE RIG INDUSTRY
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. 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 many factors, including 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
and mobile offshore rig 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.
Many of the Company's contracts contain provisions requiring the payment by
the Company of liquidated damages in the event that the Company fails to meet
specified performance deadlines. There can be no assurance that the Company
will not be required to make payments to customers under such liquidated damages
provisions or that the requirement to make such payments will not have a
material adverse effect on the Company's operating results.
In addition, the Company uses the percentage of completion method to
account for its contracts in process. Under this method, revenue 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 revenue 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. To the extent that such
provisions 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.
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 Chairman, 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 has entered into a noncompetition agreement with the Company. The
loss of the services of one or more of the Company's executive officers could
have a material adverse effect on the Company.
LIMITATION ON AVAILABILITY OF TRAINED SHIPYARD WORKERS
Shipyards located in certain portions of southern 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 drilling
rigs 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, including the Company's Lockport
facility. While the Company's other shipyards are not currently experiencing
severe labor shortages, these shipyards are faced with limitations on the
availability of skilled labor that could limit the Company's ability to increase
production to the extent the Company might otherwise desire. No assurances can
be given regarding whether severe shortages will be experienced at these
shipyards in the future.
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MATTERS RELATING TO SEPARATION FROM TRINITY
Prior to the IPO, which was completed on September 26, 1996, the Company
operated as a wholly owned subsidiary of Trinity and from time to time relied
upon Trinity to provide credit and other financial support, services and
assistance. As a result, the Company has a limited independent operating
history. In addition, in connection with the Separation from Trinity, the
Company entered into various agreements with Trinity for the purpose of
establishing the terms governing their on-going arrangements and relationships.
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 with unrelated third
parties. Such agreements provide, among other things, for certain prohibitions
on the ability of the Company to compete in Trinity's businesses.
Trinity obtained a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the Trinity Distribution would be treated as a
tax-free transaction. The agreements entered into between the Company and
Trinity in connection with the Separation from Trinity provide that the Company
will not take actions which could jeopardize the tax-free status of the Trinity
Distribution and that the Company will indemnify Trinity for any damages
resulting from actions by the Company that have the effect of destroying the
tax-free status of the Trinity Distribution. If the tax-free status of the
Trinity Distribution were destroyed as a result of actions taken by the Company,
such indemnification obligation would have a material adverse effect on the
Company.
HIGHLY COMPETITIVE INDUSTRY
The shipbuilding and mobile offshore rig industry is highly competitive.
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, and for the construction,
conversion and repair of mobile offshore rigs, 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
bidder 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. The Company
competes for mobile offshore rig construction, conversion and repair contracts
principally with two major U.S. competitors.
In connection with the Separation from Trinity, the Company entered into an
agreement with Trinity that prohibits the Company, for a period of four years
after completion of the IPO (which period will be extended under certain
circumstances), from engaging in any and all businesses and operations conducted
prior to the date of the IPO by Trinity or any of its subsidiaries other than
the Company Businesses (as defined herein), which include the construction and
repair of inland hopper barges and inland tank barges. Under the terms of this
agreement, the four-year noncompetition period is extended for a period of time
equal to any period during which the Company is constructing
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inland hopper barges under an arrangement with Trinity. Under special
arrangements with Trinity, the Company has built a limited number of such
vessels. Revenue related to this business were $13.3 million, $26.2 million and
$19.9 million for fiscal years 1995, 1996 and 1997, respectively. Because the
Company has continuously been constructing such barges under an arrangement with
Trinity since the IPO, the four-year noncompetition period has not yet begun to
run. "Company Businesses" means the business and operations conducted prior to
the date of the IPO 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 the Company
or any of its subsidiaries.
OPERATING RISKS
The Company's activities involve the fabrication and refurbishment of large
steel structures, the operation of cranes and other heavy machinery and other
operating hazards that can cause personal injury or loss of life, severe damage
to and destruction of property and equipment and suspension of operations. The
failure of the structure of a vessel or mobile offshore rig after it leaves the
Company's shipyard can result in similar injuries and damages. Litigation
arising from any such occurrences may result in the Company being named as a
defendant in lawsuits asserting large claims. In addition, due to their
proximity to the Gulf of Mexico, the Company's facilities are subject to the
possibility of physical damage caused by hurricanes or flooding. Although the
Company maintains such insurance protection as it considers economically
prudent, there can be no assurance that any such insurance will be sufficient or
effective under all circumstances or against all hazards to which the Company
may be subject. A successful claim for which the Company is not fully insured
could have a material adverse effect on the Company.
LEGISLATIVE PROPOSALS TO MODIFY 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 revenue from U.S. commercial
shipbuilding contracts (which represented 41.1% of the Company's total revenue
for fiscal 1997) results from the sale of vessels capable of being used for U.S.
coastwise trade. In 1997, proposed legislation was introduced in Congress to
modify the provisions of the Jones Act to eliminate the requirement that ships
be 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.
DEPENDENCE ON GOVERNMENT CONTRACTS
The Company builds vessels for the U.S. Navy, foreign nations and state and
local governments. Revenue derived from government customers accounted for
approximately 53% of the Company's total revenue in fiscal 1997. There can be no
assurance that the Company will be successful in obtaining new government
contracts, many of which are subject to strict competitive bidding requirements.
Purchases of vessels by governments, including the U.S.
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Government, generally are subject to the uncertainties inherent in their
respective budgeting and appropriations processes, which are affected by
political events over which the Company has no control. Revenue derived from
commercial (including energy) and government customers accounted for
approximately 61% and 34%, respectively, of the Company's total revenue for the
six months ended September 30, 1997.
Revenue derived from the construction of U.S. Navy vessels accounted for
approximately 37.4% of the Company's total revenue in fiscal 1997. 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.
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 revenue 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 revenue and profit from contracts with
other customers, could have a material adverse effect on the Company's business,
financial condition and results of operations.
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.
SHARES AVAILABLE FOR FUTURE SALE
As of November 14, 1997, there were 28,515,061 shares of Common Stock
issued and outstanding, of which 835,484 were "restricted securities" within the
meaning of Rule 144 under the Securities Act. The Shares, which were issued
pursuant to the AmClyde Acquisition and the Utility Steel Acquisition, will be
"restricted securities" until sold pursuant to the Registration Statement in
which this Prospectus is included.
The Company maintains a shelf registration statement for the Notes and the
Common Stock issuable upon conversion of the Notes. An aggregate of 5,873,016
shares of Common Stock are currently reserved for issuance upon conversion of
the Notes.
An aggregate of 3,594,900 shares of Common Stock are currently reserved for
issuance pursuant to the Company's Amended and Restated 1996 Stock Option and
Incentive Plan (the "Stock Option and Incentive Plan"). As of November 14,
1997, there were 2,585,400 shares of Common Stock issuable upon the exercise of
options granted under the Stock Option and Incentive Plan, 69,900 of which were
immediately exercisable. The Company has registered all shares of Common Stock
issuable under its Stock Option and Incentive Plan pursuant to a registration
statement on Form S-8 filed with the Securities and Exchange Commission.
8
<PAGE>
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Common Stock could be subject to significant
fluctuations in response to the Company's operating results, changes in earnings
estimated by securities analysts or the Company's ability to meet those
estimates, publicity regarding the shipbuilding and mobile offshore rig industry
and other factors, some of which may be beyond the Company's control. There can
be no assurance that the market price of the Common Stock will not decline below
the price at which the shares of the Common Stock are currently being traded.
In addition, the stock markets have from time to time experienced extreme price
and volume volatility. These fluctuations may be unrelated to the operating
performance of particular companies whose shares are traded. Market
fluctuations may adversely affect the market price of the Common Stock.
CERTAIN ANTI-TAKEOVER EFFECTS
The Restated Certificate of Incorporation of the Company (the
"Certificate"), the Bylaws of the Company (the "Bylaws"), the Company's
Preferred Stock Purchase Rights (the "Rights") 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 Board of Directors of the Company. Certain provisions of
the Certificate and the Bylaws, among other things, (i) authorize the issuance
of "blank check" preferred stock, (ii) divide the Board of Directors of the
Company into three classes, the members of which 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 Stockholder Rights Agreement with The Bank of New York, as rights agent,
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 Board of Directors of the Company. 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.
DIVIDEND POLICY
The Company has not paid, and does not anticipate paying in the foreseeable
future, any cash dividends on the Common Stock. In addition, the New Credit
Facility restricts the payment of dividends.
9
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders pursuant to this Prospectus. In connection
with the Company's acquisition of AmClyde and Utility Steel pursuant to the
AmClyde and Utility Steel Acquisitions, as applicable the Company issued the
Shares to the Selling Stockholders. See "Selling Stockholders" for a list of
those persons and entities receiving the proceeds from the sales of the
Shares.
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each Selling Stockholder and
relationship, if any, with the Company, (ii) the number of Shares owned by each
Selling Stockholder as of November 20, 1997 and (ii) the maximum number of
Shares which may be offered for the account of such Selling Stockholder under
this Prospectus.
<TABLE>
<CAPTION>
Common Stock Maximum Common Stock
Beneficially Owned Amount Beneficially Owned
Name of Selling Stockholder Prior to Offering Offered Hereby (1) After Offering (2)
- --------------------------- ----------------- ------------------ ------------------
Percent Amount
------- ------
<S> <C> <C> <C> <C>
Wallace K. Fisk, Jr.(3)............................. 477,652 459,652 *% 18,000
Richard J. Juelich (4).............................. 140,731 140,731 0 *
AmClyde Engineered.................................. 13,851 13,851 0 *
Products, Inc.(5).
Edgar and Melanie Pender(6)......................... 151,026 151,026 0 *
Amie Pender Guttuso................................. 23,408 23,408 0 *
Stacie Pender Hollingsworth......................... 23,408 23,408 0 *
John Coerver, as Trustee of the
Maurice S. Pender Trust........................... 23,408 23,408 0 *
------- ------- - -------
Total............................................... 853,484 835,484 0% *
</TABLE>
_____________________________
* Less than 1%.
(1) This Prospectus also covers any additional shares of Common Stock that
become issuable in connection with the shares of Common Stock offered for
sale hereby by reason of any future stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration that results in an increase in the number of the Company's
outstanding shares of Common Stock.
(2) Assumes all of the Shares offered hereby are sold.
(3) Includes 18,000 shares that Mr. Fisk may acquire upon the exercise of call
options that he acquired on October 27, 1997. 9,000 of such options expire
on December 20, 1997, and 9,000 of such options expire on March 21,
1998.
(4) Mr. Juelich became an officer of a subsidiary of the Company upon
completion of the AmClyde Acquisition. In addition, Mr. Juelich owns a 25%
interest in a partnership that leases a building to the Company for $10,000
a month. Approximately three years remain on the lease. The Company has a
purchase option with respect to the leased premise and a renewal option
with respect to the lease.
10
<PAGE>
(5) Such shares are currently held in escrow by Whitcust & Co. under an escrow
agreement among the Company, AmClyde Engineered Products, Inc. and Whitcust
& Co. entered into at the time of the AmClyde Acquisition.
(6) Edgar Pender became an officer of a subsidiary of the Company upon
completion of the Utility Steel Acquisition.
Because the Selling Stockholders may, pursuant to this Prospectus, offer
all or some portion of the Shares they presently hold, no estimate can be given
as to the amount of Common Stock that will be held by the Selling Stockholders
upon termination of any such sales. In addition, the Selling Stockholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of their Shares since the date on which they provided the information
regarding their Shares, in transactions exempt from the registration
requirements of the Securities Act. See "Plan of Distribution."
The Company will pay the expenses of registering the Shares being sold
hereunder.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders, or by
pledgees, donees, transferees or other successors in interest. The Selling
Stockholders may from time to time sell all or a portion of their Shares in
transactions on the AMEX, in negotiated transactions, or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Shares
may be sold directly or through underwriters or broker-dealers. If the Shares
are sold through underwriters or broker-dealers, the Selling Stockholders may
pay underwriting discounts or brokerage commissions and charges. The methods by
which the Shares may be sold include (i) a block trade in which the broker or
dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction,
(ii) purchases by a broker or dealer as principal and resale by such broker or
dealer for its own account pursuant to this Prospectus, (iii) exchange
distributions and/or secondary distributions in accordance with the rules of the
AMEX, (iv) ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and (v) privately negotiated transactions. In addition,
any Shares that qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this Prospectus.
The Company will pay the costs and expenses incident to its registration
and qualification of the Shares offered hereby, including registration and
filing fees. In addition, the Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities arising under
the Securities Act. The Selling Stockholders will pay or assume brokerage and
selling commissions or other charges or expenses incurred in connection with the
sale of the Shares.
The Selling Stockholders and any underwriter or broker-dealer participating
in the distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any profits, discounts, commissions or
concessions paid or allowed to any such underwriter or broker-dealer may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of Shares against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Shares will be passed upon by
Baker & Botts, L.L.P., Dallas, Texas.
11
<PAGE>
EXPERTS
The consolidated financial statements of Halter Marine Group, Inc.
appearing in Halter Marine Group, Inc.'s Annual Report on Form 10-K for the year
ended March 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements of Texas Drydock, Inc. and
subsidiary as of September 30, 1995 and 1996, and for each of the years then
ended, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
12
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus or any Prospectus
Supplement in connection with the offering described herein and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale made hereunder shall, under any
circumstances, create an implication that the information contained or
incorporated by reference herein is correct as of any time subsequent to its
date or that there has been no change in the affairs of the Company since such
date. This Prospectus and any Prospectus Supplement do not constitute an offer
to sell or a solicitation of an offer to buy any securities other than those
specifically offered hereby or of any Securities offered hereby in any
jurisdiction in which such offer or solicitation is not authorized, or in which
the person making such offer or solicitation is not qualified to do so, or to
anyone to whom it is unlawful to make such offer or solicitation.
-----------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information....................................................... 1
Incorporation of Documents by Reference..................................... 2
The Company................................................................. 3
Risk Factors................................................................ 4
Use of Proceeds............................................................. 10
Selling Stockholders........................................................ 10
Plan of Distribution........................................................ 11
Legal Matters............................................................... 11
Experts..................................................................... 12
</TABLE>
835,484 Shares
HALTER MARINE GROUP, INC.
COMMON STOCK
-----------------------------------------
PROSPECTUS
-----------------------------------------
November 26, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the expenses in connection with the distribution of the Shares are
set forth below and will be borne by the Registrant.
<TABLE>
<S> <C>
Registration Fee.................................... $ 8,828
American Stock Exchange Listing Fee................. 17,500
*Legal Fees and Expenses............................. 15,000
*Accounting Fees and Expenses........................ 7,500
-------
*Total......................................... $48,828
=======
</TABLE>
____________
*Estimated.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 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
II-1
<PAGE>
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.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (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 Title 8 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision may eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision became effective.
Certificate of Incorporation
The Certificate of Incorporation of the Company 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,
II-2
<PAGE>
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
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 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 also provide for the
advancement of certain expenses to such directors and officers in connection
with any such suit or proceeding.
II-3
<PAGE>
ITEM 16. EXHIBITS
3.1+ Amended and Restated Certificate of Incorporation (filed as Exhibit
3.1 to the Company's Registration Statement on Form S-1 (Reg. No. 333-
6967)).
3.2+ Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Reg. No. 333-6967)).
4.1 Asset Purchase Agreement among the Company, AEPI Acquisition, Inc.,
AmClyde Engineered Products, Inc. and Wallace K. Fisk, Jr.
4.2 Agreement and Plan of Merger by and among the Company, Utility
Acquisition, Inc., Utility Steel Fabrication, Inc. and the
shareholders of Utility Steel Fabrication, Inc.
4.3+ Form of Certificate representing shares of Common Stock (filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg.
No. 333-6967)).
4.4 Rights Agreement dated September 23, 1996, between the Company and The
Bank of New York, as Rights Agent.
5.1* Opinion of Baker & Botts, L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
24.1* Power of Attorney (included on signature pages to the Registration
Statement).
_____________
* Previously filed.
+ Incorporated herein by reference to the indicated filing.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
II-4
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Gulfport, State of Mississippi, on the 25th day of
November, 1997.
HALTER MARINE GROUP, INC.
By: /s/ Rick S. Rees
-----------------
Rick S. Rees
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the date, and
in the capacities, indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
* Chairman, President and Chief November 25, 1997
- --------------------- Executive
John Dane III Officer and Director
(Principal Executive Officer)
* Senior Vice President November 25, 1997
- --------------------- (Principal Accounting Officer)
Keith L. Voigts
/s/ Rick S. Rees Executive Vice President, Chief November 25, 1997
- --------------------- Financial
Rick S. Rees Officer and Director
(Principal Financial Officer)
* Director November 25, 1997
- ---------------------
Kenneth W. Lewis
* Director November 25, 1997
- ---------------------
Daniel J. Mortimer
* Director November 25, 1997
- ---------------------
Angus R. Cooper, II
* Director November 25, 1997
- ---------------------
Burt H. Keenan
- --------------------- Director
Barry J. Galt
*By: /s Rick S. Rees
----------------
Rick S. Rees
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
3.1+ Amended and Restated Certificate of Incorporation (filed as Exhibit
3.1 to the Company's Registration Statement on Form S-1 (Reg. No. 333-
6967)).
3.2+ Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Reg. No. 333-6967)).
4.1 Asset Purchase Agreement among the Company, AEPI Acquisition, Inc.,
AmClyde Engineered Products, Inc. and Wallace K. Fisk, Jr.
4.2 Agreement and Plan of Merger by and among the Company, Utility
Acquisition, Inc., Utility Steel Fabrication, Inc. and the
shareholders of Utility Steel Fabrication, Inc.
4.3+ Form of Certificate representing shares of Common Stock (filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg.
No. 333-6967)).
4.4 Rights Agreement dated September 23, 1996, between the Company and The
Bank of New York, as Rights Agent.
5.1* Opinion of Baker & Botts, L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
24.1* Power of Attorney (included on signature pages to the Registration
Statement).
____________
* Previously filed.
+ Incorporated herein by reference to the indicated filing.
<PAGE>
EXHIBIT 4.1
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 31st day of October, 1997, by and among AmClyde Engineered Products,
Inc., a Delaware corporation ("Seller"), Wallace K. Fisk, Jr., the majority
shareholder of Seller ("Shareholder"), AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Halter Marine Group, Inc., a Delaware corporation
("Parent").
WHEREAS, Seller engages in the business of custom designing, engineering
and, through subcontractors, manufacturing of revolver and pedestal cranes for
ships, barges, offshore drilling rigs and other applications, winches, bulk
unloaders and related materials handling equipment, and pulling and jacking
systems, prooftest and related equipment (the "Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, substantially all of the assets of the Business;
WHEREAS, Parent is the ultimate parent corporation of Buyer and intends to
guarantee Buyer's obligations hereunder and indemnify Seller and Shareholder;
and
WHEREAS, Shareholder is the majority shareholder of Seller (and on or
before Closing will become the sole shareholder of Seller) and intends to
guarantee Seller's obligations hereunder and indemnify Buyer and Parent.
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and agreements hereinafter set forth and other good and
valuable consideration, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Assets. Seller will sell, convey, transfer,
---------------------------
assign and deliver to Buyer, and Buyer will acquire and accept from Seller, at
the Closing (as that term is defined in Section 9.1), the following assets and
properties, free and clear of any and all options, pledges, mortgages, security
interests, liens, charges, adverse claims, rights, restrictions, burdens and
encumbrances whatsoever ("Encumbrances"):
(a) All of the personal property and other tangible assets and
properties of Seller, wherever located and whether or not described or referred
to herein, including, without limitation, all equipment, machinery, tools,
vehicles, inventories (including raw materials, work-in-process, finished goods
(other than finished goods delivered by Seller to others under consignment),
supplies in store, maintenance items and parts (which hereinafter shall
sometimes be collectively referred to as the "Inventory")), prepaid accounts and
prepaid expenses, furniture, fixtures, fixed assets, books, reports and records
(including customer lists);
(b) The customer accounts, contracts, leases, arrangements and
commitments listed on Schedule 1.1A and no others;
-------------
<PAGE>
(c) All intangible properties and rights (other than contracts,
leases, arrangements and commitments not listed on Schedule 1.1A), wherever
-------------
located and whether or not described or referred to herein, including, without
limitation, all know-how, trade secrets, technology, all patents and patent
applications and rights and licenses thereunder, trade names (including the
names "AmClyde Engineered Products" and "AmCane"), trademark registrations and
applications, common law trademarks, servicemarks, copyrights and copyright
registrations and applications, engineering drawings and customer files and the
goodwill related to trade names, trademarks and servicemarks;
(d) All licenses, permits, certificates and authorizations relating
to the Business operations of Seller;
(e) All cash, deposits, bank accounts, certificates of deposit,
securities (including, without limitation, all the stock of AmCane Company, a
Minnesota corporation, "AmCane"), accounts receivable, evidences of indebtedness
and choses-in-action of Seller; and
(f) Any other property or right, tangible or intangible, of Seller
used in the Business (other than contracts, leases, arrangements and commitments
not listed on Schedule 1.1A) (the items in (a) through (f) hereof hereinafter
-------------
collectively referred to as the "Assets");
provided, however, that Seller will not sell, convey, transfer, assign or
- -------- -------
deliver to Buyer, and Buyer will not acquire from Seller, the items listed on
Schedule 1.1B (collectively, the "Excluded Assets").
- -------------
1.2 Transfer and Conveyance. Seller shall execute and deliver to Buyer
-----------------------
at the Closing a Bill of Sale and Assignment in substantially the form attached
hereto as Exhibit A and all such other assignments, endorsements and instruments
---------
of transfer as shall be necessary or appropriate to carry out the intent of this
Agreement and as shall be sufficient to vest in Buyer title to all of the Assets
and all right, title and interest of Seller thereto.
1.3 Assumption of Certain Obligations. Effective at the Closing and
---------------------------------
subject to the terms set forth herein, at the Closing Buyer shall assume and be
liable for (a) all liabilities of Seller that are disclosed on Seller's
September 20, 1997 balance sheet and all trade accounts payable, accrued
expenses and other liabilities that arise from such date through the Closing
Date (as defined below) to the extent they were or are incurred in the ordinary
course of business and in compliance with the terms of this Agreement, but with
respect to Seller's indebtedness to Firstar Bank, only to the extent of
$10,000,000 in the aggregate (including principal and accrued interest) and
specifically excluding (i) all expenses incurred in connection with the
transactions contemplated hereby, (ii) all liabilities and obligations relating
to the AmJet Services Division of Seller, (iii) all liabilities and obligations
relating to the operation of AmJet Aircraft Corporation, a Minnesota
corporation, (iv) all liabilities and obligations relating to the Excluded
Assets, and (v) all liabilities and obligations under the "Grid Note" described
in the 60-Ton Portal Crane Agreement, as defined below; and (b) Seller's
obligations to render performance arising after the Closing Date under, or
otherwise accruing after the Closing Date under, the contracts, leases,
arrangements and commitments listed on Schedule 1.1A (but not any obligation for
-------------
performance or obligation or liability of Seller for default
-2-
<PAGE>
or nonperformance under said contracts, leases, arrangements and commitments
arising prior to the Closing)(collectively, the "Assumed Liabilities"). Buyer
will not assume and will not be liable for any debts, contracts, leases,
liabilities, arrangements, commitments, obligations, restrictions or duties of
Seller, other than as specified in the preceding sentence. Buyer shall execute
and deliver to Seller at the Closing an Assumption Agreement in substantially
the form attached hereto as Exhibit B.
---------
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Assets (the "Purchase
--------------
Price") shall be (i) $10,000,000 cash (the "Cash Consideration") and (ii)
614,234 shares of common stock, $.01 par value of Parent ("Halter Stock") (the
"Stock Consideration").
2.2 Additional Consideration at Closing. To the extent the outstanding
-----------------------------------
balance of Seller's indebtedness owing to Firstar Bank on the Closing Date,
including accrued interest thereon (the "Bank Debt Balance"), is less than
$10,000,000, Buyer shall pay to Seller on the Closing Date as additional
consideration an amount equal to the difference between $10,000,000 and the Bank
Debt Balance, but not to exceed $500,000 (the "Additional Consideration").
2.3 Allocation of Purchase Price. Seller and Buyer agree to file all
----------------------------
income tax returns or reports, including without limitation, IRS Form 8954, for
their respective taxable years in which the Closing occurs to reflect an
allocation of the Purchase Price and other consideration in a manner consistent
with Exhibit H attached hereto and not to take any position inconsistent
---------
therewith before any governmental agency charged with the collection of Taxes or
in any judicial proceeding relating solely to tax reporting.
2.4 Contingent Payments. Seller shall be entitled to additional
-------------------
consideration hereunder (the "Contingent Payment"), which shall be payable as
follows:
(a) Seller shall be entitled to an annual payment in an amount (not
to exceed $500,000 per year) equal to 25% of the difference between (i) the
annual AmClyde EBITDA (as defined below) and (ii) $7,500,000 (but only to the
extent such difference is a positive number) (the "EBITDA Contingent Payment").
Such EBITDA Contingent Payment, if any, shall be due and payable within ninety
(90) days following the conclusion of Buyer's fiscal year-end and shall continue
each year for a period of six (6) fiscal years, with the first payment, if any,
based on Buyer's operations for the fiscal year ended March 31, 1999. For
purposes hereof, (i) "EBITDA" shall mean net income before interest, taxes,
depreciation and amortization (not taking into account, however, any
amortization or depreciation which results from the transaction contemplated
hereby or a write-up of the assets by Buyer as a result thereof) and (ii)
"AmClyde EBITDA" shall mean Buyer's EBITDA that is generated from the
consolidated operation of AmCane and the Business utilizing the Assets, but
shall specifically exclude any proceeds from the sale of the AmCane. Buyer
agrees that, for the time period beginning with the date of Closing and ending
on March 31, 2004, Buyer (i) will operate the Business as a separate division or
subsidiary of Parent, (ii) will not include in the
-3-
<PAGE>
Business any expenses (including general overhead expenses of Parent or Buyer or
any affiliate of either such entity) not arising from the operation of the
Business, (iii) will provide Seller with separate financial statements of such
division or subsidiary for the fiscal years 1999 through 2004 and, on the
request of and at the sole expense of Seller, will submit any such financial
statement to an audit by a recognized accounting firm engaged by Seller and
reasonably acceptable to Buyer, and (iv) will include in the Business all
revenues of the type currently generated by the Business.
(b) If Buyer sells the assets or stock of AmCane at any time prior to
the third anniversary of the Closing Date in one transaction or a series of
related transactions and the Net Proceeds (as defined below) from such sale
exceed $3,000,000, Seller shall be entitled to an amount equal to 50% of the Net
Proceeds in excess of $3,000,000 (the "AmCane Contingent Payment"). The AmCane
Contingent Payment, if any, shall be due and payable within sixty (60) days
following the consummation of the sale of AmCane described above. For purposes
hereof, "Net Proceeds" shall mean the aggregate cash proceeds received by Buyer
from the sale of AmCane described above less (i) all capital contributions and
debt funded by Buyer, Parent or Halter Marine, Inc. with respect to the
operations of AmCane (without the double counting of expenses funded by capital
contributions or debt), (ii) the amount of any unpaid intercorporate charges due
Buyer, Parent or Halter Marine, Inc. from AmCane (less the amount of any unpaid
intercorporate charges due AmCane from Buyer, Parent or Halter Marine, Inc.),
and (iii) all expenses of Buyer (excluding income taxes) related to such sale.
(c) Seller shall be entitled to earn the Contingent Payment pursuant
to any combination of the EBITDA Contingent Payments and the AmCane Contingent
Payment, but in no event shall the amount owing by Buyer under this Section 2.4
for the Contingent Payment exceed $3,000,000 in the aggregate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
Each of Seller and Shareholder, jointly and severally, represents and
warrants to Buyer and Parent with respect to the Business and the Assets (but
not the Excluded Assets) as follows:
3.1 Due Organization and Qualification. Seller is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease or
operate its properties and to carry on its business as it is presently being
operated and in the place where such properties are owned, leased or operated
and such business is conducted.
3.2 Title. Seller has good title to all of the Assets, free and clear of
-----
any and all Encumbrances except as set forth on Schedule 3.2. Upon conveyance
------------
of the Assets to Buyer by Seller at the Closing, Buyer will acquire and hold
good title to all of the Assets, free and clear of any and all Encumbrances.
Seller does not currently nor has ever owned any real property, except Seller
has owned, but does not currently own, a tract of real property in or around
King of Prussia, Pennsylvania.
-4-
<PAGE>
3.3 Inventory. The Inventory consists of current items of a quality and
---------
quantity that are usable or marketable in the ordinary course of the business of
Seller, and items of Inventory not usable in the business of Seller have been
written down in value in accordance with the normal business practice of Seller
to estimated net realizable market values.
3.4 Properties. Set forth on Schedule 3.4 is a description of (i) all
---------- ------------
vehicles owned or leased by Seller and included among the Assets (showing motor
vehicle identification numbers and whether owned or leased), (ii) all production
and warehouse machinery and equipment owned or leased by Seller and included
among the Assets and (iii) all physical properties (other than the types of
properties referred to in (i) and (ii) above), real, personal or mixed, owned by
or leased to Seller and included among the Assets, having an original cost in
excess of $5,000 (exclusive of Inventory). Seller enjoys peaceable possession of
all properties owned or leased by it. Except for the stock of AmCane and AmJet
Aircraft Corporation, Seller is not a shareholder, stockholder, member, manager,
partner, grantor, beneficiary or other form of owner of any corporation, limited
liability company, partnership (general, limited, registered limited liability
or other form of partnership), trust or other entity.
3.5 Trademarks, Etc. Schedule 3.5 lists the domestic and foreign trade
---------------- ------------
names, trademarks, service marks, trademark registrations and applications,
service mark registrations and applications, patents, patent applications, and
copyright registrations and applications owned by Seller and patent licenses and
software licenses granted to or by Seller and used by Seller in the operation of
its business (collectively, the "Intellectual Property") and comprising a
portion of the Assets, which Schedule indicates whether each item of
Intellectual Property is owned by or licensed to or by Seller, and if licensed,
the licensor. Unless otherwise indicated on Schedule 3.5, to Seller's knowledge
------------
Seller has the right to use and license the Seller-owned Intellectual Property
and to transfer and convey the Seller-owned Intellectual Property. Each item
constituting part of the Seller-owned Intellectual Property has been, to the
extent indicated on Schedule 3.5, registered with, filed in or issued by, as the
------------
case may be, the United States Patent and Trademark Office or such other
government entity, domestic or foreign, as is indicated on Schedule 3.5; all
------------
such registrations, filings and issuances remain in full force and effect to the
extent indicated under "status" on Schedule 3.5; and all maintenance fees and
------------
other maintenance charges with respect thereto are current. Except as stated on
Schedule 3.5: (i) there are no pending proceedings challenging validity or
- ------------
ownership or adverse claims made or, to the best knowledge of Seller and
Shareholder, threatened against Seller with respect to the Intellectual
Property; (ii) there has been no litigation commenced or threatened in writing
within the past five (5) years with respect to the Seller-owned Intellectual
Property or the rights of Seller therein; (iii) to the knowledge of Seller and
Shareholder, neither Seller nor Shareholder is aware of any facts that would
cause any Seller-owned Intellectual Property to be invalid or unenforceable, and
(iv) neither Seller nor Shareholder has any knowledge that (a) the Intellectual
Property or the use thereof by Seller or by Buyer after the Closing in the same
manner as Seller used it or held it for use prior to Closing infringes or
otherwise violates rights of third parties in any trade names, trademarks,
service marks, trademark or service mark registrations or applications, patents,
patent applications, patent licenses or copyright registrations or applications
("Third Party Intellectual Property"), or (b) such Third Party Intellectual
Property or its use by others or any other conduct of a third party infringes
upon or violates the Seller-owned Intellectual Property.
-5-
<PAGE>
3.6 Permits. Seller holds all licenses, franchises, permits and other
-------
governmental authorizations, including permits, titles (including, without
limitation, motor vehicle titles and current registrations), fuel permits,
licenses, franchises and certificates, the absence of any of which could
reasonably be expected to have a material adverse effect on the business,
operations properties, assets or condition (financial or otherwise) results of
operations or prospects of Seller, the Assets or the Business (a "Material
Adverse Effect") (the "Material Permits"). An accurate list and summary
description is set forth on Schedule 3.6 hereto of all such Material Permits.
------------
Except as set forth in Schedule 3.6, the Material Permits are valid and may be
------------
transferred to Buyer at the Closing, and Seller has not received any notice that
any governmental authority intends to cancel, terminate or not renew any such
Material Permit. Seller has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in applicable permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing except where such
noncompliance or violation would not have a Material Adverse Effect. Except as
specifically provided on Schedule 3.6, the transactions contemplated by this
------------
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to Seller or to Buyer after
the Closing by, any such Material Permits.
3.7 Compliance with Laws. Seller (i) has complied with all laws,
--------------------
regulations, licensing requirements and orders applicable to its business or
personnel, the noncompliance with which could reasonably be expected to have a
Material Adverse Effect, (ii) has filed with the proper authorities all
statements and reports required by the laws, regulations, licensing requirements
and orders to which it or any of its employees (because of their activities on
behalf of their employer) is subject, the failure of which to file could
reasonably be expected to have a Material Adverse Effect.
3.8 Material Contracts. Set forth on Schedule 3.8 is a list of all
------------------ ------------
contracts, agreements, arrangements or commitments (the following, "Material
Contracts") that relate to: (i) the employment of any person other than
personnel employed at the pleasure of Seller in the ordinary course of its
business at rates of compensation and on terms consistent with good business
practice; (ii) collective bargaining with, or any representation of any
employees by, any labor union or association; (iii) the acquisition of services,
supplies, equipment or other personal property involving more than $25,000 or
that is not terminable by Seller upon not more than thirty (30) days' notice
without obligation on the part of Seller; (iv) the purchase or sale of real
property; (v) distribution, agency or construction; (vi) lease of real or
personal property as lessor or lessee or sublessor or sublessee; (vii) lending
or advancing of funds other than the extension of credit to trade purchasers in
the ordinary course of Seller's business consistent with past business practice;
(viii) borrowing of funds or receipt of credit other than by Seller in the
ordinary course of business consistent with good business practice and except
for trade payables in amounts and on terms consistent with past practice; (ix)
incurring of any obligation or liability except for transactions engaged in by
Seller in the ordinary course of business consistent with good business
practice; (x) the sale of personal property (other than sales of Inventory in
the ordinary course of business consistent with good business practice) or
services under which payments due after October 3, 1997 exceed $25,000; and (xi)
any matter or transaction not in the ordinary course of the business of Seller
or that is inconsistent with the past business practice of Seller.
-6-
<PAGE>
3.9 Contract Defaults. Seller is not in default in any respect under any
-----------------
Material Contract, and such Material Contracts are legal, valid and binding
obligations of the respective parties thereto in accordance with their terms
and, except to the extent reflected in Schedule 3.8, have not been amended; and
------------
no defenses, offsets or counterclaims thereto have been asserted or, to the best
knowledge of Seller and Shareholder, may be made by any party thereto other than
Seller, nor has Seller waived any substantial rights thereunder.
3.10 Litigation. Set forth on Schedule 3.10 is a list of all actions,
---------- -------------
suits, proceedings, investigations or grievances pending against Seller or, to
the best knowledge of Seller and Shareholder, threatened against Seller,
Seller's business or any property or rights of Seller, at law or in equity or
before or by any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign ("Agencies"). None of the actions, suits, proceedings or investigations
listed on Schedule 3.10 either (i) results or would, if adversely determined,
-------------
have a Material Adverse Effect or (ii) affects or would, if adversely
determined, affect the right or ability of Seller to carry on its business
substantially as now conducted. Seller is not subject to any continuing court
or Agency order, writ, injunction or decree applicable specifically to the
Assets, the business operations of Seller or employees of Seller, or in default
with respect to any order, writ, injunction or decree of any court or Agency
with respect to the Assets, its business, operations or employees.
3.11 Corporate Power and Authority. The execution, delivery and
-----------------------------
performance of this Agreement by Seller, and all other agreements by and among
the parties, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate action and no
further action or approval is required in order to permit Seller to consummate
the transactions contemplated hereby and thereby. This Agreement constitutes,
and all other agreements by and among the parties, when executed and delivered
in accordance with the terms thereof, will constitute the legal, valid and
binding obligations of Seller and Shareholder, enforceable in accordance with
their terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, (ii) the remedy of specific performance and injunctive relief
are subject to certain equitable defenses and to the discretion of the court
before which any proceedings may be brought and (iii) rights to indemnification
hereunder may be limited under applicable securities laws (the "Equitable
Exceptions"). Seller and Shareholder have full power, authority and legal right
to enter into this Agreement, and all other agreements by and among the parties,
and to consummate the transactions contemplated hereby and thereby. The making
and performance of this Agreement, and all other agreements by and among the
parties, and the consummation of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof will not (a) conflict
with the Certificate of Incorporation or the Bylaws of Seller, (b) result in any
breach or termination of, or constitute a default under, or constitute an event
that with notice or lapse of time, or both, would become a default under, or
result in the creation of any Encumbrance upon any of the Assets under, or
create any rights of termination, cancellation or acceleration in any person
under, any Material Contract, or violate any order, writ, injunction or decree,
to which Seller is a party, by which any of the Assets, business or operations
of Seller may be bound or affected or under which any of the Assets, business or
operations of Seller receive benefits, (c) result in the loss or adverse
modification of any license, franchise, permit or other authorization granted to
or otherwise held by
-7-
<PAGE>
Seller and related to its business operations or (d) result in the violation of
any provisions of law applicable to Seller, the violation of which could have an
adverse effect upon the Assets, business or operations of Seller.
3.12 Financial Statements and Results of Operations.
----------------------------------------------
(a) Seller has previously furnished to Buyer true, correct and
complete copies of the audited balance sheet of Seller as of December 28, 1996,
and the related statements of operations, shareholders' equity and cash flows
for the three (3) fiscal years then ended, as reviewed by Simma, Flottenmesch &
Orensten, Ltd., certified public accountants, together with Seller's unaudited
balance sheet, management's statements of operations and shareholders' equity
for the 9-month period ended September 20, 1997 (collectively, the "Financial
Statements"). The Financial Statements (i) are accurate and in accordance with
the books and records and accounting methods of Seller, (ii) constitute true,
full and complete disclosure of the financial position and results of
operations of Seller as of the dates and for the periods indicated and (iii)
except for the lack of footnotes in the financial statements for the 9-month
period ended September 20, 1997, have been prepared in accordance with GAAP
consistently applied throughout the periods involved. Except as may be set
forth on the Financial Statements or otherwise disclosed herein, there are no
liabilities, contingent or otherwise, by which Seller or any of the Assets or
the Business may be bound or affected other than those incurred in the ordinary
course of business consistent with good business practice none of which could
have a Material Adverse Effect. Seller has previously permitted Buyer full
access to papers pertaining to the Financial Statements, including those work
papers in the possession of or prepared by Simma, Flottenmesch & Orensten, Ltd.
(b) Except to the extent (and not in excess of the amounts) reflected
in the September 20, 1997 balance sheet included in the Financial Statements or
as disclosed on Schedule 3.12, Seller does not have any liabilities or
-------------
obligations of any nature, whether absolute, accrued, unmatured, contingent or
otherwise that did not arise in the ordinary course of business from and after
September 20, 1997, or any unsatisfied judgments.
(c) Since September 20, 1997, Seller has not made any payments in
respect of dividends or redemptions or other distributions to its shareholders
except for distributions with respect to federal and state income tax
liabilities associated with the equity ownership of Seller and a dividend of
$44,333.37 paid on or about September 24, 1997.
(d) Seller's average annual EBITDA for the three year period ending
June 30, 1997, after adjustment for non-recurring expenses, is not less than
$6,500,000 per year.
(e) Except as disclosed on its balance sheet dated September 20,
1997, as of September 20, 1997 Seller had not received any revenue for goods or
services to be rendered after the Closing Date.
3.13 Employee Benefits. Each employee benefit plan within the meaning of
-----------------
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or contributed to by Seller or any of its Group Members
(as defined below) (collectively, the "Plans")
-8-
<PAGE>
is listed on Schedule 3.13, is in substantial compliance with applicable law and
-------------
has been administered and operated in all material respects in accordance with
its terms. Each Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service (the "IRS") and no event has occurred and no
condition exists that could be expected to result in the revocation of any such
determination. No event that constitutes a "reportable event" (within the
meaning of Section 4043(b) of ERISA) for which the 30-day notice requirement has
not been waived by the Pension Benefit Guaranty Corporation (the "PBGC") has
occurred with respect to any Plan. No Plan is subject to Title IV of ERISA, and
neither Seller nor any Group Member has made any contributions to or
participated in any "multiple employer plan" (within the meaning of the Code or
ERISA) or "multi-employer plan" (as defined in Section 4001(a)(3) of ERISA).
Full payment has been made of all amounts that Seller was required under the
terms of the Plans to have paid as contributions to such Plans on or prior to
the date hereof (excluding any amounts not yet due) and all amounts properly
accrued to date as liabilities of Seller that have not been paid have been
properly recorded on the Financial Statements, and no Plan that is subject to
Part 3 of Subtitle B of Title 1 of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Neither Seller and, to the best knowledge of
Seller and Shareholder, no other "disqualified person" or "party in interest"
(within the meaning of Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in connection with any Plan
that could be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or
a tax pursuant to Section 4975(a) of the Code. No material claim, action,
proceeding, or litigation has been made, commenced or, to the best knowledge of
Seller and Shareholder, threatened with respect to any Plan (other than for
benefits payable in the ordinary course and PBGC insurance premiums). No Plan or
related trust owns any securities in violation of Section 407 of ERISA. Neither
Seller nor any Group Member has incurred any liability or taken any action, or
has any knowledge of any action or event, that could cause it to incur any
liability (i) under Section 412 of the Code or Title IV of ERISA with respect to
any "single employer plan" (within the meaning of Section 4001(a)(15) of ERISA),
(ii) on account of a partial or complete withdrawal (within the meaning of
Section 4205 and 4203 of ERISA, respectively) with respect to any "multi-
employer plan" (within the meaning of Section 3(37) of ERISA), (iii) on account
of unpaid contributions to any such multi-employer plan, or (iv) to provide
health benefits or other non-pension benefits to retired or former employees,
except as specifically required by Section 4980B(f) of the Code. Except as set
forth in Schedule 3.13, neither the execution and delivery of this Agreement by
-------------
Seller nor the consummation of the transactions contemplated hereby will (i)
entitle any current or former employee of Seller to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment or
vesting, or increase the amount of, any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any person to constitute a "parachute payment"
(within the meaning of Section 280G of the Code). For purposes of this
Agreement, "Group Member" shall mean any member of any "affiliated service
group" as defined in Section 414(m) of the Code that includes Seller, any member
of any "controlled group of corporations" as defined in Section 1563 of the Code
that includes Seller, or any member of any group of "trades or businesses under
common control" as defined by Section 414(c) of the Code that includes Seller.
No employee or former employee of Seller has elected COBRA coverage.
-9-
<PAGE>
3.14 Employees; Employee Relations.
-----------------------------
(a) Schedule 3.14 sets forth (i) the name and current annual salary
-------------
(or rate of pay) and other compensation (including, without limitation, normal
bonus, profit-sharing and other compensation) now payable by Seller to each
employee whose current total annual compensation or estimated compensation is
$50,000 or more, (ii) any increase to become effective after the date of this
Agreement in the total compensation or rate of total compensation payable by
Seller to each such person, (iii) any increase to become payable after October
3, 1997 by Seller to employees other than those specified in clause (i) of this
Section 3.14(a), (iv) all presently outstanding loans and advances (other than
routine travel advances to be repaid or formally accounted for within sixty (60)
days) made by Seller to, or made to Seller by, any director, officer or
employee, (v) all other transactions between Seller and any director, officer or
employee of Seller since September 20, 1997, and (vi) all accrued but unpaid
vacation pay owing to any officer or employee that is not disclosed on the
Financial Statements.
(b) Except as disclosed on Schedule 3.14, Seller is not a party to,
-------------
nor bound by, the terms of any collective bargaining agreement, and Seller has
not experienced any material labor difficulties during the last five (5) years.
Except as set forth on Schedule 3.14, there are no labor disputes existing, or
-------------
to the best knowledge of Seller and Shareholder, threatened involving, by way of
example, strikes, work stoppages, slowdowns, picketing, or any other
interference with work or production, or any other concerted action by
employees. No charges or proceedings before the National Labor Relations Board,
or similar agency, exist, or to the best knowledge of Seller and Shareholder,
are threatened.
(c) Seller's relationship with its respective employees is good.
Except as disclosed on Schedule 3.14, Seller is not a party to any employment
-------------
contract with any individual or employee, either express or implied. No legal
proceedings, charges, complaints or similar actions exist under any federal,
state or local laws affecting the employment relationship including, but not
limited to: (i) anti-discrimination statutes such as Title VII of the Civil
Rights Act of 1964, as amended (or similar state or local laws prohibiting
discrimination because of race, sex, religion, national origin, age and the
like); (ii) the Fair Labor Standards Act or other federal, state or local laws
regulating hours of work, wages, overtime and other working conditions; (iii)
requirements imposed by federal, state or local governmental contracts such as
those imposed by Executive Order 11246; (iv) state laws with respect to tortious
employment conduct, such as slander, harassment, false light, invasion of
privacy, negligent hiring or retention, intentional infliction of emotional
distress, assault and battery, or loss of consortium; or (v) the Occupational
Safety and Health Act, as amended, as well as any similar state laws, or other
regulations respecting safety in the workplace; and to the best knowledge of
Seller and Shareholder, no proceedings, charges, or complaints are threatened
under any such laws or regulations and no facts or circumstances exist that
would give rise to any such proceedings, charges, complaints, or claims, whether
valid or not. Seller is in full compliance with the provisions of the Americans
with Disabilities Act (the "ADA"). Seller is not subject to any settlement or
consent decree with any present or former employee, employee representative or
any government or Agency relating to claims of discrimination or other claims in
respect to employment practices and policies; and no government or Agency has
issued a judgment,
-10-
<PAGE>
order, decree or finding with respect to the labor and employment practices
(including practices relating to discrimination) of Seller.
(d) Seller has not incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state laws. Seller
has not laid off more than ten percent (10%) of its employees at any single site
of employment in any ninety (90) day period during the twelve (12) month period
ending September 30, 1997.
3.15 Consents. No consent, approval, authorization or order of any court,
--------
Agency or any other person or under any Material Contract is required in order
to permit Seller to consummate the transactions contemplated by this Agreement.
3.16 Insurance. Seller is insured with responsible insurers in respect of
---------
its properties against business risks normally insured against by companies in
similar lines of business. Set forth on Schedule 3.16 attached hereto is a
-------------
summary description of all policies of fire, casualty, liability, workers'
compensation and other forms of insurance and all fidelity bonds held by Seller
(including insurer, named insured, type of coverage, limits of insurance,
required deductibles or co-payments, annual premiums and expiration dates).
3.17 Taxes. Seller has duly filed all federal, state, county, local and
-----
other excise, franchise, property, payroll, income, capital stock, sales and use
and other tax returns that are required to be filed by it and such returns are
true, correct and complete in all respects. Seller has paid all taxes which
have become due or have been assessed against it or the Assets and all taxes,
penalties and interest which any taxing authority has proposed or asserted to be
owing. All tax liabilities to which the properties of Seller may have been
subjected have been discharged except for taxes assessed but not yet payable.
There are no tax claims presently being asserted against Seller or the Assets
and Seller knows of no basis for any such claim. Seller has not granted any
extension to any taxing authority of the limitation period during which any tax
liability may be asserted thereby.
3.18 Business Relations. Schedule 3.18 contains an accurate list of all
------------------ -------------
significant customers of the Business (i.e., those customers representing 5% or
more of Seller's revenues for the twelve (12) months ended December 28, 1996).
Except as set forth in Schedule 3.18, Seller has not experienced any
-------------
difficulties in obtaining any inventory items necessary to the operation of its
business, and, to the best knowledge of Seller and Shareholder, no such shortage
of supply of inventory items is threatened or pending. Seller is not required
to provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of its customers or
suppliers.
3.19 Environmental Laws and Regulations. To the best knowledge of Seller
----------------------------------
and Shareholder, Seller does not have any liability with respect to any of the
real estate Leases to be assumed hereunder which resulted from a violation of
Environmental Requirements. "Environmental Requirements" shall mean all laws,
statutes, rules, regulations, ordinances, guidance documents, judgments,
decrees, orders, agreements and other restrictions and requirements (whether now
or hereafter in effect) of any governmental authority, including, without
limitation, federal, state
-11-
<PAGE>
and local authorities, relating to the regulation or protection of human health
and safety, natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling or other management of industrial
or solid waste, hazardous waste, hazardous or toxic substances or chemicals, or
pollutants.
3.20 Accounts Receivable; Evidences of Indebtedness. Set forth on
----------------------------------------------
Schedule 3.20 is a list of all accounts receivable, promissory notes, contract
- -------------
rights, commercial paper, debt securities and other rights to receive money
reflected as assets of Seller in the Financial Statements and through September
20, 1997 ("Receivables"), showing the name of the account debtor, maker or
obligor, the unpaid balance, the age of the Receivable and, if applicable, the
maturity date, the interest rate and the collateral securing the obligation.
All Receivables reflected in the Financial Statements or acquired since that
date are legal, valid and binding obligations of the obligors, and neither
Seller nor Shareholder has any knowledge of any fact impairing the
collectability of such Receivables in accordance with their terms. The reserves
for doubtful receivables and uncollectible accounts reflected in the Financial
Statements were established in accordance with GAAP and, taken collectively (but
not necessarily taken individually), are sufficient to provide for any losses
which may arise in connection with the collection of such Receivables. Since
September 20, 1997, Seller has not (i) written off, cancelled, committed or
become obligated to cancel or write off any Receivables; (ii) disposed of or
transferred any Receivables except through the collection thereof in accordance
with their terms; or (iii) acquired or permitted to be created any Receivables
except in the ordinary course of its business consistent with past practice.
3.21 Absence of Certain Changes or Events. Since December 28, 1996,
------------------------------------
Seller has not (i) suffered any extraordinary losses or waived any rights of
substantial value; (ii) amended its Certificate of Incorporation or Bylaws;
(iii) made any change in its mode of management or any change in its method of
operation or method of accounting; (iv) made or become obligated to make any
capital expenditures other than such expenditures or commitments not exceeding
$300,000 in the aggregate, which expenditures are listed on Schedule 3.21; (v)
-------------
suffered any event or circumstance that could have a Material Adverse Effect;
(vi) entered into any transaction, except in the ordinary course of its business
consistent with good business practice; (vii) received any notice of any claim
asserted against it by any Agency that could have a Material Adverse Effect; or
(viii) incurred or agreed to incur any material obligation outside the ordinary
course of business that has not heretofore been disclosed in writing to Buyer.
3.22 True, Correct and Complete Information. All written agreements,
--------------------------------------
lists, schedules, instruments, exhibits, documents, certificates, reports,
statement and other writings furnished to Buyer pursuant hereto or in connection
with this Agreement or the transactions contemplated hereby are and will be
complete and accurate in all material respects. No representation or warranty
by Seller or Shareholder contained in this Agreement, in the schedules attached
hereto or in any certificate furnished or to be furnished by Seller or
Shareholder to Buyer in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make any statement contained herein or
therein not misleading. There is no fact known to Seller or Shareholder that
has specific application to Seller, the Business or the Assets (other than
general economic or industry conditions) and that materially adversely affects
or, as far as Seller or Shareholder can reasonably foresee, materially
threatens, the
-12-
<PAGE>
assets, business, prospects, financial condition, or results of operations of
Seller, the Business or the Assets that has not been set forth in this Agreement
or any schedule hereto.
3.23 Availability of Documents. Seller has made available for inspection
-------------------------
by Buyer at the offices of Seller true, correct and complete copies of its
Certificate of Incorporation and Bylaws and all contracts, leases, arrangements,
commitments and documents referred to herein or in any Schedule referred to
herein, in each case together with all amendments and supplements thereto.
3.24 Broker's and Finder's Fees. Neither Seller nor Shareholder has made
--------------------------
any agreement with any person, or taken any action which would cause any person,
to become entitled to an agent's, broker's or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
3.25 Information Furnished. Seller and Shareholder each acknowledge that
---------------------
Parent has previously furnished to them true and complete copies of Parent's (i)
Annual Report for the fiscal year ended March 31, 1997, which includes a Form
10-K as filed with the Securities and Exchange Commission (the "Commission"),
(ii) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997,
as filed with the Commission, (iii) current reports on Form 8-K, as filed with
the Commission, regarding each of the acquisition of Texas Drydock, Inc., the
completion of Parent's Rule 144A offering of convertible subordinated debt, the
3-for-2 stock split in the form of a stock dividend and the pending acquisitions
involving Utility Steel Fabrication, Inc., Fritz Culver, Inc. and Seller, and
(iv) Proxy Statement for its Annual Meeting on July 15, 1997 (the documents in
Clauses (i)-(iv) are collectively referred to herein as the "SEC Documents").
3.26 Investment Representations.
--------------------------
(a) Each of Seller and Shareholder either is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933 as amended (the "Securities Act") or, either alone or
with a purchaser representative, has such knowledge and experience in financial
and business matters that it or he is capable of evaluating the merits and risks
of the investment in the Halter Stock.
(b) Each of Seller and Shareholder understands and agrees that the
issuance of shares of Halter Stock to Seller upon consummation of the
transactions contemplated hereby will not be registered under the Securities Act
and the certificates representing such shares will be imprinted with a legend
indicating that such shares have not been registered under the Securities Act or
any state securities laws.
(c) Except as provided herein, Seller is acquiring the shares of
Halter Stock that it will receive upon the Closing for Seller's own account and
not with a view to distribution thereof in violation of the Securities Act.
Seller intends to distribute some of the Halter Stock to Richard J. Juelich
("Juelich") in redemption of his stock in Seller and may distribute some of the
Halter Stock to Shareholder as a dividend or in a partial or total liquidation
of Seller.
3.27 Representations and Warranties with Regard to AmCane.
----------------------------------------------------
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<PAGE>
(a) Due Organization and Qualification. AmCane is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has all requisite corporate power and authority to own, lease or
operate its properties and to carry on its business as it is presently being
operated and in the place where such properties are owned, leased or operated
and such business is conducted.
(b) Physical Properties. Set forth on Section (b) of Schedule 3.27 is
------------------- -------------
a description of (i) all vehicles owned or leased by AmCane (showing motor
vehicle identification numbers and whether owned or leased), (ii) all production
and warehouse machinery and equipment owned or leased by AmCane and (iii) all
physical properties (other than the types of properties referred to in (i) and
(ii) above), real, personal or mixed, owned by or leased to AmCane, having an
original cost in excess of $5,000 (exclusive of inventory). AmCane enjoys
peaceable possession of all properties owned or leased by it.
(c) Trademarks, Etc. Section (c) of Schedule 3.27 lists the domestic
---------------- -------------
and foreign trade names, trademarks, service marks, trademark registrations and
applications, service mark registrations and applications, patents, patent
applications, patent licenses, software licenses and copyright registrations and
applications owned by AmCane or used thereby in the operation of its business
(collectively, the "AmCane Intellectual Property"). The patents listed in
Section (c) of Schedule 3.27 are registered in the name of Intercane World
-------------
Corporation Ltd. ("Intercane"), but were acquired by AmCane pursuant to a letter
agreement dated June 25, 1997, and AmCane has beneficial ownership thereof and
the legal right to have such registrations assigned to it. Unless otherwise
indicated on Section (c) of Schedule 3.27, to Seller's knowledge AmCane has the
-------------
right to use and license the AmCane Intellectual Property and to transfer and
convey the AmCane Intellectual Property. Each item constituting part of the
AmCane Intellectual Property has been, to the extent indicated on Section (c) of
Schedule 3.27, registered with, filed in or issued by, as the case may be, the
- -------------
United States Patent and Trademark Office or such other government entity,
domestic or foreign, as is indicated on Section (c) of Schedule 3.27; to
-------------
Seller's knowledge all such registrations, filings and issuances remain in full
force and effect to the extent indicated on Section (c) of Schedule 3.27; and
-------------
all maintenance fees and other maintenance charges with respect thereto are
current. Except as stated on Section (c) of Schedule 3.27, there are no pending
-------------
proceedings challenging validity or ownership or adverse claims made or, to the
best knowledge of AmCane, Seller and Shareholder, threatened against AmCane with
respect to the AmCane Intellectual Property; there has been no litigation
commenced or threatened in writing within the past five (5) years with respect
to the AmCane Intellectual Property or the rights of AmCane therein; and none of
AmCane, Seller or Shareholder has any knowledge that (i) the AmCane Intellectual
Property or the use thereof by AmCane after the Closing in the same manner as
AmCane used it or held it for use prior to Closing infringes or otherwise
violates rights of third parties in any trade names, trademarks, service marks,
trademark or service mark registrations or applications, patents, patent
applications, patent licenses or copyright registrations or applications ("Third
Party AmCane Intellectual Property"), or (ii) such Third Party AmCane
Intellectual Property or its use by others or any other conduct of a third party
infringes upon the AmCane Intellectual Property.
(d) Permits. AmCane holds all licenses, franchises, permits and other
-------
governmental authorizations, including permits, titles (including, without
limitation, motor vehicle
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<PAGE>
titles and current registrations), fuel permits, licenses, franchises and
certificates, the absence of any of which could reasonably be expected to have a
material adverse effect on the business, operations properties, assets or
condition (financial or otherwise) results of operations or prospects of AmCane
(an "AmCane Material Adverse Effect") (the "AmCane Material Permits"). An
accurate list and summary description is set forth on Section (d) of Schedule
--------
3.27 hereto of all such AmCane Material Permits.
- ----
(e) Compliance with Laws. AmCane (i) has complied with all laws,
--------------------
regulations, licensing requirements and orders applicable to its business, the
noncompliance with which could reasonably be expected to have a AmCane Material
Adverse Effect, (ii) has filed with the proper authorities all statements and
reports required by the laws, regulations, licensing requirements and orders to
which it is subject, the failure of which to file could reasonably be expected
to have a AmCane Material Adverse Effect.
(f) Material Contracts. Set forth on Section (f) of Schedule 3.27 is
------------------ -------------
a list of all contracts, agreements, arrangements or commitments (the following,
"AmCane Material Contracts") that relate to: (i) the acquisition of services,
supplies, equipment or other personal property involving more than $25,000 or
that is not terminable by AmCane upon not more than thirty (30) days' notice
without obligation on the part of AmCane; (ii) the purchase or sale of real
property; (iii) distribution, agency or construction; (iv) lease of real or
personal property as lessor or lessee or sublessor or sublessee; (v) lending or
advancing of funds other than the extension of credit to trade purchasers in the
ordinary course of AmCane's business consistent with past business practice;
(vi) borrowing of funds or receipt of credit other than by AmCane in the
ordinary course of business consistent with good business practice and except
for trade payables in amounts and on terms consistent with past practice; (vii)
incurring of any obligation or liability except for transactions engaged in by
AmCane in the ordinary course of business consistent with good business
practice; (viii) the sale of personal property (other than sales of inventory in
the ordinary course of business consistent with good business practice) or
services under which payments due after the date of this Agreement exceed
$25,000; and (ix) any matter or transaction not in the ordinary course of the
business of AmCane or that is inconsistent with the past business practice of
AmCane.
(g) Contract Defaults. Except to the extent reflected in Section (g)
-----------------
of Schedule 3.27, AmCane is not in default in any respect under any AmCane
-------------
Material Contract, and such AmCane Material Contracts are legal, valid and
binding obligations of the respective parties thereto in accordance with their
terms and, except to the extent reflected in Section (g) of Schedule 3.27, have
-------------
not been amended; and no defenses, offsets or counterclaims thereto have been
asserted or to the best knowledge of AmCane, Seller and Shareholder, may be
made, by any party thereto other than AmCane nor has AmCane waived any
substantial rights thereunder.
(h) Litigation. Set forth on Section (h) of Schedule 3.27 is a list
---------- -------------
of all actions, suits, proceedings, investigations or grievances pending against
AmCane or, to the best knowledge of AmCane, Seller and Shareholder, threatened
against AmCane, AmCane's business or any property or rights of AmCane, at law or
in equity or before or by any court or Agency. None of the actions, suits,
proceedings or investigations listed on Section (h) of Schedule 3.27 either (i)
-------------
results or would, if adversely determined, have an AmCane Material Adverse
Effect or (ii) affects or would, if
-15-
<PAGE>
adversely determined, affect the right or ability of AmCane to carry on its
business substantially as now conducted. AmCane is not subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to the
business operations of AmCane, or in default with respect to any order, writ,
injunction or decree of any court or Agency with respect to its business,
operations or employees.
(i) Employee Benefits. AmCane does not now have, and has never had,
-----------------
any employee benefit plan within the meaning of ERISA.
(j) Employees; Employee Relations. AmCane does not now have, and has
-----------------------------
never had, any employees. AmCane is not a party to any employment contract with
any individual or employee, either express or implied. AmCane has entered into
the consulting agreements listed on Section (f) of Schedule 3.27.
-------------
(k) Taxes. AmCane has duly filed all federal, state, county, local
-----
and other excise, franchise, property, payroll, income, capital stock, sales and
use and other tax returns that are required to be filed by it and such returns
are true, correct and complete in all respects. AmCane has paid all taxes which
have become due or have been assessed against it or its assets and all taxes,
penalties and interest which any taxing authority has proposed or asserted to be
owing. All tax liabilities to which the properties of AmCane may have been
subjected have been discharged except for taxes assessed but not yet payable.
There are no tax claims presently being asserted against AmCane or its assets
and AmCane, Seller and Shareholder knows of no basis for any such claim. AmCane
has not granted any extension to any taxing authority of the limitation period
during which any tax liability may be asserted thereby.
(l) Business Relations. Section (l) of Schedule 3.27 contains an
------------------ -------------
accurate list of all significant customers of the AmCane's business (i.e., those
customers representing 5% or more of AmCane's revenues for the twelve (12)
months ended December 28, 1996).
(m) Environmental Laws and Regulations. To the best knowledge of
----------------------------------
AmCane, Seller and Shareholder, AmCane does not have any liability with respect
to any violation of Environmental Requirements.
(n) Accounts Receivable; Evidences of Indebtedness. Set forth on
----------------------------------------------
Section (n) of Schedule 3.27 is a list of all accounts receivable, promissory
-------------
notes, contract rights, commercial paper, debt securities and other rights to
receive money reflected as assets of AmCane in the Financial Statements and
through September 20, 1997 ("AmCane Receivables"), showing the name of the
account debtor, maker or obligor, the unpaid balance, the age of the AmCane
Receivable and, if applicable, the maturity date, the interest rate and the
collateral securing the obligation.
(o) Absence of Certain Changes or Events. AmCane began business on or
------------------------------------
about July 1, 1997, when it acquired the interests of Seller and Intercane in
the AmCane Joint Venture. Except as described on Section (o) of Schedule 3.27,
-------------
since July 1, 1997, AmCane has not (i) suffered any extraordinary losses or
waived any rights of substantial value; (ii) amended its Certificate of
Incorporation or Bylaws; (iii) made any change in its mode of management or any
change in its
-16-
<PAGE>
method of operation or method of accounting; (iv) made or become obligated to
make any capital expenditures other than such expenditures or commitments not
exceeding $300,000 in the aggregate; (v) suffered any event or circumstance that
could have a AmCane Material Adverse Effect; (vi) entered into any transaction,
except in the ordinary course of its business consistent with good business
practice; (vii) received any notice of any claim asserted against it by any
Agency that could have a AmCane Material Adverse Effect; or (viii) incurred or
agreed to incur any material obligation outside the ordinary course of business
that has not heretofore been disclosed in writing to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Each of Buyer and Parent, jointly and severally, represents and warrants to
Seller and Shareholder as follows:
4.1 Organization and Authority.
--------------------------
(a) Each of Buyer and Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own or lease its respective
properties and to carry on its business as it is presently being operated and in
the place where such properties are owned or leased and such business is
conducted. The execution, delivery and performance of this Agreement by each of
Buyer and Parent, and all other agreements by and among the parties, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite corporate action and no further action or
approval is required in order to permit Buyer and Parent to consummate the
transactions contemplated hereby and thereby. This Agreement constitutes, and
all other agreements by and among the parties, when executed and delivered in
accordance with the terms thereof, will constitute the legal, valid and binding
obligations of each of Buyer and Parent, enforceable in accordance with their
terms, subject to the Equitable Exceptions. Each of Buyer and Parent has full
power, authority and legal right to enter into this Agreement and all other
agreements by and among the parties and to consummate the transactions
contemplated hereby and thereby. The making and performance of this Agreement,
and all other agreements by and among the parties, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof will not (i) conflict with the respective Certificate of
Incorporation or Bylaws of Buyer or Parent, (ii) result in any breach or
termination of, or constitute a default under, or constitute an event which with
notice or lapse of time, or both, would become a default under, or result in the
creation of any Encumbrance upon any asset of Buyer or Parent under, or create
any rights of termination, cancellation or acceleration in any person under, any
contract, lease, arrangement or commitment, or violate any order, writ,
injunction or decree, to which Buyer or Parent is a party or by which Buyer or
Parent or its respective assets, business or operations may be bound or affected
or under which Buyer, Parent or their respective assets, business or operations
receive benefits, (iii) result in the loss or adverse modification of any
material license, franchise, permit or other authorization granted to or
otherwise held by Buyer or Parent that is material to the business or financial
condition of Buyer and Parent or (iv) result in the violation of any provisions
of law
-17-
<PAGE>
applicable to Buyer or Parent, the violation of which could have a material
adverse effect upon the business, operations or assets of Buyer and Parent,
taken as a whole.
4.2 Consents. Except for the approval of the registration of the Halter
--------
Stock by the Commission, the approval of the American Stock Exchange, Inc. for
the listing of the Halter Stock and the approval of all filings under the HSR
Act, as defined below, no consent, approval, authorization or order of any
court, Agency or any other person is required in order to permit Buyer or Parent
to consummate the transactions contemplated by this Agreement.
4.3 Broker's and Finder's Fees. Neither Buyer nor Parent has made any
--------------------------
agreement with any person, or taken any action which would cause any person, to
become entitled to an agent's, broker's or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
4.4 Litigation. There is no pending or, to the knowledge of Buyer and
----------
Parent, threatened litigation in any court or any proceeding before any Agency
(i) in which it is sought to restrain, prohibit, invalidate or obtain damages in
respect of the consummation of the purchase and sale of the Assets or the other
transactions contemplated hereby, (ii) that could, if adversely determined,
result in any material adverse change in the business, operations or assets or
the condition, financial or otherwise, or results of operations of Buyer and
Parent, taken as a whole, or (iii) that could, if adversely determined, have a
material adverse effect on the right or ability of Buyer or Parent to carry on
its respective business substantially as now conducted.
4.5 Halter Stock. The Halter Stock to be delivered to Seller at the
------------
Closing shall when issued constitute valid and legally issued shares of Buyer,
fully paid and nonassessable, and except as set forth in this Agreement, (a)
will be owned free and clear of all Liens created by Buyer, and (b) will be
legally equivalent in all respects to the Halter Stock issued and outstanding as
of the date hereof, except for the right to acquire additional shares pursuant
to the 3-for-2 stock split in the form of a stock dividend announced before the
date of this Agreement.
4.6 Employees. Buyer represents that it presently intends to offer
---------
employment to all of the employees of Seller; provided, however, that Buyer
shall have no such obligation to offer such employment to Seller's employees.
4.7 Capitalization. As of October 3, 1997, the authorized capital stock
--------------
of Parent consists of (i) 50,000,000 shares, $.01 par value of common stock of
which on the date hereof approximately 18,451,600 shares are issued and
outstanding and (ii) 50,000,000 shares of preferred stock, $.01 par value, of
which no shares are issued and outstanding on the date hereof. All outstanding
shares of capital stock of Parent have been duly authorized and validly issued
and are fully paid and nonassessable. Except as disclosed in the SEC Documents,
there are no plans, agreements or other arrangements pursuant to which any
options, warrants or other rights to acquire shares of capital stock from Buyer
are outstanding. Except as disclosed in the SEC Documents, other than the
shares of capital stock of Parent described above, there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent, and (iii) no phantom stock,
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<PAGE>
options or other rights to acquire from Parent, and no obligation of Parent to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent.
ARTICLE V
COVENANTS OF SELLER AND SHAREHOLDER
Each of Seller and Shareholder, jointly and severally, covenants and agrees
with Buyer and Parent as follows:
5.1 Affirmative Covenants. From October 3, 1997 to the Closing Date,
---------------------
Seller will operate the Business only in the usual, regular and ordinary course
of business consistent with good business practices, and will use all reasonable
efforts to: (i) preserve intact its business organization and the Assets; (ii)
maintain its properties, machinery and equipment in good operating condition and
repair; (iii) continue all existing policies of insurance (or comparable
insurance) in full force and effect up to and including the Closing Date (and
will not cancel any such insurance or take (or fail to take) any action that
would enable the insurers under such policies to avoid liability for claims
arising out of any occurrence prior to the Closing Date without the prior
written consent of Buyer); (iv) use all reasonable efforts to keep available the
services of its present officers, employees and agents; (v) use all reasonable
efforts to preserve its present relationships with lending and other financial
institutions, suppliers and customers; and (vi) maintain its books, accounts and
records in the usual, regular and ordinary manner on a basis consistently
applied. Seller or Shareholder will notify Buyer in writing within five (5)
business days of learning of any facts, event or circumstance that is reasonably
likely to have a Material Adverse Effect.
5.2 Negative Covenants. From October 3, 1997 to the Closing Date, Seller
------------------
will not, without the prior written consent of Buyer: (i) with regard to
employees utilized in the Business, make any increase in the compensation
payable or to become payable by it to any employee or contribute or make any
commitment to or representation that it will contribute any amounts to any bonus
or other employee benefit plan for employees of Seller except as required by law
or by the terms of any such plan in the ordinary course of business consistent
with good business practices; (ii) make any amendment to its Certificate of
Incorporation, Bylaws or other organizational documents; (iii) make any material
change in the character of the Business; (iv) incur any obligation or liability
(fixed or contingent) with regard to the Business except in the ordinary course
of business consistent with good business practices; (v) discharge or satisfy
any Encumbrance or pay any obligation or liability (fixed or contingent) with
regard to the Business other than in the ordinary course of business consistent
with good business practices; (vi) mortgage, pledge, transfer or otherwise
dispose of or subject to any Encumbrance any of the Assets, except in the
ordinary course of business consistent with good business practices; (vii)
acquire any assets or properties with regard to the Business, except in the
ordinary course of business consistent with good business practices; (viii)
cancel or compromise any material debt or claim with regard to the Business;
(ix) waive or release any rights of material value with regard to the Business;
(x) transfer, grant or terminate contract, lease, arrangement or commitment
rights under any concessions, leases, licenses, agreements, patents, patent
licenses, inventions, trademarks, trade names, service marks, trade dress
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<PAGE>
or copyrights or registrations or licenses thereof or applications therefor or
with respect to any know-how or other proprietary or trade rights with regard to
the Business; (xi) modify or change in any material respect or terminate any
existing contract, lease, arrangement or commitment required to be listed on
Schedule 1.1A; (xii) undertake any material borrowing of any nature whatsoever
- -------------
with regard to the Business other than in the ordinary course of business
consistent with good business practices; (xiii) make any loans or extensions of
credit with regard to the Business, except in the ordinary course of business
consistent with good business practices; (xiv) make or become obligated to make
any capital expenditures or enter into commitments therefor with regard to the
Business exceeding $300,000 in the aggregate; (xv) sell, discount or otherwise
dispose of any Receivables; (xvi) permit the Bank Debt Balance to exceed
$10,000,000, unless discharged on the Closing Date; (xvii) make any payments in
respect of dividends or redemptions or other distributions to its shareholders
except for (A) distributions with respect to federal and state income tax
liabilities associated with the equity ownership of Seller and (B) the
redemption of the stock of Richard Juelich, provided that such redemption is
made solely from the Cash Consideration and the Stock Consideration to be
received hereunder, and (xviii) take any action, the purpose or effect of which
is to shift income from post-closing periods to the pre-closing period or to
defer expenses from the pre-closing period to post-closing periods which action
is not in the ordinary course of business, consistent with past practice.
5.3 Access to Properties and Records. Seller will keep Buyer advised of
--------------------------------
all material developments relevant to the consummation of the transactions
contemplated hereby and will cooperate fully in permitting Buyer to make a full
investigation of the business, properties, financial condition and investments
of Seller during regular business hours and upon reasonable notice and in
bringing about the consummation of the transactions contemplated hereby. Seller
will, during regular business hours and upon reasonable notice, afford to Buyer
and its representatives full access to the offices, buildings, real properties,
machinery and equipment, inventory and supplies, records, files, books of
account, tax returns, agreements and commitments, corporate record books and
stock books and personnel of Seller, and will permit Buyer and its
representatives to contact and interview Seller's personnel, suppliers, vendors,
referral sources and any other persons that Buyer shall reasonably determine to
be necessary for it to make a full investigation of the Business. Seller will
furnish to Buyer all such further information concerning the business and
affairs of Seller as Buyer may reasonably request. Seller will update by
amendment or supplement each of the Schedules referred to herein and any other
disclosure in writing from Seller required by this Agreement to be disclosed in
writing by Seller to Buyer promptly upon any change in the information set forth
in such Schedules or other disclosures, and Seller hereby represents and
warrants that such Schedules and such written disclosures, as so amended or
supplemented, shall be true, correct and complete as of the date or dates
thereof; provided, however, that the inclusion of any information in any such
-------- -------
amendment or supplement, not included in the original Schedule or other
disclosure at or prior to the date of this Agreement, shall not limit or impair
any right which Buyer might otherwise have to terminate this Agreement pursuant
to Section 11.1(c) due to the failure to satisfy the condition in Section 7.1.
No investigation pursuant to this Section 5.3 shall affect any representations
or warranties or the conditions to the obligations of Buyer to consummate the
transactions contemplated hereby. In the event of the termination of this
Agreement, Buyer will deliver to Seller all documents, work papers and other
material (including copies thereof) obtained by Buyer or on its behalf from
Seller as a result of this Agreement or in connection herewith, whether so
obtained
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<PAGE>
before or after the execution hereof and, if the transactions contemplated
hereby are not consummated, Buyer will hold such information in confidence until
such time as such information is otherwise publicly available.
5.4 Employees of Seller. Seller shall pay all salaries and wages to all
-------------------
employees of Seller employed on the Closing Date, and effective on the Closing
Date shall terminate all such employees. Seller shall pay all wages, salaries
and bonuses which are payable to Seller's employees prior to the Closing Date.
Seller shall maintain through the Closing Date all currently-existing medical,
dental, 401(k), life insurance, and any other welfare or benefit plans for its
employees. Seller shall make all workers' compensation payments due on or before
the Closing Date.
5.5 Approvals of Third Parties. As soon as practicable after the date
--------------------------
hereof, each of Seller and Shareholder will use all reasonable efforts to secure
all necessary consents, approvals and clearances of third parties that shall be
required to consummate the transactions contemplated hereby and will otherwise
use all reasonable efforts to cause the consummation of such transactions in
accordance with the terms and conditions of this Agreement.
5.6 Notices. Seller will timely give all notices required to be given
-------
relating to the transactions contemplated hereby, including without limitation,
(i) notices to employees and (ii) any notices required or requested to be given
to all creditors and claimants against Seller.
5.7 Access to Books and Records. Seller agrees to provide Buyer, its
---------------------------
accountants, counsel and other representatives, during normal business hours and
upon reasonable notice, for a period of four (4) years after the Closing Date,
access to the books, records, income tax returns, contracts and other underlying
data and documentation of Seller relating to the period prior to the Closing
Date and to make available to Buyer personnel of Seller in Buyer's review
thereof for the purpose of enabling them to determine and calculate any tax
liabilities in connection with the Assets. Seller agrees that, for such four-
year period, it will preserve and keep intact all such books and records.
5.8 No Solicitation of Offers. Each of Seller and Shareholder covenants
-------------------------
and agrees that it or he will not solicit, entertain, encourage or assist any
acquisition proposal with respect to the purchase or exchange of the Assets or
any portion thereof, or with respect to any proposed merger, consolidation, sale
of securities or other acquisition involving Seller, by or with any person other
than Buyer until November 30, 1997.
5.9 Release of Financing Statements. Seller shall obtain and file in the
-------------------------------
appropriate jurisdictions Termination Statements property executed by any
parties holding a security interest or other Encumbrance with respect to the
Assets as identified by lien searches conducted with respect to Seller and the
Assets.
5.10 HSR Filing. Seller shall in cooperation with Buyer file with the
----------
Federal Trade Commission and the Department of Justice any notifications
required to be filed under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") and the rules and regulations
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<PAGE>
promulgated thereunder with respect to the transactions contemplated hereby;
provided, that Buyer shall pay the required fees with respect to the applicable
filings under the HSR Act.
5.11 Change of Name. Seller agrees to change its name to a name not using
--------------
the word "AmClyde" within 60 days of the date of Closing and cooperate with
Buyer with a change of Buyer's name to a name using the word "AmClyde".
5.12 Maintenance of Existence. Seller shall maintain its existence as a
------------------------
Delaware corporation until its obligations under this Agreement are satisfied.
ARTICLE VI
COVENANTS OF BUYER AND PARENT
Each of Buyer and Parent, jointly and severally, covenants and agrees with
Seller and Shareholder as follows:
6.1 Furnishing of Information. Buyer will keep Seller advised of all
-------------------------
material developments relevant to the consummation of the transactions
contemplated hereby and will cooperate fully with Seller in bringing about the
consummation of the transactions contemplated hereby. Buyer will update by
amendment or supplement each of the Schedules referred to herein and any other
disclosure in writing from Buyer required by this Agreement to be disclosed in
writing by Buyer to Seller promptly upon any change in the information set forth
in such Schedules or other disclosures, and Buyer hereby represents and warrants
that such Schedules and such written disclosures, as so amended or supplemented,
shall be true, correct and complete as of the date or dates thereof; provided,
--------
however, that the inclusion of any information in any such amendment or
- -------
supplement, not included in the original Schedule or other disclosure at or
prior to the date of this Agreement, shall not limit or impair any right which
Seller might otherwise have to terminate this Agreement pursuant to Section
11.1(c) due to the failure to satisfy the condition in Section 8.1. No
investigation pursuant to this Section 6.1 shall affect any representations or
warranties or the conditions to the obligations of Seller to consummate the
transactions contemplated hereby. In the event of the termination of this
Agreement, Seller will deliver to Buyer all documents, work papers and other
material (including copies thereof) obtained by Seller or on its behalf from
Buyer as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof and, if the transactions
contemplated hereby are not consummated, Seller will hold such information in
confidence until such time as such information is otherwise publicly available.
6.2 Approvals of Third Parties. As soon as practicable after the date
--------------------------
hereof, Buyer will use all reasonable efforts to cooperate with Seller and
Shareholder to secure all necessary consents, approvals and clearances of third
parties that shall be required to consummate the transactions contemplated
hereby and will otherwise use all reasonable efforts to cooperate with Seller
and Shareholder to cause the consummation of such transactions in accordance
with the terms and conditions of this Agreement.
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<PAGE>
6.3 Access to Books and Records. Buyer agrees to provide Seller, its
---------------------------
accountants, counsel and other representatives during normal business hours and
upon reasonable notice, for a period of four (4) years after the Closing Date,
access to the books, records, tax returns, contracts and other underlying data
and documentation of Buyer relating to the period prior to the Closing Date and
to make available to Seller personnel of Buyer in Seller's review thereof for
the purpose of enabling them to review any tax liabilities for such period.
Buyer agrees that, for such four-year period, it will preserve and keep intact
all such books and records.
6.4 Discharge of Assumed Liabilities. Subject to and upon the terms and
--------------------------------
conditions of this Agreement, Buyer shall pay, perform and discharge, according
to their terms, the Assumed Liabilities.
6.5 HSR Filing. Buyer and Parent shall in cooperation with Seller file
----------
with the Federal Trade Commission and the Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby.
6.6 Registration of Halter Stock.
----------------------------
(a) Parent shall use all reasonable efforts to effect the
registration of the Halter Stock issued hereunder (the "Registrable Securities")
as soon as practicable after the Closing Date and in any event shall prepare and
file with the Commission, within ten (10) business days following the Closing
Date, a registration statement on Form S-3 (or another appropriate form) for the
offer and sale by Seller, Shareholder and Juelich (the "Holders") of the
Registrable Securities so issued (the "Shelf Registration Statement"); provided,
that if the Shelf Registration Statement is declared effective prior to December
10, 1997 (the "Effectiveness Target Date"), Holders shall not sell any
Registrable Securities pursuant to the Shelf Registration Statement prior to the
Effectiveness Target Date. In addition, Parent shall prepare and file all such
amendments and supplements to such Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the Shelf
Registration Statement effective and in compliance with applicable law for a
period of not less than two (2) years following the Closing Date or such shorter
period which will terminate when all Registrable Securities have been sold (the
"Effectiveness Period") (but not before the expiration of the 90-day period
referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable). Notwithstanding the foregoing, Parent shall not be obligated to
effect any such registration pursuant to this Section 6.6 if Parent's counsel
delivers an opinion to Holders and Parent's registrar and transfer agent
reasonably satisfactory to counsel for Holders to the effect that the
Registrable Securities may be sold or distributed as planned by Holders without
registration. All expenses incident to Parent's performance or compliance with
this Section 6.6 shall be paid by Parent; provided, however, Holders shall be
responsible for and shall pay any underwriting, brokerage or selling agent's
fees, discounts or commissions, and shall be responsible for and pay all legal
fees and expenses of counsel to Holders or counsel to any underwriter or selling
agent. In connection with any underwritten offering to which Parent shall have
consented, Parent shall provide, or cause to be provided, such representations,
warranties, covenants, opinions, "cold comfort" letters, indemnifications,
opportunities for due diligence and other matters, and shall take all such other
reasonable actions, as are customary in underwritten public offerings of
securities.
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<PAGE>
(b) In the event the Shelf Registration Statement is not declared
effective by the Effectiveness Target Date, then within fifteen (15) business
days after receipt by Parent of a Price Protection Certificate (as defined
below) from a Holder within three hundred seventy-five (375) days after the
Closing Date Parent shall pay to such Holder an amount equal to the lesser of:
(i) the product of the Trading Price Spread (as defined below) (but only to the
extent such amount is a positive number) times the number of shares of Halter
Stock issued pursuant to Article II sold by such Holder as noted in the Price
Protection Certificate or (ii) the product of the Actual Price Spread (as
defined below) (but only to the extent such amount is a positive number) times
the number of shares of Halter Stock issued pursuant to Article II sold by such
Holder as noted in the Price Protection Certificate. For purposes hereof, the
"Trading Price Spread" shall mean the excess of (i) the average closing price of
the Halter Stock for the three trading days ending on the Effectiveness Target
Date as reported by the American Stock Exchange, Inc. ("AMEX") over (ii) the
average closing price of the Halter Stock for the three trading days ending on
the date immediately preceding the date upon which the Shelf Registration
Statement is declared effective as reported by AMEX. For purposes hereof, the
"Actual Price Spread" shall mean the excess of (i) the average closing price of
the Halter Stock for the three trading days ending on the Effectiveness Target
Date as reported by AMEX over (ii) the actual selling price of such shares
Halter Stock (without deduction for commission or fees of any nature) in an open
market brokers' transaction. For purposes hereof, the "Price Protection
Certificate" shall mean a certificate of a Holder containing all the information
required to calculate the amount to be paid by Parent, a recitation of
compliance by Holder with the provisions of this Section 6.6(b) and a brokers'
confirmation of sale or other documentation satisfactory to Parent evidencing
such Holders' sale of Halter Stock (including the date and sales price thereof).
Holder may deliver a Price Protection Certificate from time to time during the
375-day period after sales of Halter Stock are made by a Holder. Parent shall
have no obligation under this Section if Parent does not receive a Price
Protection Certificate within three hundred seventy-five (375) days after the
Closing Date.
(c) Notwithstanding anything to the contrary in Section 6.6(a), but
subject to compliance with Section 6.6(d), Parent may, by delivering written
notice to Holders, prohibit offers and sales of Registrable Securities pursuant
to the Shelf Registration Statement at any time if (A)(i) Parent is in the
possession of material non-public information relating to Parent, (ii) Parent
determines (based on advice of counsel) that such prohibition is necessary in
order to avoid a requirement to disclose such material non-public information to
the public and (iii) Parent determines in good faith that public disclosure of
such material non-public information would not be in the best interests of
Parent and its stockholders or (B)(i) Parent has made a public announcement
relating to an acquisition or business combination transaction including Parent
and/or one or more of its subsidiaries that is material to Parent and its
subsidiaries taken as a whole and (ii) Parent determines in good faith that (x)
offers and sales of Registrable Securities pursuant to the Shelf Registration
Statement prior to the consummation of such transaction (or such earlier date as
Parent shall determine) is not in the best interests of Parent and its
stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in the Shelf Registration
Statement; provided, however, that upon (i) the public disclosure by Parent of
-------- -------
the material non-public information described in clause (A) of this paragraph or
(ii) the consummation, abandonment or termination of, or the availability of the
required financial statements with respect to, a transaction
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<PAGE>
described in clause (B) of this paragraph, the suspension of the use of the
Shelf Registration Statement pursuant to this Section 6.6(c) shall cease and the
Parent shall promptly notify Holders that dispositions of Registrable Securities
may be resumed.
(d) Parent and Holders agree that Holders will suffer damages if
Parent fails to fulfill its obligations pursuant to Section 6.6 hereof and that
it would not be possible to ascertain the extent of such damages. Accordingly,
in the event of such failure by Parent to fulfill such obligations, Parent
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder.
If the prospectus contained in the Shelf Registration Statement ceases to be
usable (including as a result of a prohibition against sales of Registrable
Securities pursuant to Section 6.6(c) hereof) at any time during the
Effectiveness Period for a period of time which shall exceed 30 days in the
aggregate during any 365-day period (a "Registration Default"), then Parent
shall pay Liquidated Damages in cash to each Holder following occurrence of such
Registration Default in an amount equal to $.0024 per week per share (subject to
adjustment in the event of stock splits, stock recombination, stock dividends
and the like) of Registrable Securities then held by such Holder for each week
or portion thereof that the Registration Default continues (including the
original 30-day period constituting the Registration Default). The amount of
such Liquidated Damages will increase by additional $.0024 per week per share
(subject to adjustment as set forth above) of Registrable Securities then held
by such Holder for each subsequent 30-day period until all Registration Defaults
have been cured; provided, however, that Liquidated Damages shall not at any
-------- -------
time exceed $.0118 per week per share (subject to adjustment as set forth above)
of Registrable Securities then held by such Holder. Following the cure of all
Registration Defaults relating to any Registrable Securities, the accrual of
Liquidated Damages with respect to such Registrable Securities will cease. In
any event, Liquidated Damages will not be payable with respect to any period
following the expiration of the Effectiveness Period. A Registration Default
shall be cured on the date the Shelf Registration Statement is declared
effective or the prospectus contained therein again becomes usable.
(e) Parent may require Holders to furnish to Parent such
information regarding the distribution of Registrable Securities as is required
by law to be disclosed in the Shelf Registration Statement, and Parent may
exclude from the Shelf Registration Statement the Registrable Securities if
Holders fail to furnish such information within a reasonable time after
receiving such request. Each holder agrees to notify Parent as promptly as
practicable of any inaccuracy or change in information previously furnished by
such Holder to Parent or of the occurrence of any event as a result of which the
prospectus included in the Shelf Registration Statement contains or would
contain an untrue statement of a material fact regarding a Holder or such
Holder's intended method of distribution of Registrable Securities, or omits to
state any material fact regarding a Holder or such Holder's intended method of
distribution of Registrable Securities, necessary to make the statement therein,
in light of the circumstances then existing, not misleading and promptly furnish
to Parent any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to a Holder or the distribution of the Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
then existing, not misleading.
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<PAGE>
(f) Parent will indemnify and hold harmless Holders from and
against any and all loss, damage, liability, cost and expense to which the
Holders may become subject under the Securities Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that Parent will not be
liable in any such case and will be indemnified by Holder, to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such Holder.
6.7 Employees. With regard to all employees of Seller (whether or not
---------
hired by Buyer on or following the Closing Date), Buyer shall pay, perform and
discharge, according to their terms, any accrued holiday, short-term disability,
sick, severance, termination, payment in lieu of notice and vacation pay to
which such employees are entitled or claim to be entitled as of the Closing Date
(including obligations arising from the termination of such employees by Seller
in anticipation of the transactions contemplated herein) and any additional
holiday, sick or vacation pay set forth in Schedule 6.7; provided that with
------------
regard to any former employee of Seller that is hired by Buyer, Buyer may
discharge its obligation hereunder to such employee by giving credit (in lieu of
a cash payment) to such employee for any such accrued items, subject to any
consent of such employee required by law. With regard to all employees of
Seller (whether or not hired by Buyer on or following the Closing Date), Buyer
shall pay, perform and discharge, according to their terms, any accrued wages,
salaries and bonuses which are accrued as of the Closing Date but payable after
the Closing Date. Buyer shall (i) pay when due all workers' compensation
payments incurred by Buyer with regard to its employees, (ii) pay when due all
wages, salaries and bonuses incurred by Buyer with regard to its employees, and
(iii) be responsible for all welfare and benefit plans maintained with regard to
its employees (including, without limitation, the provision for COBRA benefits
on a prospective basis).
6.8 Letters of Credit. As of the date of this Agreement, Firstar Bank of
-----------------
Minnesota, N.A. ("Firstar Bank") has issued on behalf of Seller the letters of
credit listed on Schedule 6.8 attached hereto (the "Letters of Credit"). Parent
------------
agrees to deliver to Firstar Bank at Closing a guarantee in form satisfactory to
Firstar Bank so as to enable Firstar Bank to release Seller from any and all
liabilities to Firstar Bank with respect to such letters of credit and to
release Seller's assets from all security interests in favor of Firstar Bank
with respect to such letters of credit.
6.9 Performance and Payment Bonds. As of the date of this Agreement,
-----------------------------
United States Fidelity and Guaranty Company ("USF&G") has issued on behalf of
Seller the performance and payment bonds listed on Schedule 6.9 attached hereto
------------
(the "Bonds"). Parent agrees to deliver to USF&G at Closing a guarantee,
assumption or other agreement in form satisfactory to USF&G so as to enable
USF&G to maintain the issuance of the Bonds.
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<PAGE>
6.10 Retention of Records and Access by Seller and Shareholder. Buyer
---------------------------------------------------------
agrees that for a period of five (5) years following the Closing Date Buyer will
use reasonable efforts to retain all of the records of Seller related to the
Assets that are transferred by Seller to Buyer pursuant to Section 9.2(b) above.
Buyer further agrees that from time to time during such five (5) year period
upon the prior written request of Seller or Shareholder Buyer will make such
records available to Seller or Shareholder for review by Seller or Shareholder
for any reasonable business or tax purpose of Seller or Shareholder and for
photocopying by and at the expense of Seller or Shareholder.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT
The obligations of Buyer and Parent to cause the purchase of the Assets and
the other transactions contemplated hereby to occur at Closing shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions, except such conditions as Buyer and Parent may waive in writing:
7.1 Representations and Warranties of Seller and Shareholder. All of the
--------------------------------------------------------
representations and warranties of Seller and Shareholder contained in this
Agreement and in any Schedule or other disclosure in writing from Seller or
Shareholder shall have been true and correct in all material respects when made
(without regard to any subsequent amendment or supplement), and shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
7.2 Covenants of Seller and Shareholder. All of the covenants and
-----------------------------------
agreements herein on the part of Seller and Shareholder to be complied with or
performed on or before the Closing Date shall have been fully complied with and
performed.
7.3 Seller's Certificate. There shall be delivered to Buyer a
--------------------
certificate dated as of the Closing Date and signed by the President or a Vice
President of Seller and by Shareholder to the effect set forth in Sections 7.1
and 7.2, which certificate shall have the effect of a representation and
warranty made by each of Seller and Shareholder on and as of the Closing Date.
7.4 Noncompetition Agreements. Each of Seller, Shareholder and Juelich
-------------------------
shall have executed and delivered to Buyer a Noncompetition Agreement in
substantially the form attached hereto as Exhibit C-1, Exhibit C-2 and Exhibit
----------- ----------- -------
C-3, respectively (the "Noncompetition Agreements").
- ---
7.5 Employment Agreement. Juelich shall have executed and delivered to
--------------------
Buyer an Employment Agreement in substantially the form attached hereto as
Exhibit D (the "Employment Agreement").
- ---------
7.6 Escrow Agreement. Seller shall have executed and delivered to Buyer
----------------
an Escrow Agreement substantially in the form attached hereto as Exhibit E (the
---------
"Escrow Agreement").
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7.7 No Casualty Losses. The Assets shall not have suffered any
------------------
destruction or damage by fire, explosion or other casualty or any taking by
eminent domain which has materially impaired the operation of the Assets or
otherwise had a Material Adverse Effect.
7.8 Certificates of Authorities. Seller shall have furnished to Buyer
---------------------------
(i) certificates of the Secretary of State of Delaware, dated as of a date not
more than twenty (20) days prior to the Closing Date, attesting to the
organization, existence and good standing of Seller, (ii) a copy, certified by
the Secretary of State of Delaware as of a date not more than twenty (20) days
prior to the Closing Date, of Seller's Certificate of Incorporation and all
amendments thereto, (iii) a copy, certified by the Secretary of Seller, of the
Bylaws of Seller, as amended and in effect at the Closing Date and (iv) a copy,
certified by an authorized officer of Seller, of resolutions duly adopted by
each of the Board of Directors and shareholders of Seller duly authorizing the
transactions contemplated in this Agreement.
7.9 Litigation. At the Closing Date, there shall not be pending or
----------
threatened any litigation in any court or any proceeding before any Agency, (i)
in which it is sought to restrain, invalidate, set aside or obtain damages in
respect of the consummation of the purchase and sale of the Assets or the other
transactions contemplated hereby, (ii) that could, if adversely determined,
result in any Material Adverse Effect, or (iii) as a result of which, in the
reasonable judgment of Buyer, Buyer would be deprived of the material benefits
of its ownership of the Assets.
7.10 Satisfactory to Buyer's Counsel. All actions, proceedings,
-------------------------------
instruments and documents required to carry out this Agreement or incidental
thereto and all other related matters shall have been satisfactory to Locke
Purnell Rain Harrell (A Professional Corporation), Dallas, Texas, counsel for
Buyer.
7.11 Opinion of Seller's Counsel. Buyer shall have received the opinion
---------------------------
of Henson & Efron, P.A., counsel for Seller, dated the Closing Date, in form and
substance satisfactory to Buyer, with respect to the matters set forth on
Exhibit F-1. Buyer shall have received the opinion of Dorsey & Whitney, LLP,
- -----------
counsel for Seller, dated the Closing Date, in form and substance satisfactory
to Buyer, with respect to the matters set forth on Exhibit F-2.
-----------
7.12 No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect. Buyer shall receive a certificate from Seller, dated
as of the Closing Date and in form and substance satisfactory to Buyer, as to
the fulfillment of the conditions set forth in this Section 7.12.
7.13 HSR Approval. All applicable waiting periods and any extensions
------------
under the HSR Act shall have expired or otherwise been terminated.
7.14 Consents. Seller shall have obtained all orders, approvals, estoppel
--------
certificates or consents of third parties, including, without limitation, any
orders, approvals, certificates or consents deemed necessary by counsel to Buyer
that shall be required to consummate the transactions contemplated hereby,
including, without limitation, consents to the assignment of the Assumed
Liabilities listed on Schedule 1.1A.
-------------
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7.15 Juelich Investment Letter. Juelich shall have executed and delivered
-------------------------
to Parent an investment letter making substantially the same representations and
warranties as set forth in Sections 3.25 and 3.26 above and agreeing to be bound
by the provisions of Section 6.6 with respect to the Halter Stock to be received
by him from Seller.
7.16 60-Ton Portal Crane Agreement. Each of Seller, Shareholder and
-----------------------------
United Dominion Industries, Inc., a Delaware corporation ("UDI"), shall have
executed and delivered to Buyer a mutually satisfactory agreement regarding Navy
Prime Contract #N62471-82-C-1455 for Model NP60 Clyde Crane and UDI Product
Liability Claims, as defined below, (the "60-Ton Portal Crane Agreement") and
all documents required to be delivered pursuant to the terms of the 60-Ton
Portal Crane Agreement.
7.17 Further Assurances. Each of Seller and Shareholder shall take all
------------------
such further action as may be reasonably requested by Buyer in order to
effectuate the consummation of the transactions contemplated by this Agreement.
If Buyer shall reasonably determine that any further conveyance, assignment or
other document or any further action is necessary to vest in it full title to
the Assets, Seller and Shareholder shall cause the appropriate officers to
execute and deliver all such instruments and take all such action as Buyer may
reasonably determine to be necessary.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER AND SHAREHOLDER
The obligations of Seller and Shareholder to cause the sale of the Assets
and the other transactions contemplated hereby to occur at Closing shall be
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions, except such conditions as Seller and Shareholder may waive
in writing:
8.1 Representations and Warranties of Buyer and Parent. All of the
--------------------------------------------------
representations and warranties of Buyer and Parent contained in this Agreement
and in any Schedule or other disclosure in writing from Buyer shall have been
true and correct in all material respects when made (without regard to any
subsequent amendment or supplement), and shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date.
8.2 Covenants of Buyer and Parent. All of the covenants and agreements
-----------------------------
herein on the part of Buyer or Parent to be complied with or performed on or
before the Closing Date shall have been fully complied with and performed.
8.3 Certificate of Buyer and Parent. There shall be delivered to Seller
-------------------------------
and Shareholder a certificate dated as of the Closing Date and signed by the
President or a Vice President of Buyer and Parent to the effect set forth in
Sections 8.1 and 8.2, which certificate shall have the effect of a
representation and warranty made by Buyer and Parent on and as of the Closing
Date.
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8.4 Noncompetition Agreements. Buyer shall have executed and delivered
-------------------------
to Seller and to Shareholder the Noncompetition Agreements.
8.5 Employment Agreement. Buyer or an affiliate of Buyer shall have
--------------------
executed and delivered to Juelich the Employment Agreement.
8.6 Escrow Agreement. Buyer shall have executed and delivered to Seller
----------------
the Escrow Agreement.
8.7 Certificates of Authorities. Each of Buyer and Parent shall have
---------------------------
furnished to Seller (i) certificates of the Secretary of State of Delaware,
dated as of a date not more than twenty (20) days prior to the Closing Date,
attesting to the organization, existence and good standing of each of Buyer and
Parent, (ii) copies, certified by the Secretary of State of Delaware, as of a
date not more than twenty (20) days prior the Closing Date, of each of Buyer's
and Parent's respective Certificate of Incorporation and all amendments thereto,
(iii) a copy, certified by the Secretary of Buyer, of the Bylaws of Buyer, as
amended and in effect at the Closing Date, (iv) a copy, certified by the
Secretary of Parent, of the Bylaws of Parent, as amended and in effect at the
Closing Date and (v) copies, certified by authorized officers of each of Buyer
and Parent, of resolutions duly adopted by the respective Board of Directors of
Buyer and Parent duly authorizing the transactions contemplated in this
Agreement.
8.8 Satisfactory to Seller's Counsel. All actions, proceedings,
--------------------------------
instruments and documents required to carry out this Agreement or incidental
thereto and all other related legal matters shall have been satisfactory to
Dorsey & Whitney, LLP, counsel for Seller and Shareholder.
8.9 Opinion of Buyer's Counsel. Seller shall have received an opinion of
--------------------------
Locke Purnell Rain Harrell, counsel for Buyer, dated the Closing Date, in form
and substance satisfactory to Seller, with respect to the matters set forth on
Exhibit G.
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8.10 HSR Approval. All applicable waiting periods and any extensions
------------
under the HSR Act shall have expired or otherwise been terminated.
8.11 Transfer of Juelich's Interest. Seller shall have acquired from
------------------------------
Juelich all of Juelich's equity interest in Seller.
8.12 60-Ton Portal Crane Agreement. Each of Buyer, Parent and UDI shall
-----------------------------
have executed and delivered to Seller the 60-Ton Portal Crane Agreement and all
documents required to be delivered pursuant to the terms of the 60-Ton Portal
Crane Agreement.
ARTICLE IX
CLOSING
9.1 Date and Place of Closing. Subject to satisfaction or waiver of the
-------------------------
conditions to the obligations of the parties, the purchase and sale of the
Assets pursuant to this Agreement shall be
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consummated at a closing (the "Closing") to be conducted by a mutual exchange of
documents or telecopies on October 31, 1997 or such other date as the parties
may mutually agree upon (the "Closing Date").
9.2 Performance by Seller and Shareholder. At the Closing, concurrently
-------------------------------------
with performance by Buyer of its obligations to be performed at the Closing:
(a) Conveyances. Seller shall execute and deliver to Buyer, in form
-----------
and substance acceptable to Buyer (i) a Bill of Sale and Assignment in
substantially the form attached hereto as Exhibit A conveying to Buyer all items
---------
of personalty included among the Assets, (ii) assignments of each of the
contracts, leases, arrangements and commitments listed on Schedule 1.1A and
-------------
(iii) all other assignments, endorsements and instruments of transfer as shall
be necessary or appropriate to carry out the intent of this Agreement and as
shall be sufficient to vest in Buyer title to all of the Assets and all right,
title and interest of Seller thereto. If requested by Buyer, such documents
shall be in a form suitable for recording.
(b) Records. Seller shall deliver to Buyer all documents, agreements,
-------
reports, books, records and accounts pertaining specifically to the Assets that
are in Seller's possession.
(c) Certificates. Seller and Shareholder shall execute and deliver to
------------
Buyer the certificates referred to in Sections 7.3 and 7.12.
(d) Noncompetition Agreements and Employment Agreement. Seller,
--------------------------------------------------
Shareholder and Juelich shall execute and deliver to Buyer the Noncompetition
Agreements and Juelich shall execute and deliver to Buyer the Employment
Agreement.
(e) Escrow Agreement. Seller shall execute and deliver to Buyer the
----------------
Escrow Agreement.
(f) Certificates of Authorities. Seller shall deliver to Buyer the
---------------------------
certificates of authorities referred to in Section 7.8.
(g) Opinion of Seller's Counsel. Seller shall deliver to Buyer the
---------------------------
opinions of its counsel, dated the Closing Date, as specified in Section 7.11.
(h) Consents. Seller shall deliver to Buyer the consents and
--------
approvals required by Section 7.14.
(i) Other Actions. Each of Seller and Shareholder shall take all
-------------
such other steps as may be necessary or appropriate to put Buyer in
actual and complete ownership and possession of the Assets.
9.3 Buyer's Performance. At the Closing, concurrently with the
-------------------
performance by Seller of its obligations to be performed at the Closing, Buyer
shall:
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(a) Purchase Price. Deliver to Seller the Cash Consideration and the
--------------
Additional Consideration, if any.
(b) Escrow Deposit. Deliver to Seller written instructions to
--------------
Parent's transfer agent to deliver to Escrow Agent, as named in the Escrow
Agreement, two certificates representing an aggregate 13,851 shares of Halter
Stock to be held pursuant to the Escrow Agreement.
(c) Halter Stock. Deliver to Seller written instructions to Parent's
------------
transfer agent to deliver to Seller a certificate representing 459,652 shares of
Halter Stock. Deliver to Seller written instructions to Parent's transfer agent
to deliver to Juelich, on behalf of Seller and for the benefit of Seller, a
certificate representing 140,731 shares of Halter Stock.
(d) Assumption Agreement. Execute and deliver to Seller the
--------------------
Assumption Agreement in substantially the form attached hereto as Exhibit B.
---------
(e) Escrow Agreement. Buyer shall execute and deliver to Seller the
----------------
Escrow Agreement.
(f) Certificate. Execute and deliver the certificate referred to in
-----------
Section 8.3.
(g) Noncompetition Agreement and Employment Agreement. Execute and
-------------------------------------------------
deliver to Seller, Shareholder and Juelich the Noncompetition Agreements and
either execute and deliver, or cause an affiliate of Buyer to execute and
deliver, to Juelich the Employment Agreement.
(h) Certificates of Authorities. Deliver to Seller the certificates
---------------------------
of authorities referred to in Section 8.7.
(i) Opinion of Buyer's and Parent' Counsel. Buyer and Parent shall
--------------------------------------
deliver to Buyer the opinion of their counsel, dated the Closing Date, as
specified in Section 8.9.
9.4 Other Instruments. In addition to the foregoing, Buyer, Seller and
-----------------
Shareholder agree as follows:
(a) Further Action by Seller and Shareholder. At any time and from
----------------------------------------
time to time, at or after the Closing, upon request of Buyer, each of Seller and
Shareholder shall do, execute, acknowledge and deliver or shall cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
reasonably be required in order to evidence, vest in and confirm to Buyer full
and complete title to, possession of, and the right to use and enjoy, the
Assets.
(b) Further Action by Buyer. At any time and from time to time,
-----------------------
at or the Closing, upon request of Seller or Shareholder, Buyer shall do,
execute, acknowledge and deliver or shall cause to be done, executed,
acknowledged and delivered all such further acts and assurances as may
reasonably be required in order to better assure and confirm to Seller and
Shareholder the
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assumption by Buyer of the obligations to render performance that are to be
assumed by Buyer pursuant to this Agreement.
ARTICLE X
INDEMNIFICATION AND POST-CLOSING MATTERS
10.1 Buyer's Losses. Each of Seller and Shareholder jointly and severally
--------------
agrees to indemnify and hold harmless Buyer and Parent, and each of their
directors, officers, employees, representatives, agents and attorneys from,
against, for and in respect of any and all damages (including, without
limitation, amounts paid in settlement with Seller's consent, which may not be
unreasonably withheld), penalties, fines, interest and monetary sanctions,
losses, obligations, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action, investigation, claim or proceeding
(hereinafter referred to collectively as "Buyer's Losses") suffered, sustained,
incurred or required to be paid by any of them by reason of (i) any
representation or warranty made by Seller and Shareholder in or pursuant to this
Agreement (as amended or supplemented pursuant to Section 5.3) being untrue or
incorrect in any respect; (ii) any liability arising from or with respect to the
Assets through the Closing Date; (iii) any failure by Seller or Shareholder to
observe or perform its covenants and agreements set forth in this Agreement;
(iv) any failure by Seller or Shareholder to satisfy and discharge any other
liability or obligation not expressly assumed by Buyer pursuant to this
Agreement; (v) the items described in Schedule 3.10 hereof; or (vi) the failure
-------------
of Buyer to collect the full face amount of all accounts receivable of Seller
and AmCane as of the date of Closing (the "Receivables") net of applicable
reserves within 23 months from the date of Closing. With regard to Receivables,
Buyer will, upon receipt of cash payment from Seller, transfer to Seller unpaid
Receivables or portions thereof equal to such cash payment from Seller, and
Buyer shall remit to Seller any amounts received by Buyer with regard to such
transferred Receivables.
10.2 Seller's Losses. Each of Parent and Buyer jointly and severally
---------------
agrees to indemnify and hold harmless Seller and Shareholder and Seller's
directors, officers, employees, representatives, agents and attorneys from,
against, for and in respect of any and all damages (including, without
limitation, amounts paid in settlement with Buyer's consent, which may not be
unreasonably withheld), penalties, fines, interest and monetary sanctions,
losses, obligations, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action, investigation, claim or proceeding
(hereinafter referred to collectively as "Seller's Losses") suffered, sustained,
incurred or required to be paid by either Seller or Shareholder by reason of (i)
any representation or warranty made by Buyer in or pursuant to this Agreement
(as amended or supplemented pursuant to Section 6.1) being untrue or incorrect
in any respect; (ii) any liability arising from or with respect to the Assets
after the Closing Date; (iii) any failure by Buyer to observe or perform its
covenants and arising from sales of goods manufactured or sold or services
provided by Buyer on or after the Closing Date; or (v) any failure by Buyer to
satisfy and discharge any liability or obligation expressly assumed by Buyer
pursuant to this Agreement.
10.3 Liability Relating to Pre-Closing Products and Services.
-------------------------------------------------------
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<PAGE>
(a) Product Liability Claims. For purposes hereof, the term
------------------------
"Product Liability Claims" shall mean any and all liabilities, losses, claims,
judgments, awards, causes of action, suits, demands and obligations resulting
from, arising out of, or relating to personal injury, wrongful death, property
damage, breach of contract, economic loss, consequential damages, punitive
damages, incidental damages, product or service liability claims (including, but
without limitation to, negligence, gross negligence, strict liability, punitive
damages, failure to warn, breach of contract, implied warranty, express
warranty, Restatements of Torts Section 4.02A claims and any and all derivative
---------------------
claims such as loss of consortium and any and all contribution and indemnity
claims) involving products of the Business shipped or services (including, but
not limited to, engineering, design, installation, service and consulting)
performed by the Business prior to the Closing Date. For purposes hereof, the
term "UDI Product Liability Claims" shall mean those Product Liability Claims
for products of the Business shipped or services (including, but not limited to,
engineering, design, installation, service and consulting) performed by the
Business prior to October 14, 1989. For purposes hereof, the term "Seller
Product Liability Claims" shall mean those Product Liability Claims for products
of the Business shipped or services (including, but not limited to, engineering,
design, installation, service and consulting) performed by the Business on or
after October 14, 1989 but prior to the Closing Date.
(b) Seller Insurance. For purposes hereof, the term "Seller
----------------
Insurance" shall mean Seller's existing policy of insurance providing coverage
for Seller Product Liability Claims on the form(s) previously delivered by
Seller to Buyer at the level (in excess of the $1,000,000 retention) of
$1,000,000 in years 1989, 1990 and 1991; $5,000,000 in years 1992, 1993 and
1994; $8,000,000 in 1995; and $11,000,000 in 1996 and 1997).
(c) UDI Product Liability Claims. With respect to UDI Product
----------------------------
Liability Claims made before, on or after the date of Closing (none of which UDI
Product Liability Claims are being assumed by Buyer). Buyer's assistance of UDI
is documented in the 60-Ton Portal Crane Agreement and Buyer is receiving from
UDI the Indemnification Agreement pursuant to the 60-Ton Portal Crane Agreement.
Each of Seller and Buyer shall promptly notify each other party to this
Agreement in writing upon receipt of notice of a UDI Product Liability Claim.
(d) Seller Product Liability Claims. With respect to Seller Product
-------------------------------
Claims (none of which Seller Product Liability Claims are being assumed by
Buyer): (i) on or before Closing, Buyer shall purchase a single premium policy
of insurance on the form previously delivered by Buyer to Seller that provides
coverage to each of Buyer, Parent and Seller as named insureds for Seller
Product Liability Claims made during the period from the Closing Date through
October 15, 2007 for (a) all of Seller's existing $1,000,000 retention under the
Seller Insurance for Seller Product Liability Claims made after the Closing Date
with the exception of the first $250,000 of such retention and (b) an amount of
additional insurance for Seller Product Liability Claims effecting at least
$25,000,000 of coverage per occurrence and in the aggregate for each policy
period of the Seller Insurance; (ii) on or before Closing, Seller shall add
Buyer, Parent and Utility Steel, Inc., a Louisiana corporation, as additional
named insureds to the Seller Insurance for Seller Product Liability Claims made
before, on or after the Closing Date; (iii) within thirty (30) days of written
request by Seller from time-to-time, which shall include appropriate supporting
documentation, Buyer shall reimburse Seller (and, following the liquidation and
dissolution of Seller, Shareholder,
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provided Shareholder takes no action to increase or alter Buyer's exposure under
this Section 10.3) for all its third party out of pocket expenses incurred by
Seller in connection with its defense of a Seller Product Liability Claim
(whether made before, during or after the Closing Date) (including, without
limitation, reasonable attorneys' fees and other third party out of pocket
costs, expenses, judgments, damages, penalties, fines, interest, monetary
sanctions, losses, obligations, liabilities, claims, deficiencies and, to the
extent approved by Buyer, settlements incident to any suit, action,
investigation, claim or proceeding suffered, sustained, incurred or required to
be paid by Seller by reason of a Seller Product Liability Claim), provided that
such reimbursement obligation of Buyer shall be limited to $250,000 per Seller
Product Liability Claim; and (iv) at the end of the term of the insurance policy
described in (i) above, Buyer shall indemnify, defend and hold harmless Seller,
and its directors, officers, employees, representatives, agents and attorneys
(and, following the liquidation and dissolution of Seller, Shareholder, provided
Shareholder takes no action to increase or alter Buyer's exposure under this
Section 10.3) from, against, for and in respect of any and all damages
(including, without limitation, amounts paid in settlement with Buyer's consent,
which may not be unreasonably withheld), penalties, fines, interest and monetary
sanctions, losses, obligations, liabilities, claims, deficiencies, costs and
expenses, including, without limitation, reasonable attorneys' fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding suffered, sustained, incurred or required to be paid by it by reason
of any underinsured Seller Product Liability Claims (such underinsurance to
include any retentions required by insurance) made before, during or after the
Closing Date, provided that such obligation of Buyer shall be limited to an
aggregate total of $25,000,000; and (v) each of Buyer and Seller shall not take
any action, or omit to take any action, that would modify, alter, waive, limit,
negate, void or otherwise negatively impact either Seller's or Buyer's insurance
coverage for Seller Product Liability Claims. Each of Seller and Buyer shall
promptly notify each other party to this Agreement in writing upon receipt of
notice of a Seller Product Liability Claim.
10.4 Notice of Loss. Except to the extent set forth in the next sentence,
--------------
a party to this Agreement shall not have any liability under the indemnity
provisions of this Agreement with respect to a particular matter unless a notice
setting forth in reasonable detail the breach which is asserted has been given
to the Indemnifying Party (as hereafter defined) and, in addition, if such
matter arises out of a suit, action, investigation or proceeding, such notice is
given promptly, but in any event within thirty (30) days after the Indemnified
Party (as hereafter defined) is given notice of the commencement of the suit,
action, investigation or proceeding. Notwithstanding the preceding sentence,
failure of the Indemnified Party to give notice hereunder shall not release the
Indemnifying Party from its obligations under this Article XI, except to the
extent the Indemnifying Party is actually prejudiced by such failure to give
notice. With respect to Buyer's Losses, Seller and Shareholder, jointly and
severally, shall be the Indemnifying Party and Buyer and Parent shall be the
Indemnified Party. With respect to Seller's Losses, Buyer and Parent shall be
the Indemnifying Party and Seller and Shareholder shall be the Indemnified
Party.
10.5 Right to Defend. Upon receipt of notice of any suit, action,
---------------
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against such suit, action, investigation, claim or
proceeding at its own cost and expense, and the Indemnified Party must cooperate
in any such defense or other action. The Indemnified Party shall have the
right, but not the obligation, to
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<PAGE>
participate at its own expense in a defense thereof by counsel of its own
choosing, but the Indemnifying Party shall be entitled to control the defense
unless the Indemnified Party has relieved the Indemnifying Party from liability
with respect to the particular matter or the Indemnifying Party fails to assume
defense of the matter. In the event the Indemnifying Party shall fail to defend,
contest or otherwise protect in a timely manner against any such suit, action,
investigation, claim or proceeding, the Indemnified Party shall have the right,
but not the obligation, to defend, contest or otherwise protect against the same
and make any compromise or settlement thereof and recover the entire cost
thereof from the Indemnifying Party including reasonable attorneys' fees,
disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or the compromise or settlement thereof;
provided, however, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice. Failure to reject
such notice within such thirty (30) day period shall be deemed an acceptance of
such settlement or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the Indemnifying Party;
provided, that if (i) the Indemnifying Party is contesting such claim in good
faith or (ii) the Indemnifying Party has assumed the defense from the
Indemnified Party, the Indemnified Party waives any right to indemnity therefor.
If the Indemnifying Party undertakes the defense of such matters, the
Indemnified Party shall not, so long as the Indemnifying Party does not abandon
the defense thereof, be entitled to recover from the Indemnifying Party any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written consent
of the Indemnifying Party.
10.6 Cooperation. Each of Buyer, Seller and Shareholder and each of their
-----------
affiliates, successors and assigns shall cooperate with each other in the
defense of any suit, action, investigation, proceeding or claim by a third party
and, during normal business hours, shall afford each other access to their books
and records and employees relating to such suit, action, investigation,
proceeding or claim and shall furnish each other all such further information
that they have the right and power to furnish as may reasonably be necessary to
defend such suit, action, investigation, proceeding or claim, including, without
limitation, reports, studies, correspondence and other documentation relating to
Environmental Protection Agency, Occupational Safety and Health Administration,
and Equal Employment Opportunity Commission matters.
10.7 Claim Against U.S. Government. Seller shall continue to pursue its
-----------------------------
claim against the United States Government with respect to a 135 ton crane
matter (the "Government Claim"), and Buyer shall cooperate with Seller in the
prosecution thereof, all as provided for in this Section 10.7. Buyer shall make
available to Seller the services of Dennis Kalman and Herb Eberhardt (who are
currently employed by Seller and will likely become employed by Buyer on the
Closing Date), or of individuals employed by Buyer who are the successors to the
positions that Messrs. Kalman and Eberhardt currently hold with respect to the
Business, for purposes of administering the Government Claim; provided, however,
that neither of such individuals, nor such successors shall be required to spend
more than 10% of their working time and attention in monitoring the Government
Claim. Further, Buyer shall loan, on an interest-free basis, amounts from time
to time expended by Seller in pursuing the Government Claim, not to exceed
$100,000 in the aggregate. As part of such
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arrangement, Seller will pursue the Government Claim until it is resolved by
settlement or until the matter is set for trial, whichever shall first occur. If
the matter is set for trial without first being settled, Buyer and Seller shall
meet and shall evaluate the Government Claim, including the projected costs of
litigation, the time period involved in litigation, the likelihood of a positive
or a negative outcome as a result of litigation, and other factors. If, after
such meeting (the "Pre-Trial Meeting"), the parties mutually agree to pursue the
matter through trial, then Buyer shall commit to loan Seller such additional
funds to cover the cost of litigation, not limited by the $100,000 amount
referred to above, as the parties mutually agree to be reasonable to fund the
pursuit of the matter through trial. The Buyer is under no obligation to pursue
the matter through trial, provide the services of employees or fund additional
costs without its agreement, which can be given or withheld in its sole
discretion. To the extent Seller receives any settlement amount with respect to
the Government Claim or any judgment amount from litigation in which Buyer has
elected to participate as aforesaid with respect to the Government Claim, Seller
and Buyer agree that the proceeds from the Government Claim shall be distributed
as follows: (i) Seller shall first receive and pay over to Buyer as a loan
repayment an amount equal to all loans made by Buyer to Seller pursuant to this
Section 10.7 and (ii) Seller shall distribute to Buyer fifty percent (50%) of
the balance of the proceeds and shall retain the remaining fifty percent (50%)
balance of the proceeds. If, as a result of the Pre-Trial Meeting, Buyer does
not agree to pursue litigation on the basis described above, then Buyer shall
thereafter have no rights against Seller with respect to the proceeds of the
Government Claim (but Buyer shall retain rights against Seller with regard to
the collection of the loans to Seller under this Section) and Seller shall be
left with the decision to pursue the Government Claim at its sole cost and
expense. Any proceeds received by Seller with respect to the Government Claim,
through any judgment, settlement or otherwise, shall first be paid by Seller to
Buyer as a loan repayment. All unpaid loan amounts shall be due and payable by
Seller to Buyer upon the last to occur of the date of the settlement of the
matter, the date of the expiration of all appeal periods with respect to any
judgment entered in the matter and the date that Seller abandons its pursuit of
the Government Claim.
10.8 Survival of Representations, Warranties, Covenants and Agreements.
-----------------------------------------------------------------
All representations, warranties, covenants and agreements made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
survive the Closing and shall continue in full force and effect thereafter
according to their terms without limit as to duration.
10.9 Limitation on Indemnification. Notwithstanding anything to the
-----------------------------
contrary herein, the liability of Seller and Shareholder under this Agreement
shall be limited such that Seller and Shareholder shall have no liability or
obligation to Buyer under Section 10.1 unless and until the amount of Buyer's
Losses incurred by Buyer in the aggregate exceed the sum of $300,000 and Seller
and Shareholder shall be responsible for Buyer's Losses only to the extent such
Buyer's Losses exceed $300,000 in the aggregate but in no event shall Seller and
Shareholder's collective liability hereunder exceed $10,000,000 in the
aggregate. Notwithstanding anything to the contrary herein, the liability of
Parent and Buyer under this Agreement shall be limited such that Parent and
Buyer shall have no liability or obligation to Seller and Shareholder under
Section 10.2 unless and until the amount of Seller's Losses incurred by Seller
and Shareholder in the aggregate exceed the sum of $500,000 and Parent and Buyer
shall be responsible for Seller's Losses only to the extent such Seller's Losses
exceed $500,000 in the aggregate but in no event shall Parent and Buyer's
collective
-37-
<PAGE>
liability hereunder exceed $10,000,000 in the aggregate. Any claims to be made
under either Section 10.1 or 10.2 must be made on or before the second
anniversary of the date of the Closing.
10.10 Escrowed Shares. In the event that a claim by either Buyer or
---------------
Parent is to be satisfied by Escrow Agent distributing to Buyer or Parent shares
of Halter Stock held by Escrow Agent pursuant to the Escrow Agreement, then
either Seller or Shareholder shall have the right to pay cash to Buyer or
Parent, as appropriate, to satisfy the amount of such claim as determined by
settlement of the claim by the parties or a resolution of the claim by a final
judgment rendered by court or an arbitration award. Upon the receipt by Buyer
or Parent, as appropriate, of the cash payment of the amount of such claim as so
determined, then Buyer and Parent hereby agree that they shall join Seller and
Shareholder to (i) jointly instruct Escrow Agent to distribute to Seller that
number of shares of Halter Stock as is equal to the quotient of the cash payment
received by Buyer or Parent, as appropriate, divided by the closing price of
Halter Stock for the trading day immediately preceding the day that such payment
is received by the Buyer or Parent, as appropriate, as reported by the American
Stock Exchange, Inc. and (ii) jointly advise Escrow Agent that such claim, as so
determined, has been satisfied. Neither Buyer nor Parent shall make a claim
under the Escrow Agreement until notice has been given as required by Section
10.4.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated and abandoned at any
-----------
time on or prior to the Closing Date:
(a) By the consent in writing of Buyer, Parent, Seller and
Shareholder;
(b) By Buyer or Parent in writing if any of the material
conditions to the obligations of Buyer and Parent contained herein shall not
have been satisfied or, if unsatisfied, waived by Buyer and Parent as of the
Closing Date;
(c) By Seller or Shareholder in writing if any of the material
conditions to the obligations of Seller and Parent contained herein shall not
have been satisfied or, if unsatisfied, waived by Seller and Parent as of the
Closing Date; and
(d) By Buyer and Parent or Seller and Shareholder in writing if the
Closing shall not have occurred by November 30, 1997.
11.2 No Further Force or Effect. In the event of termination and
--------------------------
abandonment of this Agreement pursuant to the provisions of Section 11.1, this
Agreement shall be of no further force or effect, except for Sections 5.3, 6.1
and 12.1, which shall not be affected by termination of this Agreement.
-38-
<PAGE>
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. Buyer shall pay Seller's and Shareholder's expenses
--------
incurred in connection with the transactions contemplated hereby provided that
the Closing occurs but not to exceed $50,000 in the aggregate. Thereafter or if
the transactions are not consummated, Shareholder, on behalf of himself and
Seller on one hand and Buyer on the other shall each pay their own expenses in
connection with the transactions contemplated hereby, including, without
limitation, fees of its own counsel, auditors and other experts.
12.2 Guaranties by Parent and Shareholder. Parent does hereby guarantee
------------------------------------
all of Buyer's obligations under this Agreement (including indemnification
obligations). Shareholder does hereby guarantee all of Seller's obligations
under this Agreement (including indemnification obligations).
12.3 Entire Agreement. This Agreement (including the exhibits and
----------------
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
12.4 Publicity. No party hereto shall issue any press release or make
---------
any public statement, in either case relating to or in connection with or
arising out of this Agreement or the matters contained herein, without obtaining
the prior written approval of the other parties hereto to the content and manner
of presentation and publication thereof, which consent shall not be unreasonably
withheld or delayed; provided, however, that the parties shall be entitled,
following reasonable prior written notice to the other party, to issue such
press releases and make such public statements as are, in the opinion of its
legal counsel, required by applicable law.
12.5 Successors and Assigns. This Agreement and the rights of the parties
----------------------
hereunder may not be assigned (except by operation of law), and the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties and their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of such agreements.
12.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
12.7 Headings. The headings of the paragraphs and subparagraphs of this
--------
Agreement are inserted for convenience of reference only and shall not be deemed
to constitute part of this Agreement or to affect the construction hereof.
12.8 Use of Certain Terms. As used in this Agreement, the words "herein,
--------------------
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular paragraph, subparagraph or other
subdivision.
-39-
<PAGE>
12.9 Modification and Waiver. Any of the terms or conditions of this
-----------------------
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by Buyer and Parent and Seller and Shareholder. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
12.10 Notices. All notices of communication required or permitted
-------
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (b) delivering the same
in person to an officer or agent of such party, or (c) telecopying the same with
electronic confirmation of receipt.
(i) If to Seller AmClyde Engineered Products, Inc.
and/or c/o Wallace K. Fisk, Jr.
Shareholder: #9 Chickadee Lane
North Oaks
St. Paul, MN 55127
Telecopy No. (612) 483-5060
with copies to: Dorsey & Whitney, LLP
220 South Sixth Street
Minneapolis, MN 55402
Attention: William R. Hibbs, Esq.
Telecopy No.: (612) 340-8827
(ii) If to Buyer Halter Marine Group, Inc.
and Parent: 13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen Sullivan, Esq.
Telecopy No.: (601) 897-4803
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Charles C. Reeder, Esq.
Telecopy Number: (214) 740-8800
or at such other address or counsel as any party hereto shall specify pursuant
to this Section 12.10 from time to time.
-40-
<PAGE>
12.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING EFFECT TO ITS CHOICE OF LAWS
PROVISIONS).
12.12 Time. Time is of the essence with respect to this Agreement.
----
12.13 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
12.14 Remedies Cumulative. No right, remedy or election given by any term
-------------------
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
-41-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed in counterparts all as of the date first above written.
SELLER:
AmClyde Engineered Products, Inc.
By: /s/ Wallace K. Fisk, Jr.
---------------------------------
Printed Name: Wallace K. Fisk, Jr.
-----------------------
Title: CEO
------------------------------
SHAREHOLDER:
/s/ Wallace K. Fisk, Jr.
-------------------------------------
Wallace K. Fisk, Jr.
BUYER:
AEPI Acquisition, Inc.
By: /s/ Rick S. Rees
---------------------------------
Printed Name: Rick S. Rees
-----------------------
Title: Executive Vice President
------------------------------
PARENT:
Halter Marine Group, Inc.
By: /s/ Rick S. Rees
---------------------------------
Printed Name: Rick S. Rees
-----------------------
Title: Executive Vice President
------------------------------
-42-
<PAGE>
ASSET PURCHASE AGREEMENT
List of Schedules and Exhibits
SCHEDULES
- ---------
1.1A Assumed Contracts
1.1B Excluded Assets
3.2 Encumbrances
3.4 Physical Properties
3.5 Trademarks, Etc.
3.6 Permits
3.8 Contracts
3.10 Litigation
3.12 Unrecorded Liabilities
3.13 Employee Benefits
3.14 Employees
3.16 Insurance
3.18 Business Relations
3.19 Environmental Matters
3.20 Rights to Receive Money
3.21 Capital Expenditures
3.27 AmCane Schedule
6.7 Additional Holiday, Sick or Vacation Pay
6.8 Letters of Credit
6.9 Performance and Payment Bonds
EXHIBITS
- --------
A Bill of Sale and Assignment
B Assumption Agreement
C-1 Noncompetition Agreement - Seller
C-2 Noncompetition Agreement - Shareholder
C-3 Noncompetition Agreement - Juelich
D Employment Agreement
E Escrow Agreement
F-1 Matters covered by Opinion of Seller's Counsel - Henson & Efron, P.A.
F-2 Matters covered by Opinion of Seller's Counsel - Dorsey & Whitney LLP
G Matters covered by Opinion of Buyer's Counsel
H Allocation of Purchase Price and Other Consideration
<PAGE>
EXHIBIT A
BILL OF SALE AND ASSIGNMENT
---------------------------
This Bill of Sale and Assignment (the "Assignment") is made as of the 31st
day of October, 1997 by AMCLYDE ENGINEERED PRODUCTS, INC., a Delaware
corporation ("Grantor"), to AEPI ACQUISITION, INC., a Delaware corporation
("Grantee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Grantee,
Halter Marine Group, Inc., Grantor, and Wallace K. Fisk, Jr., Grantor is to sell
to Grantee and Grantee is to purchase and accept as of the Closing the Assets
(other than the Excluded Assets) and the Assumed Liabilities;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees as follows:
1. Assignment. Grantor hereby grants, bargains, sells, conveys, transfers,
----------
assigns, sets over and delivers unto Grantee, its successors and assigns,
effective as of the Closing Date, all right, title and interest of Grantor in
and to all of the Assets (other than the Excluded Assets) and the Assumed
Liabilities, to have and to hold said Assets and Assumed Liabilities hereby
conveyed to Grantee, its successors and assigns forever.
1. Assignment of Contracts Requiring Third Party Consent. Anything in
-----------------------------------------------------
this Assignment to the contrary notwithstanding, this Assignment shall not
constitute an agreement to assign any Asset or any claim or right, or any
benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of Grantee or Grantor
thereunder. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would materially adversely affect the rights of
Grantor thereunder such that Grantee would not in fact receive all such rights,
Grantor and Grantee will cooperate in a mutually agreeable arrangement under
which Grantee would obtain substantially the same economic benefits that would
be obtained under an assignment thereof and assume the obligations thereunder in
accordance with the Asset Purchase Agreement, including subcontracting, sub-
licensing or sub-leasing to Grantee, or under which Grantor would enforce for
the benefit of Grantee, with Grantee assuming Grantor's obligations, any and all
rights of Grantor against a third party thereto.
2. Consents Pending at Closing. As of the date of this Assignment,
---------------------------
third party consents for the assignment of certain contracts held by Seller and
intended to be transferred to Buyer have not been obtained. These contracts,
listed under paragraph 1 of Schedule 1.1A to the
<PAGE>
Asset Purchase Agreement, include the Global Marine contracts (Contract Nos.
5248 and 5239, the latter of which was formerly held by Interstate Services,
Inc.); the Mitsubishi Heavy Industries contract (Contract No. 5229); the Diamond
Offshore contracts (Contract Nos. 5230 and 5240); the GE Capital Modular Space
contracts (numbers 19 and 20 of Schedule 1.1A); and the North Carolina Ports
Authority contract (Contract No. 5250). Seller agrees to diligently pursue the
consents for the aforementioned contracts and, pending consent, Seller will take
all commercially reasonable action so as to give Buyer the benefit of such
contracts. In addition, consents are required for the contracts listed on
Schedule 1.1A, numbers 54 through 86 (relating to Unit Lucker master service and
dealer agreements). Of those contracts, Seller agrees to diligently pursue the
consents for contracts numbered 55, 58 and 68, and Seller will take all
commercially reasonable action so as to give Buyer the benefit of the contracts
for numbers 55, 58 and 68. The remaining contracts numbered 54 through 86 can
each be terminated upon 30 days' notice or less, and Seller does not intend to
pursue consents for those contracts.
3. Further Assurances. Grantor, at any time and from time to time, upon
------------------
the request of Grantee, shall do, execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyances and the Assumed
Liabilities, powers of attorney and assurances as may be required to convey and
transfer the Assets and the Assumed Liabilities to Grantee.
4. Headings. Headings are for convenience of reference only and shall
--------
not in any manner affect the meaning or interpretation of this Assignment.
5. Asset Purchase Agreement. This Assignment is entered into pursuant
------------------------
to the Asset Purchase Agreement and is subject to the terms and conditions
thereof. Undefined capitalized terms will have the same meaning as those terms
have in the Asset Purchase Agreement.
6. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING EFFECT TO ITS
CHOICE OF LAW PROVISIONS).
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
-2-
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Assignment to be executed in
its corporate name by its duly authorized officer, on the day and year first
above written.
GRANTOR:
AMCLYDE ENGINEERED PRODUCTS, INC.
By: _______________________________________
Printed Name:_______________________________
Title:______________________________________
STATE OF______________ (S)
(S)
COUNTY OF__________ (S)
This instrument was acknowledged before me this _____ day of____________,
199__, by __________________________, _______________ of AMCLYDE ENGINEERED
PRODUCTS, INC., a _____________ corporation, on behalf of said corporation.
_______________________________________
Notary Public in and for the State of
_______________
My Commission Expires:
_______________ _______________________________________
Printed Name of Notary
-3-
<PAGE>
EXHIBIT B
ASSUMPTION AGREEMENT
--------------------
This ASSUMPTION AGREEMENT is made as of the 31st day of October, 1997, by
and between AMCLYDE ENGINEERED PRODUCTS, INC., a Delaware corporation
("Seller"), and AEPI ACQUISITION, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
October 31, 1997, by and among Buyer, Halter Marine Group, Inc., a Delaware
corporation ("Parent"), Seller and Wallace K. Fisk, Jr. (the "Asset Purchase
Agreement"), Seller is to convey to Buyer and Buyer is to accept and assume
effective as of the Effective Time the Assets (other than the Excluded Assets)
and the Assumed Liabilities;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer hereby agrees as follows:
1. Acceptance and Assumption. Buyer hereby accepts the foregoing
-------------------------
assignment and transfer of the Assets (other than the Excluded Assets), and
Buyer hereby assumes and agrees to pay, perform and discharge in due course the
Assumed Liabilities, subject to the provisions of the Asset Purchase Agreement.
2. Further Assurances. Buyer, at any time and from time to time, upon
------------------
the request of Seller, shall do, execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may be required to assume the Assumed Liabilities.
3. Headings. Headings are for convenience of reference only and shall
--------
not in any manner affect the meaning or interpretation of this Assumption
Agreement.
4. Asset Purchase Agreement. This Assumption Agreement is entered into
------------------------
pursuant to the Asset Purchase Agreement and is subject to the terms and
conditions thereof. Undefined capitalized terms will have the same meaning as
those terms have in the Asset Purchase Agreement.
<PAGE>
5. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING
EFFECT TO ITS CHOICE OF LAWS PROVISIONS).
IN WITNESS WHEREOF, Buyer has caused this Assumption Agreement to be
executed in its corporate name by its duly authorized officer, on the day and
year first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
STATE OF ______________ (S)
(S)
COUNTY OF _____________ (S)
This instrument was acknowledged before me this _____ day of_____________,
199__, by ________________________, ___________ of AEPI ACQUISITION, INC., a
Delaware corporation, on behalf of said corporation.
________________________________________
Notary Public in and for the State of
_______________
My Commission Expires:
_______________ ________________________________________
Printed Name of Notary
-2-
<PAGE>
Guarantee of Halter Marine Group, Inc.
--------------------------------------
Halter Marine Group, Inc., a Delaware corporation, does hereby guarantee
all of Buyer's obligations under this Assumption Agreement.
HALTER MARINE GROUP, INC.
By:______________________________________
Printed Name:____________________________
Title:___________________________________
STATE OF ______________ (S)
(S)
COUNTY OF _____________ (S)
This instrument was acknowledged before me this _____ day of_____________,
199__, by _____________________, _______________ of HALTER MARINE GROUP, INC., a
Delaware corporation, on behalf of said corporation.
________________________________________
Notary Public in and for the State of
_________________
My Commission Expires:
_______________ ________________________________________
Printed Name of Notary
-3-
<PAGE>
EXHIBIT C-1
NONCOMPETITION AGREEMENT
------------------------
AMCLYDE ENGINEERED PRODUCTS, INC.
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October, 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and AmClyde Engineered Products, Inc., a Delaware
corporation ("Seller").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), Seller and Wallace
K. Fisk, Jr. ("Shareholder"), Seller is to sell to Buyer and Buyer is to
purchase and accept as of the Closing the Assets (other than the Excluded
Assets) and the Assumed Liabilities (each as defined in the Asset Purchase
Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Seller shall execute and deliver
this Agreement;
WHEREAS, the agreements of Seller hereunder are an important aspect of the
Acquisition, and Buyer would not consummate the Acquisition absent the execution
and delivery by Seller of this Agreement;
WHEREAS, Seller has been and is presently engaged in the business of custom
designing, engineering and, through subcontractors, manufacturing of revolver
and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory");
WHEREAS, Seller and Seller's affiliates have substantial financial
resources, experience in the Business and the ability to operate a business or
businesses that could compete with Buyer or Halter Marine in the Business or in
related businesses following the Closing; and
WHEREAS, the agreements of Seller hereunder are reasonable and necessary,
both in scope and duration, to protect the business and goodwill of Buyer that
will be acquired pursuant to the Asset Purchase Agreement, and Buyer would
suffer damages, including the loss of profits, if Seller or any of Seller's
affiliates engaged, directly or indirectly, in a competing business with Buyer.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and
<PAGE>
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby agree as follows:
1. Disclosure of Information. Seller agrees that for a period of thirty
-------------------------
(30) years following the date of this Agreement, without the prior written
consent of Buyer, Seller shall not, directly or indirectly, through any form of
ownership, in any individual or representative or affiliated capacity
whatsoever, except as may be required by law, reveal, divulge, disclose or
communicate to any person, firm, association, corporation or other entity in any
manner whatsoever information of any kind, nature or description relating to the
Business or the business of Buyer or Halter Marine concerning: (i) the names of
any prior or present suppliers or customers of Seller, Buyer or Halter Marine,
(ii) the prices for which Seller, Buyer or Halter Marine obtains or has obtained
products or services, (iii) the manner of operation of Seller, Buyer or Halter
Marine, (iv) the plans, trade secrets, or other data of any kind, nature or
description, whether tangible or intangible, of Seller, Buyer or Halter Marine,
or (v) any other financial, statistical or other information either (a) acquired
by Buyer from Seller or Shareholder or (b) designated or treated by Halter
Marine or Buyer as confidential or proprietary. The agreements set forth herein
shall not apply to any information that at the time of disclosure or thereafter
is generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Seller in violation of this Agreement), the
disclosure of which is required by law, regulation, order, decree or process or
is otherwise approved by Buyer or Halter Marine. Without regard to whether any
or all of the foregoing matters would be deemed confidential, material or
important, the parties hereto stipulate that as between them, the same are
important, material and confidential and gravely affect the effective and
successful conduct of the Business and its goodwill.
2. Noncompetition. Seller agrees that for a period of five (5) years
--------------
following the date of this Agreement, Seller shall not:
(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Without the prior written consent of Buyer, hire, attempt to
hire, contact or solicit with respect to hiring for Seller or on behalf of
any other person or entity any present or future employee of Buyer or
Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
(iv) Lend credit, money or reputation for the purpose of establishing
or operating a business substantially similar to the Business in the
Territory;
-2-
<PAGE>
(v) Do any act that Seller knew or should have known might injure
Buyer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business under the name
"AmClyde Engineered Products, Inc." or any other trade names, trademarks or
service marks used by Seller in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Seller from competing in any manner with Buyer, Halter Marine or the Business in
the activities that have heretofore been carried on by Seller. The obligations
set forth in subsections (i) through (vi) above shall apply to actions by
Seller, through any form of ownership, and whether as principal, agent,
employer, consultant, shareholder or holder of any equity security (beneficially
or as trustee of any trust), lender, partner, joint venturer or in any other
individual or representative or affiliated capacity whatsoever. However, none
of the foregoing shall prevent Seller from being the holder of either (a) stock,
debt or other interests in Halter Marine or (b) up to 5.0% in the aggregate of
any class of securities of any corporation (other than Halter Marine) engaged in
the activities described in subsections (i) through (vi) above, provided that
such securities are listed on a national securities exchange or reported on the
Nasdaq National Market or the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Seller acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Seller agrees that Buyer shall be entitled as a matter of right
to an injunction issued by any court of competent jurisdiction, restraining such
violation or attempted violation of such covenants and agreements by Seller, or
the affiliates, partners or agents of such Seller, as well as recover from
Seller any and all costs and expenses sustained or incurred by Buyer in
obtaining such an injunction, including, without limitation, reasonable
attorneys' fees. Seller agrees that no bond or other security shall be required
in connection with such injunction. Seller further agrees that the period of
restriction set forth in Sections 1 and 2 above shall be tolled during any
period of violation thereof by Seller. Any exercise by Buyer of its rights
pursuant to this Section 3 shall be cumulative and in addition to any other
remedies to which Buyer may be entitled. Each party represents and warrants that
it has been represented by counsel in the negotiation and execution of this
Agreement, including without limitation the provisions set forth above in this
Section 3(a) concerning the recovery of attorneys' fees.
(b) Seller understands and acknowledges that Buyer shall have the
right, in its sole discretion, to reduce the scope of any covenants set forth in
Sections 1 and 2, or any portion thereof, without Seller's consent, effective
immediately upon receipt by Seller of written notice thereof; and Seller agrees
that Seller shall comply forthwith with any covenant as so modified, which shall
be fully enforceable as so revised in accordance with the terms of this
Agreement.
-3-
<PAGE>
4. Intellectual Property. Seller recognizes and agrees that, on and
---------------------
after the date hereof, Seller will not have the right to use for Seller's own
account any of the service marks, trademarks, trade names, licenses, procedures,
processes, labels, trade secrets or customer lists conveyed to Buyer in the
Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision there shall be added
automatically by Buyer as a part hereof a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen O. Sullivan, Esq.
Telecopy No.: (601) 897-4803
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Charles C. Reeder, Esq.
Telecopy No.: (214) 740-8800
If to Seller: Wallace K. Fisk, Jr.
9 Chickadee Lane
St. Paul, MN 55127
Telecopy No.: (612) 483-3931
-4-
<PAGE>
with copies to: Dorsey & Whitney, LLP
220 South Sixth Street
Minneapolis, MN 55402
Attention: William R. Hibbs, Esq.
Telecopy No.: (612) 340-8827
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may assign its rights, interests and obligations hereunder
to Halter Marine or a subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_________________________________
Printed Name:
Title:
SELLER:
AMCLYDE ENGINEERED PRODUCTS, INC.
By:_________________________________
Printed Name:
Title:
-6-
<PAGE>
EXHIBIT C-2
NONCOMPETITION AGREEMENT
------------------------
WALLACE K. FISK, JR.
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October, 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Wallace K. Fisk, Jr. ("Shareholder").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde Engineered
Products, Inc., a Delaware corporation of which Shareholder is the sole
shareholder ("Seller") and Shareholder, Seller is to sell to Buyer and Buyer is
to purchase and accept as of the Closing the Assets (other than the Excluded
Assets) and the Assumed Liabilities (each as defined in the Asset Purchase
Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Shareholder shall execute and
deliver this Agreement;
WHEREAS, the agreements of Shareholder hereunder are an important aspect of
the Acquisition, and Buyer would not consummate the Acquisition absent the
execution and delivery by Shareholder of this Agreement;
WHEREAS, Shareholder, through Seller, has been and is presently engaged in
the business of custom designing, engineering and, through subcontractors,
manufacturing of revolver and pedestal cranes for ships, barges, offshore
drilling rigs and other applications, winches, bulk unloaders and related
materials handling equipment, and pulling and jacking systems, prooftest and
related equipment (the "Business") in and around the world (the "Territory");
WHEREAS, Shareholder and Shareholder's affiliates have substantial
financial resources, experience in the Business and the ability to operate a
business or businesses that could compete with Buyer or Halter Marine in the
Business or in related businesses following the Closing; and
WHEREAS, the agreements of Shareholder hereunder are reasonable and
necessary, both in scope and duration, to protect the business and goodwill of
Buyer that will be acquired pursuant to the Asset Purchase Agreement, and Buyer
would suffer damages, including the loss of profits, if Shareholder or any of
Shareholder's affiliates engaged, directly or indirectly, in a competing
business with Buyer.
<PAGE>
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
1. Disclosure of Information. Shareholder agrees that for a period of
-------------------------
thirty (30) years following the date of this Agreement, without the prior
written consent of Buyer, Shareholder shall not, directly or indirectly, through
any form of ownership, in any individual or representative or affiliated
capacity whatsoever, except as may be required by law, reveal, divulge, disclose
or communicate to any person, firm, association, corporation or other entity in
any manner whatsoever information of any kind, nature or description concerning:
(i) the names of any prior or present suppliers or customers of Seller, Buyer or
Halter Marine, (ii) the prices for which Seller, Buyer or Halter Marine obtains
or has obtained products or services, (iii) the manner of operation of Seller,
Buyer or Halter Marine, (iv) the plans, trade secrets, or other data of any
kind, nature or description, whether tangible or intangible, of Seller, Buyer or
Halter Marine, or (v) any other financial, statistical or other information
either (a) acquired by Buyer from Seller or Shareholder or (b) designated or
treated by Halter Marine or Buyer as confidential or proprietary. While
Shareholder is a consultant to Buyer, Halter Marine or an affiliate thereof,
Shareholder shall not be restricted with regard to disclosures made by
Shareholder in the ordinary course of the performance of his duties as a
consultant to Buyer, Halter Marine or an affiliate thereof. The agreements set
forth herein shall not apply to any information that at the time of disclosure
or thereafter is generally available to and known by the public (other than as a
result of a disclosure directly or indirectly by Shareholder in violation of
this Agreement), the disclosure of which is required by law, regulation, order,
decree or process or is otherwise approved by Buyer or Halter Marine. Without
regard to whether any or all of the foregoing matters would be deemed
confidential, material or important, the parties hereto stipulate that as
between them, the same are important, material and confidential and gravely
affect the effective and successful conduct of the Business and its goodwill.
2. Noncompetition. Shareholder agrees that for a period of five (5)
--------------
years following the date of this Agreement, Shareholder shall not:
(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Without the prior written consent of Buyer, hire, attempt to
hire, contact or solicit with respect to hiring for Shareholder or on
behalf of any other person any present or future employee of Buyer or
Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
-2-
<PAGE>
(iv) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business
in the Territory;
(v) Do any act that Shareholder knew or should have known might
injure Buyer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business under the name
"AmClyde Engineered Products, Inc." or any other trade names, trademarks or
service marks used by Seller in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Shareholder from competing in any manner with Buyer, Halter Marine or the
Business in the activities that have heretofore been carried on by Seller. The
obligations set forth in subsections (i) through (vi) above shall apply to
actions by Shareholder, through any form of ownership, and whether as principal,
officer, director, agent, employee, employer, consultant, shareholder or holder
of any equity security (beneficially or as trustee of any trust), lender,
partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Shareholder from being the holder of either (a) stock, debt or other interests
in Halter Marine or (b) up to 5.0% in the aggregate of any class of securities
of any corporation other than Halter Marine engaged in the activities described
in subsections (i) through (vi) above, provided that such securities are listed
on a national securities exchange or reported on the Nasdaq National Market or
the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Shareholder acknowledges that a violation or attempted violation
of any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Shareholder agrees that Buyer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Shareholder, or the affiliates, partners or agents of such
Shareholder, as well as recover from Shareholder any and all costs and expenses
sustained or incurred by Buyer in obtaining such an injunction, including,
without limitation, reasonable attorneys' fees. Shareholder agrees that no bond
or other security shall be required in connection with such injunction.
Shareholder further agrees that the period of restriction set forth in Sections
1 and 2 above shall be tolled during any period of violation thereof by
Shareholder. Any exercise by Buyer of its rights pursuant to this Section 3
shall be cumulative and in addition to any other remedies to which Buyer may be
entitled. Each party represents and warrants that it has been represented by
counsel in the negotiation and execution of this Agreement, including without
limitation the provisions set forth above in this Section 3(a) concerning the
recovery of attorneys' fees.
-3-
<PAGE>
(b) Shareholder understands and acknowledges that Buyer shall have
the right, in its sole discretion, to reduce the scope of any covenants set
forth in Sections 1 and 2, or any portion thereof, without Shareholder's
consent, effective immediately upon receipt by Shareholder of written notice
thereof; and Shareholder agrees that Shareholder shall comply forthwith with any
covenant as so modified, which shall be fully enforceable as so revised in
accordance with the terms of this Agreement.
4. Intellectual Property. Shareholder recognizes and agrees that, on
---------------------
and after the date hereof, Shareholder will not have the right to use for
Shareholder's own account any of the service marks, trademarks, trade names,
licenses, procedures, processes, labels, trade secrets or customer lists
conveyed to Buyer in the Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
by Buyer as a part hereof a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen O. Sullivan, Esq.
Telecopy No.: (601) 897-4803
-4-
<PAGE>
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Charles C. Reeder, Esq.
Telecopy No.: (214) 740-8800
If to Shareholder: Wallace K. Fisk, Jr.
9 Chickadee Lane
St. Paul, MN 55127
Telecopy No.: (612) 483-3931
with copies to: Dorsey & Whitney, LLP
220 South Sixth Street
Minneapolis, MN 55402
Attention: William R. Hibbs, Esq.
Telecopy No.: (612) 340-8827
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may
-5-
<PAGE>
assign its rights, interests and obligations hereunder to Halter Marine or a
subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_________________________________
Printed Name:
Title:
SHAREHOLDER:
____________________________________
Wallace K. Fisk, Jr.
-6-
<PAGE>
EXHIBIT C-3
NONCOMPETITION AGREEMENT
------------------------
RICHARD J. JUELICH
THIS NONCOMPETITION AGREEMENT (the "Agreement") made and entered into as of
the 31st day of October 1997, by and between AEPI Acquisition, Inc., a Delaware
corporation ("Buyer"), and Richard J. Juelich ("Promisor").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde Engineered
Products, Inc., a Delaware corporation of which Promisor has been a shareholder
("Seller"), and the sole shareholder of Seller, Seller is to sell to Buyer and
Buyer is to accept and assume as of the Closing the Assets (other than the
Excluded Assets) and the Assumed Liabilities (each as defined in the Asset
Purchase Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Promisor shall execute and deliver
this Agreement;
WHEREAS, the agreements of Promisor hereunder are an important aspect of
the Acquisition, and Buyer would not consummate the Acquisition absent the
execution and delivery by Promisor of this Agreement;
WHEREAS, Promisor has been and is presently engaged in the business of
custom designing, engineering and, through subcontractors, manufacturing of
revolver and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory");
WHEREAS, Promisor and Promisor's affiliates have substantial financial
resources, experience in the Business and the ability to operate a business or
businesses that could compete with Buyer or Halter Marine in the Business or in
related businesses following the Closing; and
WHEREAS, the agreements of Promisor hereunder are reasonable and necessary,
both in scope and duration, to protect the business and goodwill of Buyer that
will be acquired pursuant to the Asset Purchase Agreement, and Buyer would
suffer damages, including the loss of profits, if Promisor or any of Promisor's
affiliates engaged, directly or indirectly, in a competing business with Buyer.
<PAGE>
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
1. Disclosure of Information. Promisor agrees that during the term of
-------------------------
Promisor's employment with Buyer and for a period of three (3) years following
the date of the termination of Promisor's employment with Buyer, without the
prior written consent of Buyer, Promisor shall not, directly or indirectly,
through any form of ownership, in any individual or representative or affiliated
capacity whatsoever, except as may be required by law, reveal, divulge, disclose
or communicate to any person, firm, association, corporation or other entity in
any manner whatsoever information of any kind, nature or description concerning:
(i) the names of any prior or present suppliers or customers of Seller, (ii) the
prices for which Seller obtains or has obtained products or services, (iii) the
manner of operation of Seller, (iv) the plans, trade secrets, or other data of
any kind, nature or description, whether tangible or intangible, of Seller, or
(v) any other financial, statistical or other information either (a) acquired by
Buyer from Seller or Shareholder or (b) designated or treated by Halter Marine
or Buyer as confidential or proprietary. While Promisor is an employee of, or
consultant to, Buyer, Halter Marine or an affiliate thereof, Promisor shall not
be restricted with regard to disclosures made by Promisor in the ordinary course
of the performance of his duties as an employee of, or consultant to, Buyer,
Halter Marine or an affiliate thereof. The agreements set forth herein shall
not apply to any information that at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Promisor in violation of this Agreement),
the disclosure of which is required by law, regulation, order, decree or process
or is otherwise approved by Buyer or Halter Marine. Without regard to whether
any or all of the foregoing matters would be deemed confidential, material or
important, the parties hereto stipulate that as between them, the same are
important, material and confidential and gravely affect the effective and
successful conduct of the Business and its goodwill.
2. Noncompetition. Promisor agrees that during the term of Promisor's
--------------
employment with Buyer and for a period of three (3) years following the date of
the termination of Promisor's employment with Buyer, Promisor shall not perform
any of the following acts, except those acts as are on behalf and for the
benefit of Buyer:
(a) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(b) Hire, attempt to hire, contact or solicit with respect to hiring
for Promisor or on behalf of any other person any present employee of
Seller in the Business;
(c) Engage in, or give any advice to any person, firm, partnership,
association, venture, corporation or other entity engaged in, a business
substantially similar to the Business in the Territory;
-2-
<PAGE>
(d) Lend credit, money or reputation for the purpose of establishing
or operating a business substantially similar to the Business in the
Territory;
(e) Do any act that Promisor knew or should have known might injure
Buyer, Halter Marine or the Business; and
(f) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Promisor from competing in any manner with Buyer, Halter Marine or the Business
in the activities that have heretofore been carried on by Seller. The
obligations set forth in subsections (i) through (vi) above shall apply to
actions by Promisor, through any form of ownership, and whether as principal,
officer, director, agent, employee, employer, consultant, shareholder or holder
of any equity security (beneficially or as trustee of any trust), lender,
partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Promisor from being the holder of either (a) stock, debt or other interests in
Halter Marine or (b) up to 5.0% in the aggregate of any class of securities of
any corporation (other than Halter Marine) engaged in the activities described
in subsections (i) through (vi) above, provided that such securities are listed
on a national securities exchange or reported on the Nasdaq National Market or
the Nasdaq Small Cap Market.
3. Enforcement of Covenants.
------------------------
(a) Promisor acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 1 and 2 above will cause such
damage to Buyer as will be irreparable, the exact amount of which would be
difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Promisor agrees that Buyer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Promisor, or the affiliates, partners or agents of such Promisor,
as well as recover from Promisor any and all costs and expenses sustained or
incurred by Buyer in obtaining such an injunction, including, without
limitation, reasonable attorneys' fees. In the event that Buyer is unsuccessful
in obtaining such an injunction, then Buyer shall reimburse Promisor for
reasonable attorneys' fees and court costs and expenses incurred by Promisor in
defending such action. Buyer agrees that a reasonable bond or other security
may be required by a court in connection with such injunction. Promisor further
agrees that the period of restriction set forth in Sections 1 and 2 above shall
be tolled during any period of violation thereof by Promisor. Any exercise by
Buyer of its rights pursuant to this Section 3 shall be cumulative and in
addition to any other remedies to which Buyer may be entitled. Each party
represents and warrants that it has been represented by counsel in the
negotiation and execution of this Agreement, including without limitation the
provisions set forth above in this Section 3(a) concerning the recovery of
attorneys' fees.
-3-
<PAGE>
(b) Promisor understands and acknowledges that Buyer shall have the
right, in its sole discretion, to reduce the scope of any covenants set forth in
Sections 1 and 2, or any portion thereof, without Promisor's consent, effective
immediately upon receipt by Promisor of written notice thereof; and Promisor
agrees that Promisor shall comply forthwith with any covenant as so modified,
which shall be fully enforceable as so revised in accordance with the terms of
this Agreement.
4. Intellectual Property. Promisor recognizes and agrees that, on and
---------------------
after the date hereof, Promisor will not have the right to use for Promisor's
own account any of the service marks, trademarks, trade names, licenses,
procedures, processes, labels, trade secrets or customer lists conveyed to Buyer
in the Acquisition.
5. Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Buyer reform such provisions
to the extent necessary to cause them to contain reasonable limitations as to
time, geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth herein;
and the court shall enforce such provisions as so reformed. If, notwithstanding
the foregoing, any provision hereof is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
enforceable provision or by its severance herefrom. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
by Buyer as a part hereof a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable, and the parties hereby agree to such provision.
6. Notice. Any notice, request, instruction, document or other
------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: AEPI Acquisition, Inc.
13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen O. Sullivan, Esq.
Telecopy No.: (601) 897-4803
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
-4-
<PAGE>
Attention: Charles C. Reeder, Esq.
Telecopy No.: (214) 740-8800
If to Promisor: Richard J. Juelich
504 South Sixth Street
Sullwater, MN 55082
Telecopy No.: (612) 293-4640
with copies to: Holden & Garcia
101 W. Robert E. Lee Blvd., Suite 400
New Orleans, LA 70124
Attention: Eric A. Holden, Esq.
Telecopy No.: (504) 282-8687
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
7. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties hereto with respect to the matters covered hereby, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
8. Modification and Waiver. No modification or amendment of any of the
-----------------------
terms, conditions or provisions in this Agreement may be made otherwise than by
written agreement signed by the parties hereto, except as provided in Sections
3(b) and 5 hereof. The waiver by any party to this Agreement of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party nor shall such waiver constitute a continuing
waiver.
9. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any purported
assignment in violation of this Section 9 shall be null and void; provided,
however, that Buyer may assign its rights, interests and obligations hereunder
to Halter Marine or a subsidiary of Halter Marine.
10. Headings. The headings of the sections of this Agreement are
--------
inserted for convenience of reference only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
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<PAGE>
11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the date first above written.
BUYER:
AEPI ACQUISITION, INC.
By:_______________________________
Printed Name:
Title:
PROMISOR:
__________________________________
Richard J. Juelich
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<PAGE>
EXHIBIT D
EMPLOYMENT AGREEMENT
RICHARD J. JUELICH
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 31st day of October 1997, by and among AEPI Acquisition, Inc., a Delaware
corporation (the "Employer"), and Richard J. Juelich ("Executive") and, solely
for purposes of Section 8.13 hereof, Halter Marine Group, Inc.
W I T N E S S E T H:
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October 31, 1997 (the "Asset Purchase Agreement"), by and among Employer,
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), AmClyde
Engineered Products, Inc., a Delaware corporation of which Executive has been a
shareholder ("Seller"), and the sole shareholder of Seller, Seller is to sell to
Employer and Employer is to purchase and accept as of the Closing the Assets
(other than the Excluded Assets) and the Assumed Liabilities (each as defined in
the Asset Purchase Agreement) (the "Acquisition");
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition thereunder, that Executive shall execute and deliver
this Agreement;
WHEREAS, Executive, in the course of his employment with Employer, will
become familiar with and aware of information as to Employer's and Halter
Marine's customers, specific manner of doing business, including the processes,
techniques and trade secrets utilized by Employer and Halter Marine, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to Employer and Halter Marine; this information is a
trade secret and constitutes the valuable goodwill of Employer and Halter
Marine;
WHEREAS, Executive has been and is presently engaged in the business of
custom designing, engineering and, through subcontractors, manufacturing of
revolver and pedestal cranes for ships, barges, offshore drilling rigs and other
applications, winches, bulk unloaders and related materials handling equipment,
and pulling and jacking systems, prooftest and related equipment (the
"Business") in and around the world (the "Territory"); and
WHEREAS, the agreements of Executive hereunder are reasonable and
necessary, both in scope and duration, to protect the business and goodwill of
Employer that will be acquired pursuant to the Asset Purchase Agreement, and
Employer would suffer damages, including the loss of profits, if Executive or
any of Executive's affiliates engaged, directly or indirectly, in a competing
business with Employer.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
<PAGE>
A G R E E M E N T S
ARTICLE 1.
EMPLOYMENT TERMS AND DUTIES
1.1 Employment. Employer hereby employs Executive, and Executive hereby
----------
accepts employment by Employer, upon the terms and conditions set forth in this
Agreement.
1.2 Term. The term of Executive's employment under this Agreement shall
----
commence as of the date of this Agreement and shall terminate on that date which
is four (4) years after the date of this Agreement, subject to Article 5 of this
Agreement.
1.3 Duties. Executive will have such duties as are assigned or delegated
------
to Executive by the Board of Directors or Chairman of the Board, and will
initially serve as President of Employer. Executive will devote his entire
business time, attention, skill, and energy to the business of Employer, will
use his best efforts to promote the success of Employer's business and will
cooperate fully with the Board of Directors in the advancement of the best
interests of Employer. Nothing in this Section, however, will prevent Executive
from engaging in additional activities in connection with personal investments
and community affairs that are not inconsistent with Executive's duties under
this Agreement.
ARTICLE 2.
COMPENSATION
2.1 Base Compensation. Executive will be paid an annual salary of Two
-----------------
Hundred Fifty Thousand Dollars ($250,000.00), subject to adjustment as provided
below (the "Base Compensation"), which will be payable in equal periodic
installments according to Employer's customary payroll practices, but no less
frequently than monthly. The Base Compensation will be reviewed by the Board of
Directors of Employer (or if applicable, the Board of Directors of the
corporation which is the parent of Employer), or a Compensation Committee
appointed by such Board of Directors, not less frequently than annually, and may
be adjusted upward or downward in the sole discretion of such Board of Directors
or Compensation Committee, but in no event will the Base Compensation be less
than Two Hundred Fifty Thousand Dollars ($250,000.00) per year, without
Executive's consent.
2.2 Incentive Compensation. As additional compensation (the "Incentive
----------------------
Compensation") for the services to be rendered by Executive pursuant to this
Agreement, on the first and second anniversary dates of this Agreement Employer
shall pay Executive each such year a bonus in an amount equal to One Hundred
Twenty-Five Thousand Dollars ($125,000.00). Executive may receive additional
incentive compensation as determined by Employer based on profitability,
personal performance and other factors.
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<PAGE>
2.3 Options. Employer shall cause Halter Marine to issue to Executive
-------
qualified options for the purchase of up to Ninety Thousand (90,000) shares of
common stock of Halter Marine pursuant to the terms of the Halter Marine Group,
Inc. Amended and Restated 1996 Stock Option and Incentive Plan. Employer is an
affiliate of Halter Marine as of the date of this Agreement.
2.4 Benefits. Executive will, during the term of Executive's employment
--------
under the Agreement, be permitted to participate in such pension, profit
sharing, bonus, life insurance, hospitalization, major medical, and other
Executive benefit plans of Employer that may be in effect from time to time, to
the extent Executive is eligible under the terms of those plans (collectively,
the "Benefits").
ARTICLE 3.
FACILITIES AND EXPENSES
3.1 General. Employer will furnish Executive office space, equipment,
-------
supplies, and such other facilities and personnel as Employer deems necessary or
appropriate for the performance of Executive's duties under this Agreement.
Employer will pay Executive's dues in such professional societies and
organizations as the Chairman of the Board deems appropriate, and will pay on
behalf of Executive (or reimburse Executive for) reasonable expenses incurred by
Executive at the request of, or on the behalf of, Employer in the performance of
Executive's duties pursuant to this Agreement, and in accordance with Employer's
employment policies, including reasonable expenses incurred by Executive in
attending conventions, seminars, and other business meetings, in appropriate
business entertainment activities, and for promotional expenses. Executive must
file expense reports with respect to such expenses in accordance with Employer's
policies.
3.2 Automobile. Employer will include Executive in Employer's automobile
----------
allowance policy (currently for Executive $350 per month). Executive will own
his own automobile and maintain and insure it at his own expense, for his
business use in connection with his employment under this Agreement. Executive
will at his own expense maintain liability insurance on any automobile used in
connection with Employer's business.
ARTICLE 4.
VACATIONS AND HOLIDAYS
Executive will be entitled to a paid vacation during each fiscal year in
accordance with the vacation policies of Employer in effect for its executive
officers from time to time. Vacation must be taken by Executive at such time or
times as approved by the Chairman of the Board. Executive will also be entitled
to the paid holidays as set forth in Employer's policies. Vacation days and
holidays during any fiscal year of Employer that are not used by Executive
during such fiscal year may not be used in any subsequent fiscal year.
-3-
<PAGE>
ARTICLE 5.
TERMINATION
5.1 Events of Termination. Executive's Base Compensation and Incentive
---------------------
Compensation and any and all other rights of Executive under this Agreement or
otherwise as an employee of Employer will terminate:
(a) upon the death of Executive;
(b) upon the disability of Executive (as defined in Section 5.2)
immediately upon notice from either party to the other;
(c) for cause (as defined in Section 5.3), immediately upon notice
from Employer to Executive, or at such later time as such notice may specify; or
(d) for good reason (as defined in Section 5.4) upon not less than
30 days' prior notice from Executive to Employer.
5.2 Definition of Disability. For purposes of Section 5.1, Executive
------------------------
will be deemed to have a "disability" if, for physical or mental reasons,
Executive is unable to perform Executive's duties under this Agreement for 120
consecutive days, or 180 days during any twelve month period, as determined in
accordance with this Section 5.2. The disability of Executive will be
determined by a medical doctor selected by written agreement of Employer and
Executive upon the request of either party by notice to the other. If Employer
and Executive cannot agree on the selection of a medical doctor, each of them
will select a medical doctor and the two medical doctors will select a third
medical doctor who will determine whether Executive has a disability. The
determination of the medical doctor selected under this Section 5.2 will be
binding on both parties. Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Section 5.2, and Executive hereby authorizes the disclosure and release to
Employer of such determination and all supporting medical records. If Executive
is not legally competent, Executive's legal guardian or duly authorized
attorney-in-fact will act in Executive's stead, under this Section 5.2, for the
purpose of submitting Executive to the examinations and providing the
authorization of disclosure required under this Section 5.2.
5.3 Definitions of "for Cause". For purposes of Section 5.1, the phrase
--------------------------
"for cause" means: (a) Executive's material breach of Articles 6 or 7 of this
Agreement; (b) the willful and continued failure by Executive to substantially
perform his duties hereunder (other than any failure resulting from Executive's
disability as specified in Section 5.2) after demand for substantial performance
is delivered by Employer that specifically identifies the manner in which
Employer believes Executive has not substantially performed his duties; (c) the
appropriation (or attempted appropriation) of a material business opportunity of
Employer, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of Employer;
-4-
<PAGE>
(d) the misappropriation (or attempted misappropriation) of any of Employer's
funds or property; or (e) the conviction of, the indictment for (or its
procedural equivalent), or the entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a possible punishment. For purposes of this
Section, no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, without reasonable belief that his
action or omission was in the best interests of Employer. Any act, or failure to
act, by Executive that is based upon authority given pursuant to a resolution
duly adopted by Employer's Board of Directors or based upon the advice of
counsel for Employer shall be presumed to be done, or omitted to be done, by
Executive in the best interests of Employer. Notwithstanding the foregoing,
Executive may not be terminated for Cause without delivery to Executive of a
Notice of Termination setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under clause (a), (b), (c), (d) or (e) of this Section; provided,
however, that if clause (b) above forms the basis for such termination, (i)
Employer must have delivered to Executive a demand for substantial performance
in accordance with clause (b) above and (ii) the Notice of Termination must be
preceded by written notice to Executive (A) specifically identifying the manner
in which Employer believes Executive has not substantially performed his duties
after Employer's demand for substantial performance and (B) providing an
opportunity for Executive, together with his counsel, to be heard before the
Board of Directors of Employer.
5.4 Definition of "for Good Reason". For purposes of Section 5.1, the
-------------------------------
phrase "for good reason" means any of the following without Executive's consent:
(a) Employer's material breach of this Agreement; (b) the assignment of
Executive without his consent to a position, responsibilities or duties of a
materially lesser status than his position, responsibilities, or duties at the
Effective Date; (c) the requirement by Employer that Executive report to someone
other than the Chief Executive Officer of Halter Marine; or (d) the requirement
by Employer that Executive reside anywhere other than the Minneapolis/St. Paul
Minnesota area.
5.5 Termination Pay. Effective upon the termination of this Agreement,
---------------
Employer will be obligated to pay Executive (or, in the event of his death, his
designated beneficiary as defined below) only such compensation as is provided
in this Section 5.5. For purposes of this Section 5.5, Executive's designated
beneficiary will be such individual beneficiary or trust as Executive may
designate by notice to Employer from time to time or, if Executive fails to give
notice to Employer of such a beneficiary, Executive's estate. Notwithstanding
the preceding sentence, Employer will have no duty, in any circumstances, to
attempt to open an estate on behalf of Executive, to determine whether any
beneficiary designated by Executive is alive or to ascertain the address of any
such beneficiary, to determine the existence of any trust, to determine whether
any person or entity purporting to act as Executive's personal representative
(or the trustee of a trust established by Executive) is duly authorized to act
in that capacity, or to locate or attempt to locate any beneficiary, personal
representative, or trustee.
(a) Termination by Executive for Good Reason. If Executive terminates
----------------------------------------
this Agreement for good reason, Employer will pay Executive (i) Executive's Base
Compensation for the remainder, if any, of the calendar month in which such
termination is effective and (ii) that portion
-5-
<PAGE>
of Executive's Incentive Compensation, if any, for the fiscal year during which
the termination is effective, prorated through the date of termination.
(b) Termination by Employer for Cause. If Employer terminates this
---------------------------------
Agreement for cause, Executive will be entitled to receive his Base Compensation
only through the date such termination is effective but will not be entitled to
any Incentive Compensation for the fiscal year during which such termination
occurs.
(c) Termination upon Disability. If this Agreement is terminated by
---------------------------
either party as a result of Executive's disability, as determined under Section
5.2, Employer will pay Executive his Base Compensation through the remainder of
the calendar month during which such termination is effective and for the lesser
of (i) six (6) consecutive months thereafter or (ii) the period until disability
insurance benefits commence under the disability insurance coverage furnished by
Employer to Executive and for that part of Executive's Incentive Compensation,
if any, for the fiscal year during which disability occurs, prorated through the
end of the calendar month during which disability occurs.
(d) Termination upon Death. If this Agreement is terminated because
----------------------
of Executive's death, Executive will be entitled to receive his Base
Compensation through the end of the calendar month in which his death occurs and
that part of Executive's Incentive Compensation, if any, for the fiscal year
during which his death occurs prorated through the end of the calendar month
during which his death occurs.
(e) Benefits. Executive's accrual of, or participation in plans
--------
providing for, the Benefits will cease at the effective date of the termination
of this Agreement, and Executive will be entitled to accrued Benefits pursuant
to such plans only as provided in such plans. Executive will not receive, as
part of his termination pay pursuant to this Article 5, any payment or other
compensation for any vacation, holiday, sick leave, or other leave unused on the
date the notice of termination is given under this Agreement or upon the death
of Executive.
(f) Return of Employer Property. All records, designs, patents,
---------------------------
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of Employer,
Halter Marine or their representatives, vendors or customers which pertain to
the business of Employer or Halter Marine shall be and remain the property of
Employer or Halter Marine, as the case may be, and be subject at all times to
their discretion and control. Likewise, all such property and all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of Employer
or Halter Marine that is collected by Executive shall be delivered promptly to
Employer without request by it upon termination of employment.
ARTICLE 6.
NON-DISCLOSURE
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<PAGE>
6.1 Disclosure of Information. Executive agrees that during the term of
-------------------------
Executive's employment with Employer and for a period of three (3) years
following the date of the termination of Executive's employment with Employer,
without the prior written consent of Employer, Executive shall not, directly or
indirectly, through any form of ownership, in any individual or representative
or affiliated capacity whatsoever, except as may be required by law or as may be
in furtherance of Employer's business, reveal, divulge, disclose or communicate
to any person, firm, association, corporation or other entity in any manner
whatsoever information of any kind, nature or description concerning: (i) the
names of any prior or present suppliers or customers of Employer or Halter
Marine, (ii) the prices for which Employer or Halter Marine obtains or has
obtained products or services, (iii) the names of the personnel of Employer or
Halter Marine, (iv) the manner of operation of Employer or Halter Marine, (v)
the plans, trade secrets, or other data of any kind, nature or description,
whether tangible or intangible, of Employer or Halter Marine, or (vi) any other
financial, statistical or other information acquired by Employer or Halter
Marine that Employer or Halter Marine designates or treats as confidential or
proprietary. The agreements set forth herein shall not apply to any information
that at the time of disclosure or thereafter is generally available to and known
by the public (other than as a result of a disclosure directly or indirectly by
Executive in violation of this Agreement), the disclosure of which is required
by law, regulation, order, decree or process or is otherwise approved by
Employer or Halter Marine. Without regard to whether any or all of the
foregoing matters would be deemed confidential, material or important, the
parties hereto stipulate that as between them, the same are important, material
and confidential and gravely affect the effective and successful conduct of the
Business and its goodwill.
6.2 Non-Removal. Executive will not remove from Employer's premises
-----------
(except to the extent such removal is for purposes of the performance of
Executive's duties at home or while traveling, or except in furtherance of the
business of Employer or as otherwise specifically authorized by Employer) any
document, record, notebook, plan, model, component, device, or computer software
or code, whether embodied in a disk or in any other form (collectively, the
"Proprietary Items"). Executive recognizes that, as between Employer and
Executive, all of the Proprietary Items, whether or not developed by Executive,
are the exclusive property of Employer. Upon termination of this Agreement by
either party, or upon the request of Employer during the period of employment,
Executive will return to Employer all of the Proprietary Items in Executive's
possession or subject to Executive's control, and Executive shall not retain any
copies, abstracts, sketches, or other physical embodiment of any of the
Proprietary Items.
ARTICLE 7.
NON-COMPETITION AND NON-INTERFERENCE
7.1 Noncompetition. Executive agrees that during the term of Executive's
--------------
employment with Employer and for a period of three (3) years following the date
of the termination of Executive's employment with Employer, Executive shall not
perform any of the following acts, except those acts as are on behalf and for
the benefit of Employer:
-7-
<PAGE>
(i) Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any past, existing or potential customers,
suppliers, businesses, or accounts of the Business in connection with any
business substantially similar to the Business in the Territory;
(ii) Hire, attempt to hire, contact or solicit with respect to
hiring for Executive or on behalf of any other person or entity any present
or future employee of Employer or Halter Marine in the Business;
(iii) Engage in, or give any advice to any person, firm,
partnership, association, venture, corporation or other entity engaged in,
a business substantially similar to the Business in the Territory;
(iv) Lend credit, money or reputation for the purpose of
establishing or operating a business substantially similar to the Business
in the Territory;
(v) Do any act that Executive knew or should have known might
injure Employer, Halter Marine or the Business; and
(vi) Without limiting the generality of the foregoing provisions,
conduct a business substantially similar to the Business in the Territory.
The covenants in subsections (i) through (vi) are intended to restrict
Executive from competing in any manner with Employer, Halter Marine or the
Business. The obligations set forth in subsections (i) through (vi) above shall
apply to actions by Executive, through any form of ownership, and whether as
principal, officer, director, agent, employee, employer, consultant, shareholder
or holder of any equity security (beneficially or as trustee of any trust),
lender, partner, joint venturer or in any other individual or representative or
affiliated capacity whatsoever. However, none of the foregoing shall prevent
Executive from being the holder of up to 5.0% in the aggregate of any class of
securities of any corporation engaged in the activities described in subsections
(i) through (vi) above, provided that such securities are listed on a national
securities exchange or reported on the Nasdaq National Market or the Nasdaq
Small Cap Market.
ARTICLE 8.
GENERAL PROVISIONS
8.1 Injunctive Relief and Additional Remedies.
-----------------------------------------
(a) Executive acknowledges that a violation or attempted violation of
any of the covenants and agreements in Sections 6.1 and 7.1 above will cause
such damage to Employer as will be irreparable, the exact amount of which would
be difficult to ascertain and for which there will be no adequate remedy at law,
and accordingly, Executive agrees that Employer shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by Executive, or the affiliates,
-8-
<PAGE>
partners or agents of such Executive, as well as to recover from Executive any
and all costs and expenses sustained or incurred by Employer in obtaining such
an injunction, including, without limitation, reasonable attorneys' fees. In the
event that Employer is unsuccessful in obtaining such an injunction, then
Employer shall reimburse Executive for reasonable attorneys' fees and court
costs and expenses incurred by Executive in defending such action. Employer
agrees that a reasonable bond or other security may be required by a court in
connection with such injunction. Executive further agrees that the three-year
period of restriction set forth in Sections 6.1 and 7.1 above shall be tolled
during any period of violation thereof by Executive. Any exercise by Employer of
its rights pursuant to this Section 3 shall be cumulative and in addition to any
other remedies to which Employer may be entitled. Each party represents and
warrants that it has been represented by counsel in the negotiation and
execution of this Agreement, including without limitation the provisions set
forth above in this Section 3(a) concerning the recovery of attorneys' fees.
(b) Executive understands and acknowledges that Employer shall have
the right, in its sole discretion, to reduce the scope of any covenants set
forth in Section 6.1 and 7.1, or any portion thereof, without Executive's
consent, effective immediately upon receipt by Executive of written notice
thereof; and Executive agrees that Executive shall comply forthwith with any
covenant as so modified, which shall be fully enforceable as so revised in
accordance with the terms of this Agreement.
8.2 Validity. To the extent permitted by applicable law, if it should
--------
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be restrained,
then the court so holding shall at the request of Employer reform such
provisions to the extent necessary to cause them to contain reasonable
limitations as to time, geographical area and scope of activity to be restrained
and to give the maximum permissible effect to the intentions of the parties as
set forth herein; and the court shall enforce such provisions as so reformed.
If, notwithstanding the foregoing, any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or enforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically by Employer as a part hereof a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable, and the parties hereby agree to such provision.
If Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of Executive in Sections 6.1 and 7.1.
8.3 Representations and Warranties by Executive. Executive represents
-------------------------------------------
and warrants to Employer that the execution and delivery by Executive of this
Agreement do not, and the performance by Executive of Executive's obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both: (a) violate any judgment, writ, injunction, or order of any
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<PAGE>
court, arbitrator, or governmental agency applicable to Executive; or (b)
conflict with, result in the breach of any provisions of or the termination of,
or constitute a default under, any agreement to which Executive is a party or by
which Executive is or may be bound. Executive represents and warrants to
Employer that as of the date of this Agreement Executive has no claims against
Employer or any of its parent corporations, subsidiary corporations or
affiliated entities or any of their respective stockholders, directors,
officers, employees or agents.
8.4 Intellectual Property. Executive recognizes and agrees that, on and
---------------------
after the date hereof, Executive will not have the right to use for Executive's
own account any of the service marks, trademarks, trade names, licenses,
procedures, processes, labels, trade secrets or customer lists conveyed in the
Acquisition.
8.5 Obligations Contingent on Performance. The obligations of Employer
-------------------------------------
hereunder, including its obligation to pay the compensation provided for herein,
are contingent upon Executive's performance of Executive's obligations
hereunder.
8.6 Waiver. The rights and remedies of the parties to the Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
8.7 Binding Effect; Delegation of Duties Prohibited. This Agreement
-----------------------------------------------
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, assigns, heirs, and legal representatives,
including any entity with which Employer may merge or consolidate or to which
all or substantially all of its assets may be transferred. The duties and
covenants of Executive under this Agreement, being personal, may not be assigned
or delegated.
8.8 Notices. Any notice, request, instruction, document or other
-------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Employer: AEPI Acquisition, Inc.
13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen O. Sullivan, Esq.
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<PAGE>
Telecopy No.: (601) 897-4803
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Charles C. Reeder, Esq.
Telecopy No.: (214) 740-8800
If to Executive: Richard J. Juelich
504 South Sixth Street
Sullwater, MN 55082
Telecopy No.: (612) 293-4640
with copies to: Holden & Garcia
101 W. Robert E. Lee Blvd., Suite 400
New Orleans, LA 70124
Attention: Eric A. Holden, Esq.
Telecopy No.: (504) 282-8687
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
8.9 Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally but only by an agreement in writing signed by the parties
hereto.
8.10 Governing Law. This Agreement will be governed by the laws of the
-------------
State of Minnesota without regard to conflicts of laws principles.
8.11 Arbitration. Any unresolved dispute or controversy arising under or
-----------
in connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three (3) arbitrators in Jackson, Mississippi in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from,
or modify any provision hereof or to award punitive damages to any injured
party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to
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<PAGE>
enforce this Agreement, and interest thereon in the event the arbitrators
determine that Executive was terminated without disability or good cause, as
defined in Article 5, or that Employer has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final and
binding. Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The direct expense of any arbitration proceeding shall be borne by
Employer.
8.12 Section Headings, Construction. The headings of Sections and
------------------------------
Articles in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections" or
"Article" or "Articles" refer to the corresponding Section or Sections or
Article or Articles of this Agreement unless otherwise specified. All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
8.13 Guarantee. Halter Marine hereby unconditionally guarantees the
---------
performance of Employer's obligations under this Agreement in accordance with,
and subject to, the terms hereof.
8.14 Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.15 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AEPI ACQUISITION, INC.
By:_______________________________
Title:
EMPLOYEE:
__________________________________
Richard J. Juelich
HALTER MARINE GROUP, INC.
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<PAGE>
(solely for purposes of Section 8.13 hereof)
By:_____________________________
Title:
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<PAGE>
EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of the
31st day of October, 1997, by and between AmClyde Engineered Products, Inc., a
Delaware corporation ("Seller"), AEPI Acquisition, Inc., a Delaware corporation
("Buyer"), and Whitney National Bank, a national banking corporation, as escrow
agent (the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Asset Purchase Agreement made and entered into as
of October __, 1997 (the "Asset Purchase Agreement"), by and among Buyer, Halter
Marine Group, Inc., Seller, and Wallace K. Fisk, Jr., Seller is to sell to Buyer
and Buyer is to purchase and accept as of the Closing the Assets (other than the
Excluded Assets) and the Assumed Liabilities (each as defined in the Asset
Purchase Agreement) (the "Acquisition"); and
WHEREAS, the Asset Purchase Agreement provides, as a condition to the
closing of the Acquisition, that the parties execute and deliver this Agreement
whereby a certain portion of the purchase price would be payable in shares of
Halter Stock, as defined in the Asset Purchase Agreement, and placed in escrow
(the "Escrow") for a period of time.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms, and subject to the conditions
hereinafter set forth, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
------------
herein shall have the meaning ascribed to them in the Asset Purchase Agreement.
2. Appointment of the Agent. Buyer and Seller hereby appoint the Agent
------------------------
as Escrow agent in accordance with the terms and conditions set forth herein,
and the Agent hereby accepts such appointment.
3. Deposit of the Escrowed Property.
--------------------------------
(a) On the Closing Date, Buyer shall, in accordance with Section 9.3
of the Asset Purchase Agreement, deposit with and register in the name of the
Agent, or the nominee of the Agent, Thirteen Thousand Eight Hundred Fifty-One
(13,851) shares of Halter Stock (the "Escrowed Property") to be held in
accordance with Section 5 below.
(b) The Agent shall: (i) hold the Escrowed Property in escrow for the
purposes herein and for no other purpose, subject to the terms and conditions
hereof and (ii) provide Buyer and Seller with a periodic accounting of the
number of shares of Halter Stock held in the Escrow.
<PAGE>
4. Beneficial Ownership of Halter Stock. The Halter Stock held as
------------------------------------
Escrowed Property shall be held for the benefit of Seller and Seller shall be
entitled to exercise any and all beneficial ownership rights pertaining to
Halter Stock constituting Escrowed Property, including but not limited to, the
following:
(a) All voting rights of the shares of Halter Stock constituting
Escrowed Property registered in the name of the Agent shall be vested in the
Agent, but the Agent shall vote all such shares of Halter Stock constituting
Escrowed Property in accordance with the written instructions of Seller.
Promptly after the Agent has received a solicitation for the vote of the shares
of Halter Stock constituting Escrowed Property, it shall send to Seller copies
of any proxy statement or similar solicitation materials it has received, and a
copy of the form of proxy or a questionnaire requesting voting instructions from
Seller in respect of the shares of Halter Stock constituting Escrowed Property
and indicating a date by which Seller must return such proxy or respond to such
questionnaire.
(b) The Agent shall pay to Seller all cash amounts received by the
Agent as cash dividends on the shares of Halter Stock constituting Escrowed
Property; provided, however, that if the Parent shall at any time pay a dividend
-------- -------
on those shares of Halter Stock constituting Escrowed Property in shares of
Halter Stock or any other security convertible into or exchangeable or
exercisable for shares of Halter Stock, in non-cash assets or shall effect a
stock split, the Agent shall deposit all such shares of Halter Stock and such
other securities or non-cash assets received in respect of such dividend or
stock split into the Escrow account. All such shares of Halter Stock and other
securities so deposited shall constitute Escrowed Property and shall be
available for disposition as provided herein.
(c) Seller shall be deemed to own the shares of Halter Stock
constituting the Escrowed Property and held by the Agent and all dividends, gain
or loss from sale, and other income allocable to such Halter Stock constituting
Escrowed Property and held by the Agent shall be reported as income by Seller.
5. Disposition of Escrowed Property.
--------------------------------
(a) If the Agent shall receive a written notice from Buyer at any time
from the date of this Agreement through 24 months following the date of this
Agreement certifying (i) that Buyer has suffered a Buyer's Loss as provided in
Section 10.1 of the Asset Purchase Agreement, or other losses arising from or
relating to the Asset Purchase Agreement, and as a result, is entitled to
payment hereunder pursuant to the Asset Purchase Agreement; and (ii) the total
cash amount (the "Amount") Buyer is entitled to from the release and delivery of
that number of shares of Halter Stock (rounded upward or downward to the nearest
whole share), as determined by Buyer, valued at $36.10 per share adjusted for
stock splits and stock dividends (the "Closing Price"), which is equivalent to
the Amount (a "Claim") with respect to such Buyer's Loss or other loss, as the
case may be, then the Agent shall promptly (and in any event within ten (10)
days following receipt of such notice from Buyer) deliver a copy of such notice
to Seller. If the Agent does not, within twenty (20) days after
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<PAGE>
the delivery of such notice by the Agent to Seller, receive a written objection
from Seller with respect to such Claim, the Agent shall promptly deliver to
Buyer such number of shares of Halter Stock (rounded upward or downward to the
nearest whole share), valued at the Closing Price, as shall be sufficient to
satisfy the Claim. If the Agent shall receive a written objection from Seller
within such twenty (20)-day period, a conflict shall be deemed to have arisen (a
"Conflict") and the Agent shall, within five (5) days of the Agent's receipt of
the written objection from Seller, deliver notice of such Conflict to Buyer and
Seller, and the Agent shall refrain from taking any action until the Agent shall
be directed otherwise in accordance with Section 5(b) below.
(b) If a Conflict shall have arisen as described in Section 5(a)
above, upon receipt by the Agent during the term of this Agreement of (i) joint
written instructions signed by Buyer and Seller directing the release and
delivery of all or a portion of the Escrowed Property or (ii) a final judgment
or order of a court of competent jurisdiction not subject to any further appeals
directing the release and delivery of all or a portion of the Escrowed Property
held hereunder, the Agent shall promptly deliver to the person or persons
specified, out of the Escrow created hereunder and in the manner specified in
the instructions, judgment or order, as the case may be, all or a portion of the
Escrowed Property specified in such instructions, judgment or order, and the
Agent shall thereupon be relieved and discharged from any responsibility or
obligation with respect to such of the Escrowed Property delivered in accordance
with this Agreement.
(c) Unless otherwise notified by a joint instruction signed by Buyer
and Seller, if 12 months after the date of this Agreement the aggregate amount
of all Claims (as such term is defined in Section 5(a) hereof) made by Buyer for
which payment has been made plus those Claims which are at that time payable by
means of any disposition of the Escrowed Property plus those Claims which have
not been resolved in accordance with Section 5(a) or (b) hereof does not exceed
One Hundred Thousand Dollars ($100,000), then the Agent shall release and
deliver to Seller that number of shares of Halter Stock (rounded upward or
downward to the nearest whole share), valued at the Closing Price, which is
equivalent to the sum of Two Hundred Fifty Thousand Dollars ($250,000).
(d) Unless otherwise notified by a joint instruction signed by Buyer
and Seller, in the event the Escrow created hereunder is not sooner terminated
pursuant to the provisions of Section 5(f) below or extended pursuant to the
provisions of this Section 5(d), the escrow period and the Escrow created
hereunder shall terminate 24 months following the date hereof (the "Escrow
Period"). Upon such termination, the Agent shall release and deliver to Seller
all of the Escrowed Property; provided, however, if Buyer has filed a Claim with
-------- -------
the Agent prior to such termination, which Claim has not been resolved in
accordance with Section 5(a) or (b) above by the date of termination, the Agent
shall release and deliver to Seller only that number of shares of Halter Stock
(rounded upward or downward to the nearest whole share), valued at the Closing
Price, which is equivalent to an amount in excess of the aggregate amount of
Buyer's outstanding and unresolved Claim(s). Upon resolving all remaining
Claims in accordance with this Section 5, including any distributions to Buyer
(which may be after the 24 month period provided herein, in which case the
Escrow Period shall be extended to such time in which all Claims are resolved),
Agent shall release
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<PAGE>
and deliver to Seller all remaining Escrowed Property and close the Escrow,
whereupon the Escrow Period and the Escrow created hereunder shall be
terminated.
(e) Notwithstanding the provisions of Section 5(d) above, at the
conclusion of the Escrow Period, if any Claim has not been resolved in
accordance with the terms hereof, the Agent shall have the right, in its sole
discretion, to deposit with the registry of any State or Federal court located
in the Parish of Orleans, Louisiana, that number of shares of Halter Stock
(rounded upward or downward to the nearest whole share), valued at the Closing
Price, which is equivalent to the aggregate amount of Buyer's outstanding and
unresolved Claims. In such a case, the Agent shall implead Buyer and Seller in
any such action filed with the Court.
(f) Unless otherwise notified in a joint instruction signed by Buyer
and Seller, in the event the Agent releases and delivers to Buyer all of the
Escrowed Property in accordance with the terms of this Section 5 prior to the
date that is 24 months following the date hereof, the Escrow Period and the
Escrow created hereunder shall immediately terminate and the Agent shall close
the Escrow and give notice thereof to Buyer and Seller.
(g) All distributions of the Escrowed Property to be made by the Agent
under this Agreement shall be effected by the Agent's delivering from the Escrow
to the transfer agent for Halter Marine Group, Inc. (the "Transfer Agent") a
negotiable certificate or certificates, as the case may be, representing
sufficient shares of Halter Stock to satisfy the relevant distribution (the
"Delivered Certificates"), along with instructions to the Transfer Agent to (i)
transfer the shares representing the distribution to each distributee, (ii)
reissue the balance of the Halter Stock represented by the Delivered
Certificates, if any, in the name of the Agent or the Agent's nominee and (iii)
return all of the newly issued certificates to the Agent for distribution. The
Agent shall, upon receipt of the newly issued certificates, promptly deliver to
each distributee the certificates representing shares of Halter Stock to which
the distributee is entitled under this Agreement and place the shares reissued
to the Agent, if any, in the Escrow to be held as Escrowed Property.
6. Exculpation and Indemnification of the Agent.
--------------------------------------------
(a) The Agent is not a party to and is not bound by or charged with
notice of any agreement out of which this Escrow may arise. The Agent acts
hereunder solely as a depository and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, authenticity or validity of the
Escrowed Property, the form of execution thereof or for the identity or
authority of any person executing this Agreement or depositing the Escrowed
Property. The responsibility of the Agent extends only to the duties
affirmatively stated in this Agreement and to the exercise of ordinary
diligence. The Agent shall not be responsible for any act or omission except
for actual fraud, dishonesty or bad faith. No implied duties or obligations of
the Agent shall be read into this Agreement and the Agent shall have no duty to
enforce any obligation of any person to make any payment or delivery, or to
direct or cause any payment or delivery to be made, or to enforce any obligation
of any persons to perform any other act. The Agent shall in no way be
responsible for, nor shall it have any duty to notify any party hereto or any
other party interested in this Agreement
-4-
<PAGE>
of any payment required or maturity occurring under this Agreement or under the
terms of any instrument deposited hereunder. The Agent shall be under no
liability to Buyer or Seller or to anyone else by reason of any failure on the
part of any party hereto or any maker, guarantor, endorser or other signatory of
any document or any other person to perform such person's obligations under any
such document. Except for amendments to this Agreement referred to below and
except for joint instructions given to the Agent by Buyer and Seller relating to
the Escrowed Property, the Agent shall not be obligated to recognize any
agreement between any or all of the persons referred to herein, notwithstanding
that references thereto may be made herein and whether or not it has knowledge
thereof.
(b) The Agent shall not be liable to Buyer and Seller or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment.
The Agent may rely conclusively and shall be protected in acting upon any order,
written notice, request, waiver, consent, receipt, authorization, power of
attorney, demand, certificate, opinion or advice of counsel (including counsel
chosen by the Agent), statement, instrument, report or other paper or document
(not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained), including any of such of the aforementioned instruments as
are delivered by facsimile transmission, which is believed by the Agent to be
genuine and to be signed or presented by the proper person or persons, including
but not limited to, items requesting or authorizing release or retention of the
Escrowed Property and items amending the terms of this Agreement. The Agent may
rely upon any such instructions and deliver the Escrowed Property as directed
without further investigation. The Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Agreement
or any of the terms hereof, unless evidenced by a writing delivered to the Agent
signed by the proper party or parties and, if the duties or rights of the Agent
are affected, unless it shall give its prior written consent thereto.
(c) The Agent shall not be responsible for the sufficiency or accuracy
of the form of, or the execution, validity, value or genuineness of, any
document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein, nor shall the Agent be responsible or liable to Buyer
or Seller or to anyone else in any respect on account of the identity,
authority, or rights of the persons executing or delivering or purporting to
execute or deliver any document or property or this Agreement. The Agent shall
have no responsibility with respect to the use or application of any of the
Escrowed Property delivered by the Agent pursuant to the provisions hereof.
(d) The Agent shall have the right to assume in the absence of written
notice to the contrary from the proper person or persons that a fact or an event
by reason of which an action would or might be taken by the Agent does not exist
or has not occurred, without incurring liability to Buyer or Seller or to anyone
else for any action taken or omitted, or any action suffered by it to be taken
or omitted, in good faith and in the exercise of its own best judgment, in
reliance upon such assumption.
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<PAGE>
(e) The Agent shall be indemnified and held harmless jointly and
severally by Buyer and Seller from and against any and all expenses, including
attorneys' fees and disbursements, or any losses, costs, claims, demands or
damages suffered or incurred by the Agent in connection with any cause of
action, litigation or other proceeding involving any claim, or in connection
with any claim or demand, which in any way, directly or indirectly, arises from
or in conjunction with this Agreement, the services of the Agent hereunder, or
the property held by it hereunder, except for matters resulting from the Agent's
own gross negligence or willful misconduct.
(f) In the event of a Conflict, if the Agent, in good faith, should be
in doubt as to what action it should take hereunder, the Agent may, at its
option, (i) deposit all of the Escrowed Property with a court registry, as
provided in Section 5(e) hereunder, (ii) refuse to comply with any claims or
demands on it, or (iii) refuse to take any other action hereunder. The Agent
may consult with legal counsel of its choice in the event of any dispute or
question as to the construction of any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such counsel.
7. Compensation of the Agent. The Agent shall be entitled to an account
-------------------------
acceptance fee in the amount of $1,000, due and payable upon execution of this
Agreement, and an account service fee in the amount of $1,500 per year or part
thereof for its services hereunder and to reimbursement for its costs and
expenses in connection with its performance of additional services under this
Agreement (including amounts representing reasonable fees and expenses of the
Agent's officers, employees, legal counsel, accountants and/or agents)
(collectively, the "Fees"). Buyer shall pay the Fees hereunder; provided,
however, that if the Agent incurs any out-of-pocket expenses relating to a
dispute which are subject to reimbursement hereunder, Buyer on the one hand and
Seller on the other hand shall share equally such expense reimbursement.
8. Further Assurances. From time to time on and after the date hereof,
------------------
Buyer and Seller shall deliver or cause to be delivered to the Agent such
further documents and instruments and shall do and cause to be done such further
acts as the Agent shall reasonably request (it being understood that the Agent
shall have no obligation to make any such request) to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
9. Termination of Agreement and Resignation of the Agent.
-----------------------------------------------------
(a) This Agreement shall terminate on the final disposition of the
Escrowed Property hereunder, provided that the rights of the Agent and the
obligations of Buyer and Seller under Sections 6 and 7 shall survive the
termination hereof.
(b) The Agent may resign at any time and be discharged from its duties
as Escrow agent hereunder by giving Buyer and Seller at least thirty (30) days
written notice thereof. As soon as practicable after its resignation, the Agent
shall turn over to a successor Escrow agent appointed by Buyer and Seller all
Escrowed Property held hereunder upon presentation of the
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<PAGE>
document appointing the new Escrow agent and its acceptance thereof. If no new
agent is so appointed within the sixty (60) day period following such notice of
resignation, the Agent may deposit the aforesaid monies and property with the
registry of any State or Federal court located in the Parish of Orleans,
Louisiana. Upon doing so, the Agent shall be relieved and discharged of any
further duty, responsibility or obligation under this Agreement.
10. Notices. Any notice, request, instruction, document or other
--------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer: Halter Marine Group, Inc.
13085 Seaway Road
Gulfport, MS 39503
Attention: Maureen O. Sullivan, Esq.
Telecopy No.: (601) 897-4803
with copies to: Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Attention: Charles C. Reeder, Esq.
Telecopy No.: (214) 740-8800
If to Seller: AmClyde Engineered Products, Inc.
c/o Wallace K. Fisk, Jr.
#9 Chickadee Lane
North Oaks
St. Paul, MN 55127
Telecopy No. (612) 483-3931
With copies to: Dorsey & Whitney, LLP
220 South Sixth Street
Minneapolis, MN 55402
Attention: William R. Hibbs, Esq.
Telecopy No.: (612) 340-8827
If to Agent: Whitney National Bank
Attention: Patrick M. Kingsmill
228 St. Charles Avenue, Ste. 206
New Orleans, LA 70130
Telecopy No.: (504) 586-3488
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<PAGE>
with copies to: Monroe & Lemman
(A Professional Corporation)
201 St. Charles Avenue, Suite 3400
New Orleans, Louisiana 70170-3400
Attention: John M. Girault, Esq.
Telecopy No.: (504) 581-7312
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon receipt by such party. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.
11. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
and supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof, and no
party shall be liable or bound to the other in any manner by any representations
or warranties not set forth herein.
12. Successors and Assigns. This Agreement and the rights and
----------------------
obligations hereunder of the other parties hereto may be assigned by those
parties only to a successor to the relevant party's entire business. This
Agreement and the rights and obligations hereunder of the Agent may be assigned
by the Agent only to a successor to its entire business. This Agreement shall
be binding upon and inure to the benefit of each party's respective successors,
heirs and permitted assigns. No other person shall acquire or have any rights
under or by virtue of this Agreement. This Agreement is intended to be for the
sole benefit of the parties hereto, and (subject to the provisions of this
Section 12) their respective successors, heirs and assigns, and none of the
provisions of this Agreement are intended to be, nor shall they be construed to
be, for the benefit of any third person.
13. Headings. The headings of the sections of this Agreement are inserted
--------
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
14. Modification and Waiver. Any of the terms or conditions of this
-----------------------
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by all parties hereto. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by all
parties. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
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<PAGE>
15. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED, AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF LOUISIANA (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
16. Invalid Provisions. If any provision of this Agreement is held to be
------------------
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
[Balance of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed in counterparts all as of the date first above written.
SELLER:
AmClyde Engineered Products, Inc., a Delaware
corporation
By:___________________________________________
Richard J. Juelich
President
BUYER:
AEPI Acquisition, Inc., a Delaware corporation
By:___________________________________________
Rick S. Rees
Executive Vice President
ESCROW AGENT:
Whitney National Bank, a national banking
corporation
By:___________________________________________
Patrick M. Kingsmill
Trust Officer
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<PAGE>
EXHIBIT F-1
MATTERS COVERED BY OPINION OF
SELLER'S COUNSEL-HENSON & EFRON, P.A.
-------------------------------------
1. Seller is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of Delaware and is in good standing
under such laws. Seller has the requisite corporate power and authority to own
and operate the Assets and to carry on its business as presently conducted.
2. Seller has all requisite legal and corporate power and authority to
execute and deliver the Agreement, and any other certificate or document to be
executed, delivered and entered into by Seller in connection with the
acquisition (collectively, the "Seller Signed Documents"), and to carry out and
perform all of its obligations under each of the Seller Signed Documents.
docs
3. All corporate action on the part of Seller and its board of directors
and shareholder necessary for the authorization, execution and delivery by
Seller of each of the Seller Signed Documents, the performance of Seller's
obligations under the Seller Signed Documents, and the consummation of the
transactions contemplated by the Seller Signed Documents has been duly, validly
and lawfully taken.
4. The Seller Signed Documents have been duly and validly executed and
delivered by Seller and constitute valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar federal or state laws affecting the rights of creditors generally
and except that we render no opinion with respect to the effect or availability
of rules of law governing specific performance, injunctive relief or other
equitable remedies (regardless of whether any such remedy is considered in a
proceeding at law or in equity).
5. The execution, delivery and performance of and compliance by Seller
with the Seller Signed Documents does not breach or violate: (a) any provision
of Seller's Certificate of Incorporation or Bylaws; (b) any material agreement,
commitment, instrument or contract listed in Schedules 1.1A and 3.8 to the
Agreement, except as disclosed in the Agreement, its Schedules or its Exhibits;
(c) to the best of our knowledge, any other agreement, commitment, instrument or
contract to which Seller is a party or by which Seller is bound; or (d) to the
best of our knowledge, any judgment, decree, injunction or order applicable to
Seller.
6. Except as set forth in the Agreement, the Schedules or the Exhibits
to the Agreement, no consent, approval or authorization of or designation,
declaration or filing with any federal or Delaware governmental authority or to
the best of our knowledge any other person is required in connection with the
valid execution, delivery and performance by Seller of the Agreement and the
Seller Ancillary Agreements or of any other transaction contemplated thereby,
except that we express no opinion as to the requirement of filing of any
notifications with federal agencies pursuant to the Hart Scott Rodino Antitrust
Improvements Act.
<PAGE>
7. To the best of our knowledge, no material Environmental Claim is
pending or threatened against Seller.
8. To the best of our knowledge, the execution and performance of the
Agreement by Seller will not violate or result in a failure to comply with any
presently existing federal or Delaware statute or regulation which in our
experience is normally applicable to general business corporations which are not
engaged in regulated activities and to transactions of the type set forth in the
Agreement (but without our having made special investigation as to any other
laws), except no opinion is expressed as to any laws the violation of which
would not have a material adverse impact on Seller or to which Seller may be
subject as a result of Buyer's legal or regulatory status, except that we
express no opinion as to the requirement of filing of any notifications with
federal agencies pursuant to the Hart Scott Rodino Antitrust Improvements Act
for the transactions set forth in the Agreement.
-2-
<PAGE>
EXHIBIT F-2
MATTERS COVERED BY OPINION OF
SELLER'S COUNSEL-DORSEY & WHITNEY LLP
-------------------------------------
The Agreement constitutes the legal, valid and binding obligation of Seller
and Shareholder, enforceable against Seller and Shareholder in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally, and to
the exercise of judicial discretion in accordance with general principles of
equity, including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether considered in a
proceeding in equity or at law).
<PAGE>
EXHIBIT G
MATTERS COVERED BY OPINION OF BUYER'S COUNSEL
---------------------------------------------
1. Each of Halter and Subsidiary is a corporation validly existing
and in good standing under the laws of the State of Delaware;
2. Halter has the requisite corporate power and authority to execute
and deliver the Agreement and the Assumption Agreement and to consummate
the transactions contemplated thereby;
3. Subsidiary has the requisite corporate power and authority to
execute and deliver the Agreement, the Assumption Agreement and the Escrow
Agreement and to consummate the transactions contemplated thereby;
4. The execution and delivery of the Agreement and the Assumption
Agreement by Halter and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary action of the Board of
Directors of Halter;
5. The execution and delivery of the Agreement, the Assumption
Agreement and the Escrow Agreement by Subsidiary and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary action of the Board of Directors of Subsidiary;
6. The Agreement and the Assumption Agreement have been duly
executed and delivered by a duly authorized officer of Halter and each
constitutes the valid, legal and binding obligation of Halter, enforceable
in accordance with its terms (except insofar as the enforceability of the
Agreement and the Assumption Agreement may be limited by bankruptcy,
insolvency, similar laws affecting the rights of creditors generally or the
general principles of equity, as to which we express no opinion);
7. The Agreement, the Assumption Agreement and the Escrow Agreement
have been duly executed and delivered by a duly authorized officer of
Subsidiary and each constitutes the valid, legal and binding obligation of
Subsidiary, enforceable in accordance with its terms (except insofar as the
enforceability of the Agreement, the Assumption Agreement and the Escrow
Agreement may be limited by bankruptcy, insolvency, similar laws affecting
the rights of creditors generally or the general principles of equity, as
to which we express no opinion); and
8. The shares of Halter Stock, when issued and delivered will have
been duly authorized and issued, and will be fully paid and non-assessable.
<PAGE>
EXHIBIT "H"
ALLOCATION OF PURCHASE PRICE AND OTHER CONSIDERATION
----------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Allocated
-----------
<S> <C>
Class I Assets (cash, demand deposits and
similar accounts in banks, savings and loan
associations and other depository institutions): actual*
Class II Assets (certificates of deposit, U.S.
government securities, readily marketable stock
or securities and foreign currency): -0-
Class III Assets (all tangible and intangible
assets that are not Class I, II or IV assets): $_______**
Class IV Assets (intangible assets in the nature
of goodwill and going concern value): [balance***]
</TABLE>
* Will be equal to the actual cash balances transferred at Closing.
** To be determined after Closing based on the fair market value of such
assets in conjunction with a physical inventory. Buyer and Seller agree
that the fair market value of Assets consisting of either inventory or
depreciable personal property shall equal the federal income tax basis of
such Assets as of the Closing Date as reflected on the books and records of
Seller.
*** Balance of the Purchase Price, Contingent Consideration and any other
consideration.
-2-
<PAGE>
EXHIBIT 4.2
AGREEMENT AND PLAN OF MERGER
By and Among
HALTER MARINE GROUP, INC.,
UTILITY ACQUISITION, INC.,
UTILITY STEEL FABRICATION INC.,
and the
SHAREHOLDERS OF
UTILITY STEEL FABRICATION INC.
Dated as of October 31, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I THE MERGER.......................................................... 1
1.1. The Merger........................................................... 1
1.2. The Closing.......................................................... 1
1.3. Effective Time....................................................... 2
1.4. Appointment of Shareholder Representative............................ 2
1.5. Shareholder Representative; Power of Attorney........................ 3
ARTICLE II THE SURVIVING CORPORATION.......................................... 4
2.1 Articles of Incorporation.......................................... 4
2.2 Bylaws............................................................. 4
2.3 Directors.......................................................... 4
2.4 Officers........................................................... 4
ARTICLE III CONVERSION OF UTILITY STOCK....................................... 4
3.1 Conversion of Utility Stock........................................ 4
3.2. Exchange of Certificates........................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................... 6
4.1. Representations and Warranties of Utility and the Shareholders..... 6
4.1.1. Authorization, etc......................................... 6
4.1.2. Corporate Status........................................... 6
4.1.3. Capitalization, etc........................................ 7
4.1.4. No Conflicts, etc.......................................... 7
4.1.5. Financial Statements....................................... 8
4.1.6. Absence of Undisclosed Liabilities......................... 9
4.1.7. Taxes...................................................... 9
4.1.8. Absence of Changes......................................... 10
4.1.9. Litigation................................................. 12
4.1.10. Compliance with Laws; Governmental Approvals............... 13
4.1.11. Title to Assets............................................ 13
4.1.12. Contracts.................................................. 14
4.1.13. Territorial Restrictions................................... 15
4.1.14. Inventories................................................ 16
4.1.15. Bank Accounts.............................................. 16
4.1.16. Licenses................................................... 16
4.1.17. Intellectual Property...................................... 16
4.1.18. Insurance.................................................. 17
4.1.19. Environmental Matters...................................... 18
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
4.1.20. Employees; Labor Matters, etc................................................... 20
4.1.21. Employee Benefit Plans and Related Matters...................................... 20
4.1.22. Brokers; Finders, etc........................................................... 22
4.1.23. Disclosure...................................................................... 22
4.1.24. Purchase for Investment......................................................... 23
4.1.25. Accounts Receivable............................................................. 23
4.2. Representations and Warranties of Halter and Acquisition................................. 23
4.2.1. Authorization, etc.............................................................. 23
4.2.2. Corporate Status................................................................ 24
4.2.3. No Conflicts, etc............................................................... 24
4.2.4. Brokers; Finders, etc........................................................... 24
4.2.5. Validity of Halter Shares....................................................... 25
4.2.6. Disclosure...................................................................... 25
4.2.7. Halter Stock.................................................................... 25
ARTICLE V COVENANTS................................................................................ 25
5.1. Covenants of Utility and the Shareholders................................................ 25
5.1.1. Conduct of Business............................................................. 25
5.1.2. No Solicitation................................................................. 28
5.1.3. Access and Information; Cooperation for SEC Filings by Halter................... 28
5.1.4. Public Announcements............................................................ 29
5.1.5. Vote or Consent on Merger; Other Actions........................................ 29
5.1.6. Further Actions................................................................. 30
5.1.7. Further Assurances.............................................................. 30
5.2. Covenants of Halter and Acquisition...................................................... 30
5.2.1. Further Actions................................................................. 30
5.2.2. Further Assurances.............................................................. 31
5.2.3. Election of President........................................................... 31
5.2.4. Employee Benefits............................................................... 31
5.2.5. Registration of Halter Shares................................................... 32
5.2.6. Principal Office................................................................ 34
5.2.7. Acquisition's Articles and Bylaws............................................... 34
5.2.8. Price Protection................................................................ 34
ARTICLE VI CONDITIONS PRECEDENT.................................................................... 35
6.1 Conditions to Obligations of Each Party.................................................. 35
6.1.1. No Injunction, etc.............................................................. 35
6.1.2. Corporate Proceedings........................................................... 35
6.2 Conditions to Obligations of Halter and Acquisition...................................... 35
6.2.1. Representations; Performance.................................................... 35
6.2.2. Consents........................................................................ 36
6.2.3. No Material Adverse Effect...................................................... 36
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
6.2.4. Transaction Agreements..................................... 36
6.2.5. Opinion of Counsel......................................... 36
6.2.6. Estoppel Letters........................................... 36
6.2.7. Title Insurance............................................ 36
6.3. Conditions to Obligations of Utility and the Shareholders.......... 37
6.3.1. Representations; Performance, etc......................... 37
6.3.2. Opinion of Counsel......................................... 37
6.3.3. Transaction Agreements.................................... 37
6.3.4. Consents................................................... 37
6.3.5. Tax Opinion................................................ 37
ARTICLE VII TERMINATION................................................... 37
7.1. Termination........................................................ 37
7.2. Effect of Termination.............................................. 38
ARTICLE VIII INDEMNIFICATION; MISCELLANEOUS............................... 38
8.1 Indemnification.................................................... 38
8.2 Survival of Representations and Warranties; etc.................... 42
8.3. Expenses........................................................... 43
8.4. Severability....................................................... 43
8.5. Notices............................................................ 43
8.6. Miscellaneous...................................................... 44
8.6.1. Headings................................................... 44
8.6.2. Entire Agreement........................................... 44
8.6.3. Counterparts............................................... 45
8.6.4. Governing Law.............................................. 45
8.6.5. Binding Effect............................................. 45
8.6.6. Assignment................................................. 45
8.6.7. No Third Party Beneficiaries............................... 45
8.6.8. Amendment; Waiver,etc...................................... 45
8.6.9. Confidentiality............................................ 46
8.6.10. Nature of Obligations...................................... 46
</TABLE>
(iii)
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - List of Shareholders
Exhibit B - Escrow Agreement
Exhibit C - Form of Subscription Agreement
Exhibit D - Form of Employment Agreement
Exhibit E - Forms of Non-Competition Agreement
Exhibit F - Form of Shareholder's Release
Schedules
(iv)
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of October 31, 1997, by and among
Halter Marine Group, Inc., a Delaware corporation ("Halter"), Utility
Acquisition, Inc., a Louisiana corporation ("Acquisition"), Utility Steel
Fabrication Inc., a Louisiana corporation ("Utility"), and the shareholders of
Utility listed on Exhibit A hereto (collectively, the "Shareholders" and
severally, a "Shareholder").
WHEREAS, each of Halter, Acquisition and Utility desire to effect a
business combination pursuant to which Utility will be merged with and into
Acquisition (the "Merger") and the holders of common stock, no par value, of
Utility ("Utility Common Stock") will receive shares of common stock, par value
$0.01 per share, of Halter ("Halter Common Stock") and cash in exchange for
their shares of Utility Common Stock;
WHEREAS, the Boards of Directors of Halter, Acquisition and Utility each
have approved the Merger provided for herein upon the terms and subject to the
conditions set forth herein;
WHEREAS, the Shareholders, the beneficial owners and holders of record of
all of the issued and outstanding capital stock of Utility, each desires to join
in and be a party to this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements made herein and of the mutual benefits to be derived
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), Utility shall be merged with
and into Acquisition and the separate corporate existence of Utility shall
thereupon cease. Acquisition shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"). The Merger
shall have the effects specified in the Louisiana Business Corporation Law (the
"LBCL").
<PAGE>
1.2. The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the office of
McGlinchey Stafford, A Professional Limited Liability Company, 643 Magazine
Street, New Orleans, Louisiana, at 9:00 a.m., Central time, on the first
business day immediately following the day on which the last to be fulfilled or
waived of the conditions set forth in Article 6 shall be fulfilled or waived in
accordance herewith or (b) at such other time, date or place as Halter and
Utility may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date".
1.3. Effective Time. If the conditions to the Merger set forth in
Article 6 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 7, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
112F of the LBCL to be properly executed and filed in accordance with such
section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Louisiana in accordance with the LBCL, or at such later time which the parties
hereto shall have agreed upon and designated in such filing as the effective
time of the Merger (the "Effective Time").
1.4. Appointment of Shareholder Representative.
(a) In order to efficiently administer the Merger and the
transactions contemplated hereby, including (i) the waiver of any condition to
the obligations of the Shareholders to consummate the Merger and the
transactions contemplated hereby and (ii) the defense and/or settlement of any
claims for which the Shareholders may be required to indemnify Halter and/or
Acquisition pursuant to Article VIII of this Agreement or the Escrow Agreement,
the Shareholders hereby designate Edgar F. Pender (or his successor appointed in
accordance with Section 1.5) as their representative (the "Shareholder
Representative").
(b) The Shareholders hereby authorize the Shareholder Representative
(i) to take all action necessary in connection with the waiver of any condition
to the obligations of the Shareholders to consummate the Merger and the
transactions contemplated hereby, or the defense and/or settlement of any claims
for which the Shareholders may be required to indemnify Halter and/or
Acquisition pursuant to the Escrow Agreement, (ii) to give and receive all
notices required to be given under this Agreement and the Escrow Agreement and
(iii) to take any and all additional action as is contemplated to be taken by or
on behalf of the Shareholders by the terms of this Agreement or the Escrow
Agreement.
(c) By his or her execution of this Agreement, each Shareholder
agrees that:
(i) the provisions of this Section 1.4 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Shareholder may have in
connection with the Merger and the transactions contemplated by this Agreement;
2
<PAGE>
(ii) remedies available at law for any breach of the provisions
of this Section 1.4 are inadequate; therefore, Halter, Acquisition and Utility
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving damages if either Halter, Acquisition and/or Utility brings
an action to enforce the provisions of this Section 1.4; and
(iii) the provisions of this Section 1.4 shall be binding upon
the executors, heirs, legal representatives, personal representatives, trustees,
and successors of each Shareholder, and any references in this Agreement to a
Shareholder or the Shareholders shall mean and include the successors to the
Shareholders' rights hereunder, whether pursuant to testamentary disposition,
the laws of descent and distribution or otherwise.
1.5. Shareholder Representative; Power of Attorney.
(a) The Shareholder Representative shall be appointed by and shall
constitute the agent and attorney-in-fact of each Shareholder, for and on behalf
of such Shareholders: to give and receive notices and communications hereunder
and under the Escrow Agreement and any other document contemplated hereby or
thereby; to authorize delivery to Halter and/or Acquisition of funds from the
escrow in satisfaction of claims by Halter and/or Acquisition in respect to
Damages (as hereinafter defined); to object to such deliveries; to agree to,
negotiate, enter into settlements and compromises of, and comply with orders of
courts and awards of arbitrators with respect to such claims which may be
satisfied from the Escrow Amount (as hereinafter defined); and to take all
actions necessary or appropriate in the judgment of the Shareholder
Representative for the accomplishment of the foregoing. The Shareholder
Representative may resign upon 30 days prior written notice to the parties to
this Agreement, and the Escrow Agent. The Shareholder Representative may be
replaced by the Shareholders from time to time upon not less than five days
prior written notice to the parties to this Agreement and the Escrow Agent;
provided that the Shareholder Representative may not be replaced unless
Shareholders holding a majority in interest of the Escrow Amount agree to such
replacement. In the event that the Shareholder Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such position,
Shareholders holding a majority in interest of the Escrow Amount shall select
another representative to fill such vacancy and such substituted representative
shall be deemed to be the Shareholder Representative for all purposes of this
Agreement. Any successor Shareholder Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Shareholder Representative, and the term "Shareholder Representative"
as used herein shall be deemed to include any successor Shareholder
Representative. No bond shall be required of the Shareholder Representative,
and the Shareholder Representative shall receive no compensation for his
services. During the term of the Escrow Agreement, notices or communications to
or from the Shareholder Representative shall constitute notice to or from each
of the Shareholders, as appropriate.
(b) The Shareholder Representative shall not be liable for his
service in such capacity to the Shareholders for any act done or omitted
hereunder as the Shareholder
3
<PAGE>
Representative while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of counsel shall be
evidence of such good faith.
(c) A decision, act, consent or instruction of the Shareholder
Representative then serving shall constitute the decision, act or consent or
instruction of all the Shareholders, and shall be final, valid, binding and
conclusive upon each of the Shareholders, and the Escrow Agent, Halter and
Acquisition may rely upon any decision, act, consent or instruction of the
Shareholder Representative as being the decision, act, consent or instruction of
each and all of the Shareholders with respect to the Escrow Amount. The Escrow
Agent, Halter, and Acquisition are hereby relieved from any liability to any
person for any acts done by them with respect to the Escrow Amount in accordance
with such decision, act, consent or instruction of the Shareholder
Representative. Although the Shareholder Representative shall not be obligated
to obtain instructions from the Shareholders prior to any decision, act, consent
or instruction, if and to the extent that the Shareholder Representative
receives any written instructions from the Shareholders holding a majority in
interest of the Escrow Amount, the Shareholder Representative shall comply with
such instructions.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of
Acquisition in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
2.2 Bylaws. The Bylaws of Acquisition in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 Directors. The directors of Acquisition immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.4 Officers. The officers of Acquisition immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE III
CONVERSION OF UTILITY STOCK
3.1 Conversion of Utility Stock. (a) At the Effective Time, each share of
common stock, par value $1.00 per share, of Acquisition outstanding immediately
prior to the Effective Time shall remain outstanding and shall represent one
share of common stock, par value $1.00 per share, of the Surviving Corporation.
4
<PAGE>
(b) At the Effective Time, the shares of Utility Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holders thereof be converted
into the right to receive an aggregate of 221,250 shares of Halter Common Stock
and cash in the amount of $5,880,000 (the "Merger Consideration"). Of the cash
portion of the Merger Consideration, $350,000 (the "Escrow Amount") shall be
deposited into an escrow account pursuant to an Escrow Agreement among Halter,
each of the shareholders of Utility, and Hibernia National Bank substantially in
the form attached hereto as Exhibit B (the "Escrow Agreement") to secure the
indemnification obligations of the Shareholders set forth in Section 8.1(a) of
this Agreement. The Merger Consideration and the Escrow Amount shall be
allocated among the Shareholders as set forth in Schedule 3.1 hereto. The cash
portion of the Merger Consideration shall be paid by wire transfer or cashiers
checks as the Shareholders may direct.
(c) As a result of the Merger and without any action on the part of
the holder thereof, all shares of Utility Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate (a "Certificate") representing any shares of Utility
Common Stock shall thereafter cease to have any rights with respect to such
shares, except the right to receive upon the surrender of such Certificate,
without interest, the Halter Common Stock and cash into which the shares
represented by such Certificate have been converted in accordance with Sections
3.1(b) and 3.2(d) of this Agreement.
(d) Each share of Utility Common Stock issued and held in Utility's
treasury at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor.
3.2. Exchange of Certificates. (a) At or after the Effective Time,
each holder of Certificates theretofore representing shares of Utility Common
Stock, upon the surrender thereof to Halter together with a duly executed and
completed Subscription Agreement, in the form attached hereto as Exhibit C
("Subscription Agreement"), shall receive in exchange therefor the portion of
the Merger Consideration into which such shares of Utility Common Stock have
been converted as provided in Section 3.1 hereof, subject to the payment into an
escrow account of the Escrow Amount and after giving effect to any required
withholding tax, and the Certificate so surrendered shall be canceled. No
interest will be paid or accrued on the value of any Halter Common Stock or cash
payable to holders of Certificates. Until so surrendered, each Certificate
shall be deemed for all purposes, other than as provided below with respect to
the payment of dividends or other distributions, if any, in respect of Halter
Common Stock, to represent the number of whole shares of Halter Common Stock and
cash into which the shares of Utility Common Stock theretofore represented
thereby shall have been converted.
(b) Notwithstanding any other provisions of this Agreement, no
dividends on Halter Common Stock shall be paid with respect to any shares of
Utility Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall
5
<PAGE>
be paid to the holders of the Certificates representing whole shares of Halter
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore payable with respect to such whole
shares of Halter Common Stock and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Halter Common Stock, less the
amount of any withholding taxes which may be required thereon.
(c) At or after the Effective Time, there shall be no transfers on
the stock transfer books of Utility of the shares of Utility Common Stock which
were outstanding immediately prior to the Effective Time.
(d) No fractional shares of Halter Common Stock will be issued
pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Utility and the Shareholders.
Utility and each Shareholder represents and warrants to Halter and Acquisition
as follows:
4.1.1. Authorization, etc. Utility has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements contemplated
hereby (collectively, the "Transaction Agreements"), and, subject only to the
approval of this Agreement and the transactions contemplated hereby by the
holders of two-thirds (2/3) of the outstanding shares of Utility Common Stock
(the "Requisite Shareholder Approval"), to perform fully its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Utility of this Agreement and the
other Transaction Agreements and, subject to obtaining the Requisite Shareholder
Approval, the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all requisite corporate action of Utility. Utility
and the Shareholders have duly executed and delivered this Agreement and on the
Closing Date Utility and the Shareholders will have duly executed and delivered
the Transaction Agreements to which they are parties. Subject to obtaining the
Requisite Shareholder Approval, this Agreement is, and on the Closing Date each
of the Transaction Agreements will be, legal, valid and binding obligations of
Utility and/or the Shareholders, as the case may be, enforceable against each of
them in accordance with their respective terms.
4.1.2. Corporate Status. (a) Each of Utility and J & B Company, Inc., a
Louisiana corporation ("J&B") is a corporation duly organized, validly existing
and in good standing under the laws of the State of Louisiana, with full
corporate power and authority to carry on its
6
<PAGE>
respective business and to own or lease and to operate its respective properties
as and in the places where such business is conducted and such properties are
owned, leased or operated.
(b) Each of Utility and J&B is duly qualified or licensed to do
business in the jurisdictions specified in Schedule 4.1.2, which are the only
jurisdictions in which the operation of its respective business or the character
of the properties owned, leased or operated by it makes such qualification or
licensing necessary.
(c) Utility has delivered to Halter complete and correct copies of
its articles of incorporation and bylaws, and the articles of incorporation and
bylaws of J&B, each as amended and in effect on the date hereof. Neither Utility
nor J&B is in violation of any of the provisions of its respective articles of
incorporation or bylaws. The minute books and other corporate records of Utility
and J&B have been made available to Halter prior to the execution of this
Agreement and contain a true and complete record of all action taken at all
meetings and by all written consents in lieu of meetings of the shareholders,
the Board of Directors and committees of the Board of Directors of Utility and
J&B, respectively. The stock transfer ledgers and other similar records of
Utility and J&B have been made available to Halter prior to the execution of
this Agreement and currently reflect all record transfers prior to the execution
of this Agreement in the capital stock of Utility and J&B, respectively.
4.1.3. Capitalization, etc. (a) The authorized capital stock of Utility
consists solely of 10,000 shares of Utility Common Stock, of which 4,622 shares
are issued and outstanding and 5,378 shares are held in its treasury. All
issued and outstanding shares of Utility Common Stock are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights.
(b) Except for this Agreement, no subscriptions, options,
warrants, conversion or other rights, agreements, commitments, arrangements or
understandings of any kind obligating Utility, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any shares of Utility Common
Stock, or any securities convertible into or exchangeable for any such shares,
are outstanding, and no authorization therefor has been given. There are no
outstanding contractual or other rights or obligations to or of Utility to
repurchase, redeem or otherwise acquire any outstanding shares of Utility Common
Stock.
(c) The authorized capital stock of J&B consists solely of 10,000
shares of common stock, no par value, of which 10,000 shares are issued and
outstanding and no shares are held in its treasury. All issued and outstanding
shares of J&B's capital stock are duly authorized, validly issued, fully paid,
non-assessable, free of preemptive rights and owned by Utility, free and clear
of all liens, pledges, assessments, charges, security interests, claims or other
encumbrances of any kind (each, a "Lien"). Except for interests in J&B, neither
Utility nor J&B owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or entity (other than investments in short-term investment securities).
7
<PAGE>
4.1.4. No Conflicts, etc. The execution, delivery and performance by
Utility and the Shareholders of this Agreement and of the other Transaction
Agreements to which they are parties, and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with or result in
a violation of or a default under (with or without the giving of notice or the
lapse of time or both), create in any other person a right or claim of
termination, amendment, modification, acceleration or cancellation of, or result
in the creation of any Lien (or any obligation to create any Lien) upon any of
the properties or assets of Utility or J&B under, (i) to the knowledge of
Utility or any Shareholder, any law, statute, ordinance, governmental rule or
regulation (each, a "Law") applicable to Utility, J&B or any of their respective
properties or assets, or to any Shareholder, (ii) the articles of incorporation
or bylaws of Utility or J&B or (iii) except as set forth in Schedule 4.1.4., any
contract (whether written or oral), agreement, arrangement or other instrument
(each, a "Contract") to which Utility, J&B or any Shareholder is a party or by
which Utility, J&B, any Shareholder or any of the properties or assets of
Utility or J&B may be bound or affected, except, in the case of clause (iii),
for violations or defaults that, individually and in the aggregate, would not
have a material adverse effect on the business, results of operations, condition
(financial or otherwise) or prospects of Utility and J&B (a "Material Adverse
Effect") and would not materially impair the ability of Utility or any
Shareholder to perform its obligations hereunder or under the other Transaction
Agreements to which they are parties. Except as specified in Schedule 4.1.4, to
the knowledge of Utility or any Shareholder, no governmental approval or other
approval or other consent of any party is required to be obtained or made by
Utility or any Shareholder in connection with the execution and delivery of this
Agreement or the other Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby.
4.1.5. Financial Statements. (a) Utility has delivered to Halter
complete and correct copies of (a) the consolidated balance sheets as of
December 31, 1996, December 31, 1995 and December 31, 1994 of Utility and J&B,
the related consolidated statements of income, retained earnings and cash flows
for the respective years then ended, the related notes and schedules thereto,
and the report of its independent public accountants with respect thereto
(collectively, the "Reviewed Financial Statements"), and (b) the unaudited
consolidated balance sheet (the "Latest Balance Sheet") as of June 30, 1997 (the
"Balance Sheet Date") of Utility and J&B, the related unaudited consolidated
statements of income, retained earnings and cash flows for the respective
periods then ended and the related notes and schedules, if any, thereto
(collectively, the "Unaudited Financial Statements").
(b) The Reviewed Financial Statements are complete and correct in
all respects, have been derived from the accounting books and records of Utility
and J&B and have been prepared in accordance with generally accepted accounting
principles ("GAAP") throughout the periods indicated. The Unaudited Financial
Statements have been prepared in all material respects on a basis consistent
with the Reviewed Financial Statements.
(c) The balance sheets included in the Reviewed Financial
Statements and the Unaudited Financial Statements (collectively, the "Financial
Statements") present fairly the
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consolidated financial position of Utility and J&B as of the respective dates
thereof, and the related statements of income, retained earnings and cash flows
included in such Financial Statements present fairly the consolidated result of
operations, retained earnings and cash flows of Utility and J&B for the
respective periods indicated.
4.1.6. Absence of Undisclosed Liabilities. Neither Utility nor J&B has
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
except (a) as set forth in Schedule 4.1.6, (b) as and to the extent disclosed
and adequately reserved against in the Latest Balance Sheet (excluding the notes
thereto) and (c) for liabilities and obligations that (i) were incurred after
the Balance Sheet Date, in the ordinary course of business consistent with prior
practice and (ii) individually and in the aggregate are not material to Utility
or J&B and have not had or resulted in, and will not have or could reasonably be
expected to result in, a Material Adverse Effect.
4.1.7. Taxes. (a) All federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, stamp, occupation, customer
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative, add-on minimum taxes, or other
tax of any kind whatsoever, including any interest, penalty, or addition thereto
(each, a "Tax" and collectively, "Taxes") that are or may be required to be
paid, collected or withheld by or with respect to Utility or J&B or any of their
respective assets or properties on or before the Closing Date or that are
chargeable as a Lien on any assets or properties of Utility or J&B have been
timely paid or collected or withheld and remitted to the appropriate taxing or
other governmental authorities, except (i) as set forth on Schedule 4.1.7, (ii)
for any Taxes which are being contested in good faith by appropriate proceedings
and for which adequate reserves with respect thereto have been established and
are being maintained in accordance with GAAP and (iii) for any Taxes that are
not yet due and payable and are adequately reserved in the Latest Balance Sheet
or have arisen in the ordinary course of business since the Balance Sheet Date
and before the Closing Date.
(b) Except as set forth on Schedule 4.1.7 and without limiting
the representation made in Section 4.1.7(a), all federal, state, local and
foreign tax returns that are or may be required to be filed by or with respect
to Utility or J&B, or any of their respective assets or properties, on or before
the Closing Date have been timely filed with the appropriate taxing or other
governmental authorities and have reflected only such positions on such tax
returns as were believed in good faith by the person preparing each such tax
return and the person on whose behalf each such tax return was filed to be
supported under then prevailing Law. All Taxes shown to be due on each such tax
return have been paid.
(c) Except as set forth on Schedule 4.1.7, neither Utility nor
J&B (i) has received any written notice of deficiency or assessment from any
taxing or other governmental authority with respect to Taxes, (ii) is currently
under, or has received notice of commencement
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of, any audit by any taxing or other governmental authority concerning any Taxes
or (iii) has executed any waiver of the statute of limitations with respect to
any taxable period.
(d) Except as set forth on Schedule 4.1.7, (i) no written ruling (as
such term is used in the Code has been received from, and no closing or other
similar agreement has been executed with, any taxing or other governmental
authority that will be binding upon Utility, J&B or any of their respective
assets or properties after the Closing and (ii) no power of attorney has been
given by or with respect to Utility or J&B to any person with respect to Taxes
that will be binding upon Utility or J&B.
4.1.8. Absence of Changes. Except as set forth in Schedule 4.1.8, since
the Balance Sheet Date, each of Utility and J&B has conducted its business only
in the ordinary course consistent with prior practice and has not:
(a) suffered any Material Adverse Effect;
(b) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or otherwise purchased or redeemed,
directly or indirectly, any shares of its capital stock;
(c) issued or sold any shares of its capital stock, or any securities
convertible into or exchangeable for any such shares, or issued, sold, granted
or entered into any subscriptions, options, warrants, conversion or other
rights, agreements, commitments, arrangements or understandings of any kind,
contingent or otherwise, to purchase or otherwise acquire any such shares or any
securities convertible into or exchangeable for any such shares;
(d) incurred any indebtedness for borrowed money, issued or sold any
debt securities or prepaid any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder) except for borrowings and
prepayments in the ordinary course of business;
(e) mortgaged, pledged or otherwise subjected to any Lien, any of its
properties or assets, tangible or intangible, except for (i) mortgages and
encumbrances which secure indebtedness which is properly reflected in the Latest
Balance Sheet; (ii) Liens filed of record; (iii) Liens for taxes accrued but not
yet payable; (iv) Liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after the Balance Sheet Date;
provided that the obligations secured by such Liens are not delinquent or are
being contested in good faith; (v) such imperfections of title and encumbrances,
if any, as do not materially detract from the value of or materially interfere
with the present use of any of such properties or assets or the pending sale of
any of such owned properties or assets; and (vi) capital leases, if any, with
third parties for fair and adequate consideration (collectively, "Permitted
Liens");
(f) forgiven, canceled, compromised, waived or released any debts,
claims or rights, except for debts of, or claims and rights against, persons
other than any Shareholder that
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have been forgiven, canceled, compromised, waived or released in the ordinary
course of business;
(g) amended, modified or terminated any existing Contract or entered
into (x) any agreement, commitment or other Transaction, other than agreements
entered into in the ordinary course of business and involving an expenditure of
less than $10,000 in each individual case and $50,000 in the aggregate, or (y)
any agreement, commitment or other Transaction that, pursuant to its terms, is
not cancelable without penalty on notice of 30 days or less from the end of the
first month following the Closing Date;
(h) paid or committed to pay any bonus, other incentive compensation,
change in control or similar compensation to any officer, director, employee,
sales representative, agent or consultant, Shareholder or affiliate, or granted
or committed to grant to any officer, director, employee, sales representative,
agent, consultant, Shareholder or affiliate any other increase in, or
additional, compensation in any form;
(i) entered into, instituted, adopted or amended or committed to enter
into, institute, adopt or amend any employment, consulting, retention, change-
in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate;
(j) encountered any labor union organizing activity or had any actual
or threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material adverse change in its relations with its employees, agents,
customers or suppliers;
(k) amended either of its articles of incorporation or bylaws;
(l) changed in any respect its accounting practices, policies or
principles;
(m) incurred, assumed, guaranteed or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess of
$10,000 in each case or $50,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other person) other than agreements for purchases of goods or
services in the ordinary course of business;
(n) sold any assets, other than inventory in the ordinary course of
business;
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(o) made any material changes in policies or practices relating to
selling practices, returns, discounts or other terms of sale or accounting
therefor or in policies of employment;
(p) received any notice of termination of any Contract which, in any
case or in the aggregate, would have or result in a Material Adverse Effect;
(q) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
patents, copyrights, trademarks, service marks, trade names, trade dress, logos,
business and product names, slogans, inventions, trade secrets, industrial
models, formulas, processes, designs, confidential and technical information,
manufacturing, engineering and technical drawings, product specifications, know-
how, and intellectual property rights to or similar to and registrations and
applications for registration relating to any of the foregoing ("Intellectual
Property"), or modified any existing rights with respect thereto;
(r) suffered any damage, destruction or loss (whether or not covered
by insurance), or any employment-related problem, that, individually or in the
aggregate, would have or result in a Material Adverse Effect;
(s) failed to replenish its inventories and supplies in a normal and
customary manner consistent with its prior practice and prudent business
practices prevailing in the industry, or made any purchase commitment in excess
of the normal, ordinary and usual requirements of its business or at any price
or upon terms and conditions more onerous than those usual and customary in the
industry, or made any change in its selling, pricing, advertising or personnel
practices inconsistent with its prior practice and prudent business practices
prevailing in the industry;
(t) made any capital expenditures or capital additions or improvements
in excess of an aggregate of $10,000;
(u) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body other than in the ordinary
course of business consistent with past practices, but not in any case involving
amounts in excess of $10,000;
(v) entered into any transaction, Contract or commitment other than in
the ordinary course of business, or paid or agreed to pay any brokerage or
finder's fees, taxes or other expenses in connection with, or incurred any
severance pay obligations by reason of, this Agreement, the other Transaction
Agreements or the transactions contemplated hereby or thereby; or
(w) taken any action or omitted to take any action that could
reasonably be expected to result in the occurrence of any of the foregoing.
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4.1.9. Litigation. Except as set forth in Schedule 4.1.9, there is no
action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
Utility or any Shareholder, threatened against or relating to Utility or J&B or
against or relating to the transactions contemplated by this Agreement or the
other Transaction Agreements, and neither Utility nor any Shareholder knows or
has reason to be aware of any basis for the same.
4.1.10. Compliance with Laws; Governmental Approvals. (a) To the knowledge of
Utility or any Shareholder, except as disclosed in Schedule 4.1.10(a), neither
Utility nor J&B is, and since January 1, 1994, neither Utility nor J&B has been,
in violation of or default under any Law applicable to it or any of its
properties or business, except for any such violations or defaults that,
individually and in the aggregate, have not had and are not reasonably expected
to have a Material Adverse Effect. Neither Utility nor J&B nor any Shareholder
has received any notice alleging any such violation or default.
(b) Except as disclosed in Schedule 4.1.10(b), to the knowledge of
Utility or any Shareholder, all material governmental approvals necessary for
the conduct of the business and operations of Utility and J&B have been duly
obtained and are in full force and effect. As of the date hereof, there are no
proceedings pending or, to the knowledge of Utility or any Shareholder,
threatened that could result in the revocation, cancellation or suspension, or
any materially adverse modification, of any such governmental approval, and the
execution and delivery of this Agreement and the other Transaction Agreements,
and the consummation of the transactions contemplated hereby and thereby will
not result in any such revocation, cancellation, suspension or modification.
4.1.11. Title to Assets. (a) On the Balance Sheet Date, Utility and J&B
had and, except with respect to assets disposed of for adequate consideration in
the ordinary course of business since such date, as of the date of this
Agreement, have good and merchantable title to all real property and all other
material properties and assets reflected on the Latest Balance Sheet, and have
good and merchantable title to all real property and all other material
properties and assets acquired since such date, in each case free and clear of
all Liens except for Permitted Liens. Utility and J&B own, or have valid
leasehold interests in or license to, all material properties and assets used in
the conduct of the business of Utility and J&B as now conducted. Utility and
J&B have adequate rights of ingress and egress with respect to their respective
real property and all buildings, structures, facilities, fixtures and other
improvements thereon. Utility has delivered or made available to Halter copies
of the deeds and other instruments (as recorded) by which Utility or J&B
acquired such real property, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of Utility, J&B or any
Shareholder and relating to such real property.
(b) With respect to each lease of any real property or a material
amount of personal property to which Utility or J&B is a party, (i) to the
knowledge of Utility or any
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Shareholder, such lease is a legal, valid and binding agreement, is in full
force and effect and is enforceable in accordance with its terms; (ii) all rents
and other monetary amounts that have become due and payable thereunder have been
paid; (iii) to the knowledge of Utility or any Shareholder, there exists no
default, or event, occurrence, condition or act, which with the giving of
notice, the lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease; and (iv) the execution
and delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby will not
constitute a breach under, or cause a termination of, such lease.
(c) Neither Utility nor J&B has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any substantial
part of its assets; or to sell or dispose of any of its assets except in the
ordinary course of business consistent with past practices.
(d) To the knowledge of Utility or any Shareholder, none of Utility's
or J&B's real property, buildings, structures, facilities, fixtures or other
improvements, or the use thereof, contravenes or violates any building, zoning,
administrative, occupational safety and health or other applicable Law in any
material respect.
(e) The improvements on Utility's and J&B's real property are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, are adequate and suitable for the purposes for which they are
presently being used and there are no condemnation or appropriation proceedings
pending or, to the knowledge of Utility or any Shareholder, threatened against
any of such real property or the improvements thereon. There is no writ,
injunction, decree, order or judgment outstanding, nor any action, claim, suit
or proceeding, pending or, to the knowledge of Utility or any Shareholder,
threatened, relating to the ownership, lease, use, occupancy or operation of any
such real property or the improvements thereon.
4.1.12. Contracts. (a) Schedule 4.1.12(a) contains a complete and
correct list of all Contracts of the types described below (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been made available to Halter prior to the date of this
Agreement), to which Utility or J&B is a party or by which any of its respective
assets or properties is bound:
(i) leases, licenses, and other material Contracts concerning or
relating to real property;
(ii) written or oral employment Contracts for officers,
directors, management or key personnel, consulting, agency, collective
bargaining or other similar Contracts and agreements under which current or
future obligations exist relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
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dealers, agents, independent contractors or consultants, in each case that are
not cancelable on notice of 30 days or less and do not require payments in the
event of termination;
(iii) loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees, and other agreements and instruments effecting, evidencing or
securing the borrowing of money or obtaining of or extension of credit (other
than ordinary trade credit);
(iv) brokerage or finder's agreements;
(v) joint venture, partnership and similar Contracts involving
a sharing of profits or expenses;
(vi) asset purchase agreements and other acquisition or
divestiture agreements (other than agreements for sales of inventory in the
ordinary course of business) and any agreements relating to the sale, lease or
disposal of any capital assets;
(vii) orders and other Contracts for the purchase or sale of
materials, supplies, products or services under which current or future
obligations exist;
(viii) other Contracts with respect to which the aggregate amount
that could reasonably be expected to be paid or received thereunder in the
future exceeds $10,000 in the aggregate;
(ix) master lease agreements providing for the leasing of
personal property;
(x) Contracts between or among Utility or J&B, on the one
hand, and any officer, director or affiliate of Utility or J&B, or any
Shareholder, on the other hand; and
(xi) any other Contracts, agreements or commitments that are
material to Utility, J&B or their respective businesses.
(b) All Contracts are in full force and effect and enforceable against
Utility, J&B and each Shareholder who is a party thereto, and, to the knowledge
of Utility and each Shareholder, against each other party thereto. There does
not exist under any Contract any event of default or event or condition that,
after notice or lapse of time or both, would constitute a violation, breach or
event of default thereunder on the part of Utility, J&B, each Shareholder who is
a party thereto or, to the knowledge of Utility and each Shareholder, any other
party thereto except as set forth in Schedule 4.1.12(b) and except for such
events or conditions that, individually and in the aggregate, (i) have not had
or resulted in, and will not have or result in, a Material Adverse Effect and
(ii) have not and will not materially impair the ability of Utility to perform
its obligations hereunder or under the other Transaction Agreements to which it
is a party. Except as set forth in Schedule 4.1.12(b), no consent of any third
party is required under
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any Contract as a result of or in connection with, and the enforceability of any
Contract will not be affected in any manner by, the execution, delivery and
performance of this Agreement or any of the other Transaction Agreements or the
consummation of the transactions contemplated hereby or thereby.
4.1.13. Territorial Restrictions. Except as otherwise described on
Schedule 4.1.13, neither Utility nor J&B is restricted by any Contract,
agreement or understanding with any other person from carrying on its business
anywhere in the world.
4.1.14. Inventories. Except for excess and obsolete inventory for which
reserves have been established on the Latest Balance Sheet: (a) all of the
inventories of Utility and J&B of raw materials, supplies, work in process,
finished products, spare parts, and replacement and component parts are of good,
usable and merchantable quality in all material respects and, except as set
forth on Schedule 4.1.14, do not include excess, obsolete or discontinued items;
(b) all such inventories are of such quality as to meet the quality control
standards of Utility and J&B, as applicable, and any applicable governmental
quality control standards; (c) all such inventories that are finished goods are
saleable as current inventories at the current prices thereof in the ordinary
course of business and (d) all such inventories are recorded on the books of
Utility or J&B, as applicable, at the lower of cost or market value determined
in accordance with GAAP.
4.1.15. Bank Accounts. Schedule 4.1.15 sets forth a complete and correct
list containing the names of each bank or other financial institution in which
Utility or J&B has an account or safe deposit or lock box, the account or box
number, as the case may be, and the name of every person authorized to draw
thereon or having access thereto.
4.1.16. Licenses. To the knowledge of Utility or any Shareholder, each
of Utility and J&B has all necessary licenses, permits, approvals, registrations
and similar consents and authorizations (collectively, the "Licenses") required
to lawfully conduct its business as presently conducted, including but not
limited to all material Licenses required for each of Utility and J&B to operate
as it currently operates and in accordance with all applicable Laws or orders or
permits of any governmental authority, and (a) each such License is valid,
binding and in full force and effect, (b) no such License is subject to
revocation or forfeiture by virtue of any existing circumstance, (c) there is no
pending or, to the knowledge of Utility or any Shareholder, threatened
proceeding to modify in any material respect or revoke any License, (d) no such
License is subject to any outstanding order, decree, judgment, stipulation, or
investigation known to Utility or any Shareholder that would materially affect
such License, and (e) Utility and J&B are not, and neither Utility nor J&B nor
any Shareholder has received any notice that either Utility or J&B is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any such License.
4.1.17. Intellectual Property. (a) Title. Schedule 4.1.17(a)(i)
contains a complete and correct list of all Intellectual Property that is owned
by Utility or J&B other than Intellectual Property that is both not registered
or subject to application for registration and not material to
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the business of Utility. All Intellectual Property related to, used in, held for
use in connection with, or necessary for the conduct of, or otherwise material
to, the businesses of Utility and J&B (the "Intellectual Property Assets") are
owned by Utility or J&B, except as disclosed on Schedule 4.1.17(a)(ii).
(b) No Infringement. To the knowledge of Utility and each Shareholder,
the conduct of its respective business by Utility and J&B does not infringe or
otherwise conflict with any rights of any person in respect of any Intellectual
Property. To the knowledge of Utility and each Shareholder, none of the
Intellectual Property Assets is being infringed.
(c) Licensing Arrangements. Schedule 4.1.17(c)(i) sets forth all
Contracts, agreements or arrangements pursuant to which Utility or J&B has
licensed any Intellectual Property Assets to, or the use of such Intellectual
Property Assets is otherwise permitted (through non-assertion, settlement or
similar agreements or otherwise) by, any other person. Schedule 4.1.17(c)(ii)
sets forth all Contracts, agreements or arrangements pursuant to which Utility
or J&B has had Intellectual Property primarily related to, used in, held for use
primarily in connection with, or necessary for the conduct of or otherwise
material to its business licensed to it, or has otherwise been permitted to use
such Intellectual Property (through non-assertion, settlement or similar
agreements or otherwise) (other than off-the-shelf commercially available
software). All of the Contracts, agreements or arrangements that are or should
be set forth on Schedules 4.1.17(c)(i) and (ii) (the "Intellectual Property
Licenses") (x) are in full force and effect in accordance with their terms and
no default exists thereunder by Utility or J&B or, to the knowledge of Utility
or any Shareholder, by any other party thereto, (y) are free and clear of all
Liens, and (z) do not contain any change in control or other terms or conditions
that will become applicable or inapplicable as a result of the consummation of
the transactions contemplated by this Agreement and the other Transaction
Agreements. Utility has made available to Halter true and complete copies of
all Intellectual Property Licenses (including amendments, supplements, renewals,
waivers and other modifications) set forth on Schedule 4.1.17(c)(i) and (ii).
All royalties, license fees, charges and other amounts payable by, on behalf of,
to, or for the account of Utility or J&B in respect of any Intellectual Property
Assets are set forth on Schedules 4.1.17(c)(i) and (ii) and are reflected in the
Financial Statements.
(d) No Intellectual Property Litigation. Except as set forth in
Schedule 4.1.17(d), no claim or demand of any person has been made nor is there
any proceeding that is pending, or to the knowledge of Utility or any
Shareholder, threatened, which (i) challenges the rights of Utility or J&B in
respect of any Intellectual Property Assets, (ii) asserts that Utility or J&B is
infringing or otherwise in conflict with, or is, except as set forth in Schedule
4.1.17(c)(ii), required to pay any royalty, license fee, charge or other amount
with regard to, any Intellectual Property, or (iii) claims that any default
exists under any Contract, agreement or arrangement listed on Schedule
4.1.17(c)(i) or (ii). Except as set forth in Schedule 4.1.17(d), none of the
Intellectual Property Assets is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within the last
five years, whether or not resolved in favor of Utility or J&B.
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(e) Due Registration, etc. Each of Utility and J&B has taken, or has
caused to be taken, such necessary or desirable actions to ensure that the
patents and trademarks owned by it that are material to its business have been
duly registered under any applicable Laws or regulations in the appropriate
filing offices, domestic and foreign, and such registrations are in full force
and effect.
4.1.18. Insurance. Schedule 4.1.18 contains a complete and correct list
of all insurance policies maintained by Utility or J&B. Utility has made
available to Halter complete and correct copies of all such policies, together
with all riders and amendments thereto. Such policies are in full force and
effect, all premiums due thereon have been paid and neither Utility nor J&B has
received notice of a material premium increase or cancellation with respect to
such policies or of any default thereunder. Each of Utility and J&B has
complied in all material respects with the terms and provisions of such
policies. Within the past two years, neither Utility nor J&B has been refused
any basic insurance coverage applied for, and Utility has no reason to believe
that its existing insurance coverage and J&B's existing insurance coverage
cannot be renewed as and when the same shall expire, upon terms and conditions
standard in the market at the time renewal is sought.
4.1.19. Environmental Matters.
(a)(i) To the knowledge of Utility or any Shareholder, each of
Utility and J&B has obtained all Licenses that are required to be obtained by it
in connection with the operation of its business and ownership of its properties
(collectively, the "Subject Properties") under any applicable Environmental Law
Requirements (as hereinafter defined), except where failure to obtain such
Licenses would not have a Material Adverse Effect;
(ii) to the knowledge of Utility or any Shareholder, each of
Utility and J&B is in compliance in all respects with all terms and conditions
of such Licenses and with all applicable Environmental Law Requirements, except
where the failure to so comply would not have a Material Adverse Effect;
(iii) to the knowledge of Utility or any Shareholder, there are
no past or present events, conditions, circumstances, activities or plans, in
each case by or relating in any manner to Utility or J&B or their use of the
Subject Properties, that did or would violate or prevent compliance or continued
compliance with any Environmental Law Requirements or give rise to any
Environmental Liability (as hereinafter defined), except for such matters as
would not have a Material Adverse Effect;
(iv) there is no civil, criminal or administrative action,
suit, demand, claim, order, judgment, hearing, notice or demand letter, notice
of violation, investigation or proceeding pending or, to the knowledge of
Utility or any Shareholder, threatened by any person against Utility, J&B or any
prior owner of any of the Subject Properties, and relating in any way to any
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Environmental Law Requirement or seeking to impose any Environmental Liability,
except for such matters as would not have a Material Adverse Effect;
(v) to the knowledge of Utility and each Shareholder, neither
Utility nor J&B is subject to or responsible for any Environmental Liability
which is not set forth and adequately reserved against on the Latest Balance
Sheet;
(vi) neither Utility nor J&B owns, operates or leases a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable state
or local Law; and, without limiting the foregoing, (x) no polychlorinated
biphenyl is or has been present, (y) there are no underground storage tanks or
surface impoundments for hazardous materials, active or abandoned, and (z) no
hazardous material has been released in a quantity reportable under, or in
violation of, any Environmental Law Requirement or otherwise released, in the
cases of clauses (x), (y) and (z), at, on or under any site or facility now or
previously owned, operated or leased by Utility or J&B during the period of such
ownership, operation or lease;
(vii) neither Utility nor J&B has transported or arranged for
the transportation of any hazardous material to any location that is (x) listed
on the National Priorities List (the "NPL") under the Comprehensive
Environmental Response, Compensation and Liability Act of 1986, (y) listed for
possible inclusion on the NPL by the United States Environmental Protection
Agency (the "EPA") in CERCLIS (as hereinafter defined) or on any similar state
or local list or (z) the subject of enforcement actions by federal, state or
local governmental or regulatory authorities that may lead to any Environmental
Liability of Utility or J&B;
(viii) no hazardous material generated by Utility or J&B has been
recycled, treated, stored, disposed of or released by Utility or J&B at any
location;
(ix) no oral or written notification of a release of a
hazardous material has been filed by or on behalf of Utility or J&B and no site
or facility now or previously owned, operated or leased by Utility is listed or
proposed for listing on the NPL, CERCLIS or any similar state or local list of
sites requiring investigation or clean-up;
(x) to the knowledge of Utility or any Shareholder, no Liens
have arisen under or pursuant to any Environmental Law Requirement on any site
or facility owned, operated or leased by Utility or J&B, and no federal, state
or local governmental or regulatory authority action has been taken or, to the
knowledge of Utility or any Shareholder, is in process that could subject any
such site or facility to such Liens, and neither Utility nor J&B would be
required to place any notice or restriction relating to the presence of
hazardous materials at any site or facility owned by it in any deed to the real
property on which such site or facility is located; and
(xi) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or that are in the
possession of, Utility or J&B in relation
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to any site or facility now or previously owned, operated or leased by Utility
or J&B which have not been delivered to Halter prior to the execution of this
Agreement.
(b) "Environmental Law Requirement" shall mean any Law, ordinance,
rule, regulation, notice, plan or demand letter relating to pollution or
protection of human health, safety or the environment, including those relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, soil, wetlands, subsurface strata or land) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
(c) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement that has resulted in
or is reasonably likely to result in a Material Adverse Effect, or (ii) any
liability or obligation under any other current theory of law or equity
(including without limitation, any liability for personal injury, property
damage or remediation) that results from, or is based upon or related to, the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handing, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste, which liability or obligation has
resulted in or is reasonably likely to result in a Material Adverse Effect.
(d) "CERCLIS" shall mean the list of sites identified as containing
hazardous substances and proposed for evaluation by the EPA for possible
inclusion on the NPL.
4.1.20. Employees; Labor Matters, etc. Except as set forth in Schedule
4.1.20, neither Utility nor J&B is a party to or bound by any collective
bargaining agreement and there are no labor unions or other organizations
representing, purporting to represent or attempting to represent any employees
of Utility or J&B. Since January 1, 1994, there has not occurred or been
threatened any material strike, slowdown, picketing, work stoppage, concerted
refusal to work overtime or other similar labor activity with respect to any
employees of Utility or J&B, and since such date, each of Utility and J&B has
complied in all material respects with all applicable Laws relating to the
employment of labor, including without limitation those relating to wages,
hours, occupational safety and health and collective bargaining. There are no
material labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no representation petition pending or
threatened with respect to any employee of Utility or J&B. Neither Utility nor
J&B has received any written notice of, or is otherwise aware of, any federal,
foreign, state or local administrative proceeding (excluding workers
compensation proceedings or except as set forth in Schedule 4.1.20) pending or,
to the knowledge of Utility or any Shareholder, threatened with respect to any
employee of Utility or J&B. There is no unfair labor practice, sex, age, race
or other discrimination or labor arbitration proceeding pending or, to the
knowledge of Utility or any Shareholder, threatened against Utility or J&B.
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4.1.21. Employee Benefit Plans and Related Matters. (a) Employee
Benefit Plans. (i) Schedule 4.1.21(a) sets forth a true and complete list of
each plan, fund or program that provides for its participants or their
beneficiaries, through the purchase of insurance or otherwise, medical,
surgical, or hospital care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarship
funds, prepaid legal services, or supplemental income benefits for transferred
employees, or retirement income, or results in a deferral of income by employees
for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to any such plan,
fund or program, or the method of calculating the benefits under any such plan,
fund or program or the method of distributing benefits from any such plan, fund
or program, and each bonus, incentive or deferred compensation, severance,
termination, retention, change in control, stock option or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement or policy, in any such case, whether written or unwritten
(in each case that applies to more than one person), that (x) provides or may
provide benefits or compensation in respect of any employee or former employee
employed or formerly employed by Utility or J&B or the beneficiary or dependent
of any such employee or former employee (such employees, former employees,
beneficiaries and dependents collectively, the "Employees") or under which any
Employee is or may become eligible to participate or derive a benefit and (y) is
or has been entered into, maintained or established by Utility or J&B, or to
which Utility or J&B contributes or is or has been obligated or required to
contribute or otherwise with respect to which Utility or J&B may have any
liability (collectively, the "Plans").
(ii) With respect to each such Plan, Utility has made available
to Halter complete and correct copies of: all written Plans; descriptions of all
unwritten Plans; all trust agreements, insurance contracts or other funding
arrangements; the two most recent actuarial reports prepared for any Plan that
is a defined benefit plan and for which actuarial reports are prepared; the two
most recent annual and similar reports filed with any governmental authority,
including all schedules thereto and all reports attached thereto; the most
recent Internal Revenue Service ("IRS") determination letter issued in respect
of any Plan; current summary plan descriptions and other explanatory literature
or announcements provided to Employees; all material communications received
from or sent to the IRS, the Pension Benefit Guaranty Corporation or the
Department of Labor in respect of any Plan (including a written description of
any oral communication in which Utility or J&B was identified by name) during
the preceding two years; statements or other communications regarding withdrawal
or other multi-employer plan liabilities in respect of any Plan which is a
multi-employer Plan, if any; and all amendments and modifications to any such
document. Except as disclosed in Schedule 4.1.21(a), neither Utility nor J&B has
communicated to any Employee any intention or commitment to modify any Plan or
to establish or implement any other employee or retiree benefit or compensation
arrangement.
(b) Qualification. Each Plan intended to be qualified under Section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is
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exempt from taxation under Section 501(a) of the Code, and, to the knowledge of
Utility and each Shareholder, nothing has occurred since the date of such
determination letter that could adversely affect such qualification or tax-
exempt status.
(c) Compliance; Liability.
(i) No Plan covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 412 of the Code is
now, or ever was, to the knowledge of Utility or any Shareholder, maintained by
Utility, J&B or any predecessor of either of them. Neither any Plan nor Utility
nor J&B has incurred any liability or penalty under Section 4975 of the Code or
Sections 409, 502(i) or 502(l) of ERISA.
(ii) Each of the Plans has been operated and administered in all
respects in substantial compliance with all applicable Laws, including without
limitation all applicable provisions of ERISA and the Code. There are no
pending or, to the knowledge of Utility or any Shareholder, threatened or
anticipated claims against or involving any of the Plans and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Plan activities) has been brought against or with respect to any such Plan.
(iii) All contributions required to be made as of the date of
this Agreement to the Plans have been made or provided for. Neither Utility, J&B
nor any entity under "common control" with Utility or J&B within the meaning of
Section 4001 of ERISA has contributed to, or been required to contribute to, any
"multi-employer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
(iv) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment by Utility or J&B, including,
without limitation, death or medical benefits (whether or nor insured), other
than (a) coverage provided pursuant to the terms of any Plan specifically
identified as providing such coverage in Schedule 4.1.21(a) or mandated by
Section 4980B of the Code, (b) retirement benefits payable under any Plan
qualified under Section 401(a) of the Code or (c) deferred compensation fully
and adequately accrued as a liability on the Latest Balance Sheet or incurred
with respect to services rendered after the Balance Sheet Date in the ordinary
course of business consistent with prior practice, pursuant to the terms of a
Plan. The consummation of the transactions contemplated by this Agreement will
not result in an increase in the amount of compensation or benefits or the
acceleration of the vesting or timing of payment of any compensation or benefits
payable to or in respect of any Employee.
4.1.22. Brokers; Finders, etc. Neither Utility nor J&B nor any
Shareholder has engaged any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a brokerage or finder's commission, fee or similar compensation in
connection therewith or upon the consummation thereof. All negotiations relating
to this Agreement and the transactions contemplated hereby have been carried on
without the participation of any person acting on behalf of Utility, J&B or any
Shareholder in such manner
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as to give rise to any valid claim against Halter or any of its subsidiaries or
affiliates for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to Utility, J&B or any Shareholder upon
consummation of the transactions contemplated hereby.
4.1.23. Disclosure. To the knowledge of Utility and each Shareholder, no
representation or warranty by Utility and the Shareholders contained in this
Agreement nor any statement or certificate furnished or to be furnished by or on
behalf of Utility or any Shareholder to Halter or its representatives in
connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not misleading. To
the knowledge of Utility and each Shareholder, there is no fact (other than
matters of a general economic nature which do not affect the Utility or J&B
businesses uniquely) that has not been disclosed by Utility or the Shareholders
to Halter and/or its representatives that might reasonably be expected to have
or result in a Material Adverse Effect.
4.1.24. Purchase for Investment. Each Shareholder will acquire the
Halter Shares (as defined in Section 4.2.5) under the Subscription Agreement
solely for investment, with no present intention to resell such Halter Shares in
violation of the Securities Act of 1933 (the "Securities Act"). Each
Shareholder hereby acknowledges that the Halter Shares have not been registered
pursuant to the Securities Act or other applicable Law and may not be
transferred in the absence of such registration or an exemption therefrom.
4.1.25. Accounts Receivable. All accounts receivable of Utility and J&B
that are reflected on the Latest Balance Sheet or on the accounting records of
Utility and J&B as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Latest Balance Sheet or on the accounting records of Utility and J&B as of the
Closing Date (which reserves are adequate and calculated consistent with past
practices and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
than the reserve reflected in the Latest Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the day
on which it first becomes due and payable. To the knowledge of Utility or any
Shareholder, there is no contest, claim, or right of set-off, other than returns
in the ordinary course of business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule 4.1.25 contains a complete and accurate list of all
Accounts Receivable as of the date of the Latest Balance Sheet, which list sets
forth the aging of such Accounts Receivable.
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4.2. Representations and Warranties of Halter and Acquisition. Halter
and Acquisition represent and warrant to Utility and each Shareholder as
follows:
4.2.1. Authorization, etc. Each of Halter and Acquisition has the
requisite corporate power and authority to execute and deliver this Agreement
and the other Transaction Agreements to which it is a party, to perform fully
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Halter and
Acquisition of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action of Halter and Acquisition. Each of
Halter and Acquisition has duly executed and delivered this Agreement and on the
Closing Date will have duly executed and delivered the other Transaction
Agreements to which it is a party. This Agreement is, and on the Closing Date
each of the other Transaction Agreements to which Halter or Acquisition is a
party will be, legal, valid and binding obligations of Halter and/or
Acquisition, as the case may be, enforceable against each such party in
accordance with their respective terms.
4.2.2. Corporate Status. Each of Halter and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
carry on its respective business and to own or lease and to operate its
respective properties as and in the places where such business is conducted and
such properties are owned, leased or operated.
4.2.3. No Conflicts, etc. The execution, delivery and performance by
Halter and Acquisition of this Agreement and of the other Transaction Agreements
to which they are parties, and the consummation of the transactions contemplated
hereby and thereby, do not and will not conflict with or result in a violation
of or a default under (with or without the giving of notice or the lapse of time
or both), create in any other person a right or claim of termination, amendment,
modification, acceleration or cancellation of, or result in the creation of any
Lien (or any obligation to create any Lien) upon any of the properties or assets
of Halter or Acquisition under (i) any Law applicable to Halter or Acquisition
or any of the properties or assets of Halter or Acquisition, (ii) the
certificate or articles of incorporation or bylaws of Halter or Acquisition or
(iii) except as set forth in Schedule 4.2.3, any Contract to which Halter or
Acquisition is a party or by which Halter or Acquisition or any of their
properties or assets may be bound or affected, except, in the case of clause
(iii), for violations or defaults that, individually and in the aggregate, would
not have a material adverse effect on the business, results of operations,
condition (financial or otherwise) or prospects of Halter and Acquisition, taken
as a whole (a "Halter Material Adverse Effect"), and would not materially impair
the ability of Halter or Acquisition to perform its respective obligations
hereunder or under the other Transaction Agreements to which they are parties.
Except as specified in Schedule 4.2.3, no governmental approval or other consent
of any party is required to be obtained or made by Halter or Acquisition in
connection with the execution and delivery of this Agreement or the other
Transaction Agreements or the consummation of the transactions contemplated
hereby or thereby.
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4.2.4. Brokers; Finders, etc. Halter has not engaged any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a brokerage or finder's commission, fee
or similar compensation in connection therewith or upon the consummation
thereof. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on without the participation of any person
acting on behalf of Halter in such manner as to give rise to any valid claim
against Utility, J&B or any Shareholder for any brokerage or finder's
commission, fee or similar compensation.
4.2.5. Validity of Halter Shares. The shares of Halter Common Stock to
be issued in connection with the Merger (the "Halter Shares"), when issued and
delivered in accordance with the terms of this Agreement, will have been duly
authorized and validly issued and will be fully paid and non-assessable.
4.2.6. Disclosure. To the knowledge of Halter and Acquisition, no
representation or warranty by Halter and Acquisition contained in this Agreement
nor any statement or certificate furnished or to be furnished by or on behalf of
Halter or Acquisition to Utility or its representatives in connection herewith
or pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements contained herein or therein not misleading. To the knowledge of
Halter and Acquisition, there is no fact (other than matters of a general
economic or political nature which do not affect Halter's business uniquely)
known to Halter or Acquisition that has not been disclosed by Halter or
Acquisition to Utility and/or its representatives that might reasonably be
expected to have or result in a Halter Material Adverse Effect.
4.2.7. Halter Stock. As of June 30, 1997, 18,450,000 shares of Halter
common stock were issued and outstanding.
ARTICLE V
COVENANTS
5.1. Covenants of Utility and the Shareholders.
5.1.1. Conduct of Business. On and after the date hereof and until the
Effective Time, except as expressly permitted or required by this Agreement or
as otherwise expressly consented to by Halter in writing, Utility will and will
cause J&B to, and the Shareholders will cause Utility and J&B to:
(a) carry on its business in, and only in, the ordinary course, in
substantially the same manner as heretofore conducted, and use all commercially
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end
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that its goodwill and going business shall be in all material respects
unimpaired following the Closing;
(b) not prepay any accounts payable, delay payment of any trade
payables or other obligations, or make any other cash payments other than in the
ordinary course of business;
(c) maintain all of its tangible assets in good repair, working
order and operating condition subject only to ordinary wear and tear;
(d) use all reasonable efforts to keep in full force and effect
insurance comparable in amount and scope of coverage to insurance now carried by
it;
(e) maintain its books of account and records in the usual,
regular and ordinary manner consistent with past policies and practices and not
change such policies and practices;
(f) comply in all material respects with all Laws applicable to
Utility, J&B and their respective businesses;
(g) use all reasonable efforts to maintain its good standing in
its jurisdiction of incorporation and in the jurisdictions in which it is
qualified to do business as a foreign corporation and to maintain all
governmental approvals and consents necessary for, or otherwise material to,
Utility, J&B and their respective businesses;
(h) not merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire, any business, business organization or division thereof, of any other
person;
(i) promptly advise Halter in writing of any event, occurrence,
fact, condition, change, development or effect that, individually or in the
aggregate, could, to the knowledge of Utility or any Shareholder, reasonably be
expected to have or result in a Material Adverse Effect or to cause a breach of
this Section 5.1.1;
(j) perform in all material respects all of its obligations under
all Contracts relating to or affecting Utility, J&B and their respective
businesses;
(k) not declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock or otherwise purchase or redeem,
directly or indirectly, any shares of its capital stock;
(l) not issue or sell any shares of any class of its capital
stock, or any securities convertible into or exchangeable for any such shares,
or issue, sell, grant or enter into any subscriptions, options, warrants,
conversion or other rights, agreements, commitments,
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arrangements or understandings of any kind, contingently or otherwise, to
purchase or otherwise acquire any such shares or any securities convertible into
or exchangeable for any such shares;
(m) not incur any indebtedness for borrowed money, issue or sell
any debt securities or prepay any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder or other affiliate) except for
borrowings and prepayments (other than to or from any Shareholder or other
affiliate) in the ordinary course of business;
(n) not mortgage, pledge or otherwise subject to any Lien, any of
its real property or other properties or assets, tangible or intangible, except
in the ordinary course of business;
(o) not forgive, cancel, compromise, waive or release any debts,
claims or rights, except for debts of, or claims and rights against, persons
other than any Shareholder or other affiliate that are forgiven, canceled,
compromised, waived or released in the ordinary course of business;
(p) not amend, modify or terminate any existing Contract or enter
into (x) any agreement, commitment or other Transaction, other than agreements
entered into in the ordinary course of business and involving an expenditure of
less than $10,000 in each individual case and $50,000 in the aggregate, or (y)
any agreement, commitment or other Transaction that, pursuant to its terms, is
not cancelable without penalty on notice of 30 days or less from the end of the
first month following the Closing Date;
(q) not pay or commit to pay any bonus, other incentive
compensation, change in control or similar compensation to any officer,
director, employee, sales representative, agent consultant, Shareholder or
affiliate or grant or commit to grant to any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate any other increase
in, or additional, compensation in any form;
(r) not enter into, institute, adopt or amend or commit to enter
into, institute, adopt or amend any employment, consulting, retention,
change-in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, sales
representative, agent, consultant, Shareholder or affiliate;
(s) not amend either its articles of incorporation or bylaws;
(t) not incur, assume, guarantee or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess of
$10,000 in each case or $50,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and
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whether direct or indirect, or as guarantor or otherwise with respect to any
liability or obligation of any other person) other than agreements for purchases
of goods or services in the ordinary course of business;
(u) not sell any assets, other than inventory in the ordinary
course of business;
(v) not make any material changes in policies or practices
relating to selling practices, returns, discounts or other terms of sale or
accounting therefor or in policies of employment;
(w) not transfer or grant any rights under, or enter into any
settlement regarding the breach or infringement of any Intellectual Property, or
modify any existing rights with respect thereto;
(x) replenish its inventories and supplies in a normal and
customary manner consistent with its prior practice and prudent business
practices prevailing in the industry, and not make any purchase commitment in
excess of the normal, ordinary and usual requirements of its business or at any
price or upon terms and conditions more onerous than those usual and customary
in the industry, and not make any change in its selling, pricing, advertising or
personnel practices inconsistent with its prior practice and prudent business
practices prevailing in the industry;
(y) not make any capital expenditures or capital additions or
improvements in excess of an aggregate of $10,000;
(z) not institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental body;
(aa) not liquidate, dissolve or wind-up its affairs; or
(bb) not enter into any transaction, Contract or commitment other
than in the ordinary course of business, or pay or agree to pay any brokerage or
finder's fee, Taxes or other expenses in connection with, or incur any severance
pay obligations by reason of, this Agreement, the other Transaction Agreements
or the transactions contemplated hereby or thereby.
5.1.2. No Solicitation. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement in accordance with the terms
hereof, none of Utility, J&B or any Shareholder or any officers, directors,
agents or affiliates of Utility or J&B shall, directly or indirectly: (i)
solicit or encourage any inquiries or proposals for, or enter into, participate
in or respond to any discussions with respect to, any acquisition or purchase of
all or substantially all of the assets of, or of a substantial equity interest
in, or any business combination with, Utility or J&B, other than as contemplated
by this Agreement, or (ii) furnish or cause to be furnished any non-public
information concerning Utility, J&B or their respective businesses to any person
(other
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than Halter and its agents and representatives), except pursuant to applicable
Law and after prior written notice to Halter.
5.1.3. Access and Information; Cooperation for SEC Filings by Halter.
(a) From the date hereof until the earlier of the Effective Time or the
termination of this Agreement in accordance with the terms hereof, Utility, J&B,
the Shareholders and persons acting on behalf of any of them will (and their
respective accountants, counsel, consultants, employees and agents will) give
Halter and its accountants, counsel, consultants, employees and agents, full
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all of the assets,
properties, books, Contracts, commitments, reports and records of Utility and
J&B, as Halter shall from time to time reasonably request. In addition,
Utility, J&B, the Shareholders and persons acting on behalf of any of them will
permit Halter and its accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of Utility and J&B and persons acting on
their behalf during normal business hours as may be necessary or useful to
Halter in its review of the properties, assets and business affairs of Utility
and J&B and the above-mentioned documents, records and information. Utility and
the Shareholders will keep Halter reasonably informed as to the affairs of
Utility, J&B and their respective businesses.
(b) Utility and the Shareholders will use reasonable good faith
efforts to cause the accountants of Utility and J&B to cooperate with Halter,
and deliver to Halter such written consents as it shall reasonably request, in
connection with any required filings with the Commission under the Securities
Act and the Securities Exchange Act of 1934, as amended.
5.1.4. Public Announcements. Except as required by applicable Law,
neither Utility, J&B nor any Shareholder shall, nor shall any person acting on
behalf of any of them, make any public announcement in respect of this Agreement
or the transactions contemplated hereby without the prior written consent of
Halter.
5.1.5. Vote or Consent on Merger; Other Actions. (a) Utility and each
Shareholder agree to take all action necessary in accordance with applicable Law
and Utility's articles of incorporation and bylaws to convene or cause to be
convened a meeting of the shareholders of Utility to consider and vote upon, or
to otherwise take action by shareholder consent to approve, this Agreement and
the Merger and the other Transactions contemplated hereby, as promptly as
practicable. Utility, through its Board of Directors, agrees to recommend to
the shareholders of Utility approval of this Agreement and the Merger and the
other Transactions contemplated hereby.
(b) Each Shareholder agrees to vote, or cause to be voted, all of
his shares of Utility Common Stock in favor of, or to otherwise take action by
shareholder consent to approve, any proposal submitted by the Board of Directors
of Utility for shareholder approval of this Agreement and the Merger and the
other Transactions contemplated hereby.
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(c) Each Shareholder agrees that he will not, prior to the
Effective Time or the earlier termination of this Agreement pursuant to Section
7 of this Agreement, without the prior written consent of Halter, (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any Contract,
option or other arrangement or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of any of his shares of Utility Common
Stock, (ii) grant any proxy with respect to any of his shares of Utility Common
Stock or enter into any voting trust or similar agreement or arrangement in
respect of the voting of any of his shares of Utility Common Stock or (iii) vote
any of the shares of Utility Common Stock to amend the articles of incorporation
or bylaws of Utility, to authorize any merger or consolidation of Utility, or
sale of all or substantially all of the assets of Utility, or the dissolution,
liquidation or winding-up of the affairs of Utility, or authorize the issuance
of any shares of capital stock of Utility, or approve any new employee benefit,
pension, stock option or other similar plan or arrangement of Utility or any
amendment to any existing plan or arrangement to increase the size of any such
plan or arrangement or materially increase the benefits payable thereunder.
5.1.6. Further Actions. (a) Utility and the Shareholders agree to use
and to cause all persons acting on its and their behalf to use all reasonable
good faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby by the Closing
Date.
(b) Utility, as promptly as practicable, will file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to applicable Law in connection
with this Agreement and the other Transaction Agreements and the consummation of
the transactions contemplated hereby and thereby.
(c) Utility, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all consents (including, without
limitation, all governmental approvals and any consent required under any
Contract) necessary to be obtained by it in order to consummate the transactions
contemplated by this Agreement.
(d) Utility and the Shareholders will, and will cause all persons
acting on its or their behalf to, coordinate and cooperate with Halter in
exchanging such information and supplying such assistance as may be reasonably
requested by Halter in connection with the filings and other actions
contemplated by Section 5.2.1.
(e) At all times prior to the Effective Time, Utility and the
Shareholders shall promptly notify Halter in writing of any fact, condition,
event or occurrence (including any fact that would cause the representations and
warranties of Utility and the Shareholders set forth in this Agreement to be
incorrect in any material respect) that will or could reasonably be expected to
result in the failure of any of the conditions contained in Sections 6.1 and 6.2
to be satisfied, promptly upon becoming aware of the same.
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5.1.7. Further Assurances. Following the Closing, Utility and the
Shareholders shall, and shall cause all persons acting on its or their behalf
to, from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by Halter, to confirm and assure
the rights and obligations provided for in this Agreement and in the other
Transaction Agreements and render effective the consummation of the transactions
contemplated hereby and thereby.
5.2. Covenants of Halter and Acquisition.
5.2.1. Further Actions. (a) Each of Halter and Acquisition agrees to
use, and to cause all persons acting on its behalf to use, all reasonable good
faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby by the Closing
Date.
(b) Each of Halter and Acquisition, as promptly as practicable,
will file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by it pursuant to
applicable Law in connection with this Agreement and the other Transaction
Agreements, and the consummation of the transactions contemplated hereby and
thereby.
(c) Each of Halter and Acquisition, as promptly as practicable,
will use all reasonable efforts to obtain or cause to be obtained, all consents
(including, without limitation, all governmental approvals) necessary to be
obtained by it in order to consummate the transactions contemplated by this
Agreement.
(d) Each of Halter and Acquisition will, and will cause all
persons acting on its behalf to, coordinate and cooperate with Utility in
exchanging such information and supplying such assistance as may be reasonably
requested by Utility in connection with the filings and other actions
contemplated by Section 5.1.6.
(e) At all times prior to the Effective Time, Halter shall
promptly notify Utility in writing of any fact, condition, event or occurrence
(including any fact that would cause any of the representations and warranties
of Halter set forth in this Agreement to be incorrect in any material respect)
that will or may result in the failure of any of the conditions contained in
Sections 6.1. and 6.3 to be satisfied, promptly upon becoming aware of the same.
5.2.2. Further Assurances. Following the Closing, each of Halter and
Acquisition shall, and shall cause its affiliates and persons acting on behalf
of any of them to, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by Utility, to confirm and
assure the rights and obligations provided for in this Agreement and in the
other Transaction Agreements and render effective the consummation of the
transactions contemplated hereby and thereby.
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5.2.3. Election of President. Immediately following the Effective Time,
the Board of Directors of Acquisition shall cause Edgar F. Pender to be elected
President and Chief Operating Officer of Acquisition and J&B.
5.2.4. Employee Benefits. (a) From and after the Effective Time,
subject to applicable law, Acquisition will honor in accordance with their
terms, all Plans; provided, however, that nothing herein shall preclude any
change effected on a prospective basis in any Plan that is permitted pursuant to
the following sentence of this Section 5.2.4. For a period of not less than
six months following the Effective Time, subject to applicable law, Acquisition
will provide benefits to Utility and J&B employees who become employees of
Acquisition and its subsidiaries which will, in the aggregate, be no less
favorable than those provided by Utility and J&B to their employees immediately
prior to the Effective Time. Any change effected on a prospective basis in any
Plan shall provide employees of Acquisition with benefits that, in the
aggregate, are no less favorable than those provided to Halter or any of its
other subsidiaries. Any new health insurance plan shall provide coverage for
pre-existing conditions. Acquisition shall give the former employees of Utility
full credit for the period of time each was employed by Utility prior to the
Effective Time and for the period of time each is employed by Acquisition after
the Effective Time.
(b) For three full fiscal years after the Effective Time,
Acquisition agrees to maintain a bonus plan for employees of Acquisition and
J&B, pursuant to which a pool of up to $100,000 in bonuses per year shall be
distributed by the Board of Directors of Acquisition to such employees;
provided, however, that no such bonuses shall be required to be paid with
respect to any fiscal year in which the pre-tax profits of Acquisition and J&B
do not exceed $1,000,000.
5.2.5. Registration of Halter Shares.
(a) Halter shall use its Best Lawful Efforts (as hereinafter
defined) to effect the registration of the Halter Shares issued hereunder (the
"Registrable Securities") as soon as practicable after the Closing Date and in
any event shall prepare and file with the Commission, within ten (10) business
days following the Closing Date, a registration statement on Form S-3 (or
another appropriate form) for the offer and sale by each Shareholder receiving
Registrable Securities pursuant to the Merger (collectively, the "Holders") of
such Registrable Securities (the "Registration Statement"); provided, if the
Registration Statement is declared effective prior to December 10, 1997 (the
"Effectiveness Target Date"), Holders shall not sell any Registrable Securities
pursuant to the Registration Statement prior to the Effectiveness Target Date.
In addition, Halter shall prepare and file all such amendments and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep the Registration Statement effective and in
compliance with applicable law for a period of not less than 180 days following
the Closing Date or such shorter period which will terminate when all
Registrable Securities have been sold (the "Effectiveness Period") (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable). Notwithstanding the
foregoing, Halter shall not be obligated to effect any such registration
pursuant to this Section 5.2. if Halter's counsel delivers an opinion to Holders
and
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Halter's registrar and transfer agent reasonably satisfactory to counsel for
Holders to the effect that the Registrable Securities may be sold or distributed
as planned by Holders without registration. All expenses incident to Halter's
performance or compliance with this Section 5.2.5 shall be paid by Halter;
provided, however, Holders shall be responsible for and shall pay any
underwriting, brokerage or selling agent's fees, discounts or commissions, and
shall be responsible for and pay all legal fees and expenses of counsel to
Holders or counsel to any underwriter or selling agent. In connection with any
underwritten offering to which Halter shall have consented, Halter shall
provide, or cause to be provided, such representations, warranties, covenants,
opinions, "cold comfort" letters, indemnifications, opportunities for due
diligence and other matters, and shall take all such other reasonable actions,
as are customary in underwritten public offerings of securities. As used
herein, the phrase "Best Lawful Efforts" shall mean the efforts that a prudent
business person desirous of achieving a result would use under similar
circumstances to ensure that such result is achieved as expeditiously as
possible.
(b) Notwithstanding anything to the contrary in Section 5.2.5(a),
Halter may, by delivering written notice to Holders, prohibit offers and sales
of Registrable Securities pursuant to the Registration Statement at any time if
(A)(i) Halter is in the possession of material non-public information relating
to Halter, (ii) Halter determines (based on advice of counsel) that such
prohibition is necessary in order to avoid a requirement to disclose such
material non-public information to the public and (iii) Halter determines in
good faith that public disclosure of such material non-public information would
not be in the best interests of Halter and its stockholders or (B)(i) Halter has
made a public announcement relating to an acquisition or business combination
transaction including Halter and/or one or more of its subsidiaries that is
material to Halter and its subsidiaries taken as a whole and (ii) Halter
determines in good faith that (x) offers and sales of Registrable Securities
pursuant to the Registration Statement prior to the consummation of such
transaction (or such earlier date as Halter shall determine) is not in the best
interests of Halter and its stockholders or (y) it would be impracticable at the
time to obtain any financial statements relating to such acquisition or business
combination transaction that would be required to be set forth in the
Registration Statement; provided, however, that upon (i) the public disclosure
-------- -------
by Halter of the material non-public information described in clause (A) of this
paragraph or (ii) the consummation, abandonment or termination of, or the
availability of the required financial statements with respect to, a transaction
described in clause (B) of this paragraph, the suspension of the use of the
Registration Statement pursuant to this Section 5.2.5(b) shall cease and the
Halter shall promptly notify Holders that dispositions of Registrable Securities
may be resumed.
(c) Halter may require Holders to furnish to Halter such
information regarding the distribution of Registrable Securities as is required
by law to be disclosed in the Registration Statement, and Halter may exclude
from the Registration Statement the Registrable Securities if Holders fail to
furnish such information within a reasonable time after receiving such request.
Each Holder agrees to notify Halter as promptly as practicable of any inaccuracy
or change in information previously furnished by such Holder to Halter or of the
occurrence of any event as a result of which the prospectus included in the
Registration Statement contains or would contain
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an untrue statement of a material fact regarding a Holder or such Holder's
intended method of distribution of Registrable Securities, or omits to state any
material fact regarding a Holder or such Holder's intended method of
distribution of Registrable Securities, necessary to make the statements
therein, in light of the circumstances then existing, not misleading and
promptly furnish to Halter any additional information required to correct and
update any previously furnished information or required so that such prospectus
shall not contain, with respect to a Holder or the distribution of the
Registrable Securities, an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading.
(d) Halter will indemnify and hold harmless Holders from and
against any and all loss, damage, liability, cost and expense to which the
Holders may become subject under the Securities Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
Halter will not be liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
specifically provided in writing by a Holder for inclusion in such Registration
Statement and so included in conformity with such information provided.
(e) Each Holder will indemnify and hold harmless Halter, each of
its directors, each of its officers who have signed the Registration Statement,
and each person, if any, who controls within the meaning of the Securities Act,
the Company from and against any and all loss, damage, liability, cost and
expense to which any such person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such Registration Statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was specifically provided in
writing for inclusion in such Registration Statement and so included in
conformity with such information provided.
5.2.6. Principal Office. Acquisition and Halter agree that they will
maintain the office operating Utility's assets located at 60042 Cabiran Road
Slidell, Louisiana 70460 for a period of twelve (12) months after the Closing
Date and represent and warrant to the Shareholders that they have no current
plans or intentions to move such office after such twelve month period.
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5.2.7. Acquisition's Articles and Bylaws. From and after the Closing
Date, Acquisition shall not amend, alter or repeal those provisions of the
articles of incorporation, bylaws or other governing documents of Acquisition
relating to liability or indemnification of directors and officers, except as
required by law, if the effect of such amendment, alteration or repeal would be
to increase the potential liability of a former director or officer of Utility
to Utility or to its stockholders for monetary damages for breach of fiduciary
duty, or to lessen or otherwise adversely affect the indemnification rights of
former directors and officers of Utility as provided in such articles of
incorporation, bylaws or other governing documents as in effect on the date of
this Agreement.
5.2.8. Price Protection. (a) If:
(i) the average of the closing prices (such average being the
"Average Market Price") of Halter Common Stock on the
American Stock Exchange (the "AMEX") for the five trading
days ending on the Protection Date (as hereinafter defined)
is less than the Acquisition Price (as hereinafter defined),
and
---
(ii) a Shareholder (a "Selling Shareholder") sells (in an open
market brokers' transaction) shares of Halter Common Stock
received pursuant to this Agreement, within six (6) months
after the Protection Date (the "Protection Period"), for a
price per share (a "Disposition Price") less than the
Acquisition Price, and
---
(iii) the Shareholder Representative, on behalf of such Selling
Shareholder, delivers to Halter within fifteen (15) days
after the end of the Protection Period a notice (the "Price
Protection Notice") that such Selling Shareholder is
entitled to payment pursuant to this Section, which Price
Protection Notice shall contain a brokers' confirmation of
sale or other documentation satisfactory to Halter
evidencing such Selling Shareholder's sale of Halter Shares
(including the date and sales price thereof),
then Halter shall pay to such Selling Shareholder, within fifteen (15) business
days after receiving the Price Protection Notice, an amount in cash (the
"Protection Amount") equal to the amount by which: (A) the Acquisition Price
exceeds (B) the greater of the Average Market Price or the Disposition Price,
multiplied by (C) the number of shares of Halter Common Stock disposed of at the
Disposition Price by such Selling Shareholder during the Protection Period.
(b) A Selling Shareholder shall have the option, exercisable by
giving Halter notice with the Price Protection Notice, to receive the Protection
Amount in: (i) cash; (ii) additional Halter Common Stock; or (iii) any
combination of the foregoing. If a Selling Shareholder elects to receive
additional Halter Common Stock, the number of shares of Halter Common Stock such
Selling Shareholder will receive shall equal the quotient obtained by dividing
that portion of the Protection Amount that such Selling Shareholder elects to
receive in Halter Common Stock by the
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average closing price of Halter Common Stock on the AMEX for the five trading
days ending on the date Halter receives the Price Protection Notice. All shares
of Halter Common Stock issued to the Selling Shareholders pursuant to the
foregoing shall be "restricted securities" as defined in Rule 144 under the
Securities Act and will bear a legend substantially in the form described in the
Subscription Agreement. Notwithstanding anything in this Section 5.2.9 to the
contrary, cash shall be paid in lieu of fractional shares.
(c) As used herein, the term "Protection Date" shall mean the
earlier of (i) the date on which all Registrable Securities may be sold pursuant
to the Registration Statement or (ii) the date on which all Merger Consideration
consisting of Halter Common Stock may lawfully be sold in the public market
without registration.
(d) As used herein, the term "Acquisition Price" shall mean
$27.21.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party. The respective
obligations of the parties to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
6.1.1. No Injunction, etc. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
applicable Law, including any order, injunction, decree or judgment of any court
or governmental authority. No court or governmental authority shall have
determined any applicable Law to make illegal the consummation of the
transactions contemplated hereby or by the other Transaction Agreements, and no
proceedings with respect to the application of any such Law to such effect shall
be pending or threatened.
6.1.2. Corporate Proceedings. All corporate and other proceedings of
Utility, on the one hand, and Halter and Acquisition, on the other hand, in
connection with this Agreement and the other Transaction Agreements and the
transactions contemplated hereby and thereby, and all documents and instruments
incident thereto, shall be reasonably satisfactory in substance and form to
Halter and its counsel, on the one hand, and Utility and its counsel, on the
other hand, and Halter and its counsel, on the one hand, and Utility and its
counsel, on the other hand, shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
6.2 Conditions to Obligations of Halter and Acquisition. The
obligations of Halter and Acquisition to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
Halter) on or prior to the Closing Date of the following additional conditions:
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6.2.1. Representations; Performance. The representations and warranties
of Utility and the Shareholders contained in this Agreement (i) shall be true
and correct in all material respects at and as of the date hereof, and (ii)
shall be repeated and shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though made on and as of the
Closing Date. Utility and the Shareholders shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by each of them prior to or on
the Closing Date. Utility and the Shareholders shall have delivered to Halter a
certificate, dated the Closing Date and signed by Utility's duly authorized
officer and by each Shareholder, to the foregoing effect.
6.2.2. Consents. Utility shall have obtained and shall have delivered to
Halter copies of (i) all governmental approvals required to be obtained by
Utility in connection with the execution and delivery of this Agreement and the
other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby and (ii) all consents (including, without
limitation, all consents required under any Contract) necessary to be obtained
by Utility, J&B or the Shareholders in order to consummate the Merger pursuant
to this Agreement.
6.2.3. No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
the Balance Sheet Date that, individually or in the aggregate, has constituted
or resulted in, or could reasonably be expected to constitute or result in, a
Material Adverse Effect.
6.2.4. Transaction Agreements. The Shareholders shall have entered into
the following agreements with Halter and/or Acquisition:
(a) the Employment Agreement, in the form attached hereto as
Exhibit D, shall be entered into by Edgar F. Pender;
(b) the Non-Competition Agreement, in the form attached hereto as
Exhibit E shall be entered into by Edgar F. Pender;
(c) the Escrow Agreement;
(d) the Subscription Agreements; and
(e) the Shareholder's Releases, in the form attached hereto as
Exhibit F.
6.2.5. Opinion of Counsel. Halter and Acquisition shall have received an
opinion, addressed to each of them and dated the Closing Date, from Sessions &
Fishman, L.L.P., counsel to Utility and the Shareholders, in form and content
acceptable to Halter.
6.2.6. Estoppel Letters. Utility shall have delivered to Halter estoppel
letters, reasonably satisfactory to Halter, from the lessors of the leases
listed in Schedule 6.2.6 to the effect that Utility or J&B, as applicable, has
paid all rent and other amounts due under such lease, is not otherwise in
default in any material respect thereunder and, if required under such Lease,
consenting to the assumption of such lease by Acquisition as the Surviving
Corporation in the Merger.
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6.2.7. Title Insurance. Utility shall cause to be delivered to Halter,
at Utility's expense, policies of title insurance from a title company
acceptable to Halter that each of Utility and J&B has good and indefeasible
title to each parcel of real estate or tract of land owned by Utility or J&B,
free and clear of all Liens other than Permitted Liens.
6.3. Conditions to Obligations of Utility and the Shareholders. The
obligations of Utility and the Shareholders to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
Utility or the Shareholders, as the case may be), on or prior to the Closing
Date, of the following additional conditions:
6.3.1. Representations; Performance, etc. The representations and
warranties of Halter and Acquisition contained in this Agreement (i) shall be
true and correct in all material respects at and as of the date hereof and (ii)
shall be repeated and shall be true and correct in all material respects on and
as of the Closing Date with the same effect as though made at and as of the
Closing Date. Each of Halter and Acquisition shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date. Each of Halter and Acquisition shall have delivered to Utility a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
6.3.2. Opinion of Counsel. Utility shall have received an opinion,
addressed to it and dated the Closing Date, from McGlinchey Stafford, A
Professional Limited Liability Company, counsel to Halter, in form and content
acceptable to Utility.
6.3.3. Transaction Agreements. Halter and/or Acquisition shall have
executed and delivered each of the Transaction Agreements to which it will be a
party.
6.3.4. Consents. Halter or Acquisition shall have obtained and shall
have delivered to Utility copies of (i) all governmental approvals required to
be obtained by Halter or Acquisition in connection with the execution and
delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby and (ii) all
consents necessary to be obtained by either of them in order to consummate the
Merger pursuant to this Agreement.
6.3.5. Tax Opinion. The Shareholders shall have received an opinion from
McGlinchey Stafford, A Professional Limited Liability Company to the effect that
the Merger qualifies as a reorganization under Section 368(a)(2)(D) of the Code.
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time:
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(a) by the written agreement of Halter and Utility;
(b) by either Utility or Halter, by written notice to the other
party hereto by 5:00 p.m., Central time, on January 5, 1998 if the Closing shall
not have occurred by December 31, 1997 (unless the failure of the Closing to
occur shall be due to any breach of this Agreement by the party seeking to
terminate), unless such date shall be extended by the mutual written consent of
Utility and Halter;
(c) by Utility, if there has been a breach on the part of Halter
or Acquisition in the representations, warranties or covenants of Halter and
Acquisition set forth herein, or a failure on the part of Halter or Acquisition
to perform their respective obligations hereunder; provided that Utility shall
have performed and complied with, in all material respects, all agreements and
covenants required by this Agreement to have been performed and complied with by
Utility prior to such time, or any other events or circumstances shall have
occurred such that, in any such case, any of the conditions to the Closing set
forth in Sections 6.1 or 6.3 could not be satisfied on or prior to the
termination date contemplated by Section 7.1(b) hereof; or
(d) by Halter, if there has been a breach on the part of Utility
or the Shareholders in the representations, warranties or covenants of Utility
or the Shareholders set forth herein or any failure on the part of Utility or
the Shareholders to perform their respective obligations hereunder; provided
that Halter shall have performed and complied with, in all material respects,
all agreements and covenants required by this Agreement to have been performed
or complied with by Halter prior to such time, or any other events or
circumstances shall have occurred such that, in any case, any of the conditions
to the Closing set forth in Sections 6.1 or 6.2 could not be satisfied on or
prior to the termination date contemplated by Section 7.1(b) hereof.
7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 7.1, this Agreement shall become
void and have no effect and all obligations of the parties hereto shall
terminate, except the obligations of the parties pursuant to Section 8.3 and
except for the provisions of Section 8.6.
ARTICLE VIII
INDEMNIFICATION; MISCELLANEOUS
8.1 Indemnification. (a) By the Shareholders. Each Shareholder
covenants and agrees to indemnify, defend and hold harmless Halter, its
officers, directors, employees, agents, advisers, representatives and affiliates
(collectively, the "Buyer Indemnitees") for, and will pay to or reimburse the
Buyer Indemnitees for the amount of, any and all damage, loss, liability, claim
or expense (including reasonable attorney's fees and expenses of investigating,
defending or prosecuting any claim) (collectively, "Damages"), resulting from or
arising out of directly or indirectly:
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(i) any inaccuracy of any representation or warranty made by
Utility or any Shareholder herein or under any other Transaction Agreement or in
connection herewith or therewith;
(ii) any failure of Utility or any Shareholder to perform any
covenant or agreement hereunder or under any other Transaction Agreement or to
fulfill any other obligation in respect hereof or thereof; and
(iii) any third party claim resulting from or arising out of any
services or work performed, including any product of others incorporated into
any services or work performed, by Utility or J&B prior to the Effective Time.
(b) By Halter. Halter covenants and agrees to defend, indemnify and
hold harmless each Shareholder and his respective agents, advisers,
representatives and affiliates (collectively, the "Seller Indemnitees") from and
against any and all Damages, whether or not involving a third party claim,
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Halter herein or under any other Transaction Agreement or in connection herewith
or therewith; and
(ii) any failure of Halter or Acquisition to perform any
covenant or agreement hereunder or under any other Transaction Agreement or to
fulfill any other obligation in respect hereof or thereof.
(c) By Acquisition. From and after the Closing Date, Acquisition
agrees to indemnify, defend and hold harmless the former directors and officers
of Utility and J&B (the "Former Directors") to the fullest extent permitted by
the LBCL from and against any and all Damages based upon or arising out of
actions or omissions or alleged actions or omissions of such Former Directors in
their capacity as officers or directors of Utility and J&B occurring (or alleged
to have occurred) at or prior to the Closing Date.
(d) No Indemnification for Certain Acts. Notwithstanding the
provisions of Sections 8.1(a), 8.1(b) and 8.1(c) hereof, a party otherwise
required to provide indemnification under this Section 8.1 shall not be liable
for indemnification pursuant hereto to the extent that any Damage is found by a
court or arbitration panel of competent jurisdiction, after full hearing on the
merits, to have resulted from the fraudulent, grossly negligent, bad faith or
criminal act or omission of a party otherwise entitled to indemnification
hereunder or of such party's officers, directors, employees, agents, advisers,
representatives or affiliates.
(e) Adjustments to Indemnification Payments. Without limiting the
obligations of the Indemnifying Party (as hereinafter defined) under this
Agreement, (including the timely indemnification of the Indemnified Party), any
amount payable by any Shareholder to any Buyer Indemnitee, on the one hand, or
by Halter to any Shareholder, on the other hand, pursuant to this
40
<PAGE>
Section 8.1 in respect of any Claim for indemnification hereunder shall be net
of any insurance proceeds realized by and paid to the Indemnified Party in
respect of such claim by any Buyer Indemnitee or by any Seller Indemnitee or by
any consolidated, combined or unitary group of which such Buyer Indemnitee or
Seller Indemnitee is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Section 8.1; provided that the Indemnified
Party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance premiums
or other chargebacks to the Indemnified Party, would exceed the value of the
claim for which the Indemnified Party is seeking indemnification. In the event
the Indemnified Party receives such insurance proceeds after being indemnified
by the Indemnifying Party with respect to any Damage, the Indemnified Party
shall pay to the Indemnifying Party the net amount of such insurance proceeds
(less attorney's fees and other expenses incurred in connection with such
recovery) paid to the Indemnified Party.
(f) Indemnification Procedures -- Third Party Claims. In the case of
any claim, suit, demand, proceeding or action (a "Proceeding") asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), notice shall be given by the Indemnified Party to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any Proceeding as to which
indemnity may be sought, and the Indemnified Party shall permit the Indemnifying
Party (at the expense of such Indemnifying Party) to assume the defense of any
Proceeding or any litigation resulting therefrom; provided that (i) the counsel
for the Indemnifying Party who shall conduct the defense of such Proceeding or
litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may participate in such defense at such Indemnified Party's
expense and (iii) the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such Proceeding or litigation, shall consent to entry of
any judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such
Proceeding or litigation. In the event that the Indemnified Party shall in good
faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such Proceeding by
the Indemnifying Party might be expected to affect adversely the Indemnified
Party or that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such Proceeding or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such Proceeding at the sole cost of the
Indemnifying Party; provided that if the Indemnified Party does so take over and
assume control, the Indemnified Party shall
41
<PAGE>
not settle such Proceeding or litigation without the prior written consent of
the Indemnifying Party. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such Proceeding or demand and shall be
entitled to settle or agree to pay in full such Proceeding or demand. In any
event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any Proceeding or litigation subject to this Section 8.1 and the
records of each shall be available to the other with respect to such defense.
(g) Indemnification Procedure -- Other Claims. A claim for
indemnification for any matter not involving a third party claim may be asserted
by written notice (an "Indemnification Notice") to the party from whom
indemnification is sought, specifying in reasonable detail the nature of the
event which the Indemnified Party asserts entitles it to indemnification
hereunder and the amount of (if determinable) and the basis for the
indemnification claim. The Indemnifying Party shall, within fifteen business
days after the receipt of an Indemnification Notice, either: (i) acknowledge the
debt, liability or obligation for which indemnity is sought and pay the
Indemnified Party an amount sufficient to discharge such debt, liability or
obligation, or (ii) notify the Indemnified Party in writing that it contests the
Indemnifying Party's entitlement to indemnification or disagrees as to the
amount due specifying the basis for such contest or disagreement. Failure of an
Indemnifying Party to respond within fifteen business days following receipt of
an Indemnification Notice hereunder shall be deemed acknowledgment of the right
of the Indemnified Party to indemnification hereunder and give rise to the
immediate right in the Indemnified Party to payment in full from the
Indemnifying Party of the amount claimed in such Indemnification Notice.
(h) Limitations on Indemnification. Notwithstanding anything in this
Agreement to the contrary:
(i) neither Shareholders nor Utility shall have liability for
indemnification pursuant to this Article VIII until the aggregate amount of all
Damages for which indemnification would (but for the limitation of this
sentence) be required to be paid by any Shareholder or Utility pursuant to this
Article VIII exceeds $50,000 (the "Loss Threshold"); provided however that if
the aggregate amount of such Damages exceeds the Loss Threshold the Shareholders
and Utility shall indemnify Halter and/or Acquisition in respect of all such
Damages (including the initial $50,000);
(ii) neither Halter nor Acquisition shall have liability for
indemnification pursuant to this Article VIII until the aggregate amount of all
Damages for which indemnification would (but for the limitation of this
sentence) be required to be paid by Halter or Acquisition pursuant to this
Article VIII exceeds the Loss Threshold; provided however that if the aggregate
amount of such Damages exceeds the Loss Threshold Halter and Acquisition shall
indemnify the Shareholders in respect of all such Damages (including the initial
$50,000);
42
<PAGE>
(iii) the maximum liability in the aggregate for all
Shareholders pursuant to this Article VIII shall not exceed $2,000,000 (the
"Aggregate Limitation"); and
(iv) the maximum liability for Halter and Acquisition pursuant
to this Article VIII shall not exceed $2,000,000 in the aggregate (the "Halter
Limitation").
Damages arising from any breach of the representations and warranties of Section
4.1.1 (the "Section 4.1.1 Damages") shall not be subject to the Loss Threshold,
but the amount of the Section 4.1.1 Damages shall be counted toward meeting the
Loss Threshold with respect to other indemnification claims. A Shareholder
shall have no further obligations under this Article VIII at the time when all
Shareholders have paid indemnification under this Article VIII (including,
without limitation, payments in respect of defending against third party claims)
equal in the aggregate to the Aggregate Limitation. Upon reaching the Aggregate
Limitation, any one or more Shareholders who are then defending against a third
party claim shall turn the defense thereof over to the Indemnified Parties,
which shall thereafter undertake such defense at their sole expense. Neither
Halter nor Acquisition shall have any further obligations under this Article
VIII at the time when Halter and Acquisition, in the aggregate, have paid
indemnification under this Article VIII (including, without limitation, payments
in respect of defending against third party claims) equal to the Halter
Limitation. Upon reaching the Halter Limitation, Halter and/or Acquisition (as
the case may be) shall turn the defense thereof over to the Indemnified Parties,
which shall thereafter undertake such defense at their sole expense. If an
Indemnifying Party pays indemnification (including without limitation, the cost
of defending a third party claim) that was not required to be paid due to any
limitation set forth in this Section 8.1(h), then the Indemnified Party shall,
promptly after demand by the Indemnifying Party, reimburse the latter for such
payments without interest.
(i) Time Limit. An Indemnified Party shall not be entitled to make
any claim for indemnification against an Indemnifying Party under this Article
VIII unless notice of such claim (as required in this Article VIII) is given
prior to (i) with respect to claims made pursuant to Section 8.1(a)(iii), the
date that is four years after the Closing Date, (ii) with respect to claims made
pursuant to this Article VIII (other than Section 8.1(a)(iii)), the date that is
two years after the Closing Date, or, (ii) with respect to the warranties and
representations in Sections 4.1.7, 4.1.19, and 4.1.21, the date that is the
later of two years after the Closing Date or the expiration of the applicable
statute of limitations period.
(j) Effective Date; Exclusive Remedy. The obligations of the parties
under Article VIII shall only become effective from and after the Closing. Upon
becoming effective the right to indemnification set forth in this Article VIII
shall be the sole and exclusive remedy of the parties for breach of any
representation, warranty, covenant or agreement set forth in or made pursuant to
this Agreement, and each party covenants and agrees not to seek or assert any
other remedy following the Closing, except that any party may seek such
injunctive relief and equitable remedies as may be available. Halter and
Acquisition acknowledge that, except as expressly set forth in this Agreement,
there are no other representations or warranties of the Shareholders or
43
<PAGE>
Utility in connection with the transactions contemplated hereby, all such other
representations and warranties being expressly disclaimed.
8.2. Survival of Representations and Warranties; etc. All representations
and warranties of the parties contained in this Agreement shall survive the
Merger. All covenants and agreements contained in this Agreement shall be deemed
to the extent expressly provided herein to be conditions to the Merger and shall
not survive the Merger; provided that the contractual rights to indemnification
provided for in Section 8.1 of this Agreement shall survive the Merger and be
continuing; and provided, further, that the agreements contained in Article 3
and in this Article 8, and the agreements contained in the other Transaction
Agreements, shall survive the Merger and be continuing.
8.3. Expenses. Utility and the Shareholders, on the one hand, and
Halter and Acquisition, on the other hand, shall bear their respective expenses,
costs and fees (including attorneys' and auditors' fees) in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby shall be consummated.
8.4. Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.5. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram:
(i) if to Utility or the Shareholders, at:
Utility Steel Fabrication Inc.
60042 Cabiran Road
Slidell, LA 70460
Telecopy: (504) 649-0376
Attention: Edgar F. Pender
44
<PAGE>
with copies to:
Sessions & Fishman, L.L.P.
201 St. Charles Avenue
Thirty-Fifth Floor
New Orleans, LA 70170-3500
Telecopy: (504) 582-1555
Attention: Peter S. Title
(ii) if to Halter or Acquisition, at:
Halter Marine Group, Inc.
13085 Seaway Road
Gulfport, MS 39503
Telecopy: (601) 897-4803
Attn: John Dane, III
45
<PAGE>
with copies to:
Halter Marine Group, Inc.
13085 Seaway Road
Gulfport, MS 39503
Telecopy: (601) 897-4803
Attn: Maureen O'Connor Sullivan
and:
McGlinchey Stafford
A Professional Limited Liability Company
2777 Stemmons Freeway, Suite 925
Dallas, TX 75207
Telecopy: (214) 860-9700
Attn: Lawrence B. Mandala
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery, on the day after
such delivery, (x) if by certified or registered mail, on the fifth business day
after the mailing thereof, (y) if by next-day or overnight mail or delivery, on
the day delivered, (z) if by telecopy or telegram, on the next day following the
day on which such telecopy or telegram was sent, provided that a copy is also
sent by certified or registered mail.
8.6. Miscellaneous.
8.6.1. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.6.2. Entire Agreement. This Agreement (including the Schedules
hereto), the other Transaction Agreements (when executed and delivered) and the
representations, warranties, agreements and covenants contained herein and
therein constitute the entire agreement and supersede all prior agreements,
understandings, representations, warranties, covenants and discussions, both
written and oral, between the parties with respect to the subject matter hereof,
including without limitation that certain letter of intent dated September 15,
1997, between the parties hereto.
8.6.3. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
46
<PAGE>
8.6.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana (regardless of the laws
that might otherwise govern under applicable principles of conflicts of law).
8.6.5. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
8.6.6. Assignment. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
parties hereto; provided that Halter may assign this Agreement to any subsidiary
of Halter.
8.6.7. No Third Party Beneficiaries. Except as provided in Section 8.1
with respect to indemnification hereunder, nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.
8.6.8. Amendment; Waiver, etc. (a) No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy or
breach of any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of Utility and the
Shareholders shall not be affected or deemed waived by reason of any
investigation made by or on behalf of Halter (including but not limited to by
any of its advisors, consultants or representatives) or by reason of the fact
that Halter or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate.
8.6.9. Confidentiality. Except as otherwise provided in this Agreement,
each party to this Agreement will, and will cause its affiliates (and their
respective accountants, counsel, consultants, employees and agents to whom they
disclose such information) to, keep confidential and not disclose all
information obtained by and in the possession of such party and its affiliates
or to which such party and its affiliates are given access that in any way
relates to the business or operations of the other party hereto. The provisions
of this Section 8.6.9 shall not apply to the
47
<PAGE>
disclosure by any party hereto or their respective affiliates of any
information, documents or materials (i) which are, or become, publicly
available, other than by reason of a breach of this Section 8.6.9 by the
disclosing party or any affiliate of the disclosing party, (ii) received from a
third party not bound by any confidentiality agreement with the other party
hereto, (iii) required by applicable Law to be disclosed by such party, or (iv)
necessary to establish such party's rights under either this Agreement or any
other Transaction Agreement; provided that, in the case of clauses (iii) and
(iv), the person intending to make disclosure of confidential information will
promptly notify the party to whom it is obligated to keep such information
confidential and, to the extent practicable, provide such party a reasonable
opportunity to prevent public disclosure of such information. If the
transactions contemplated by this Agreement are not consummated, such
information will be immediately returned to the applicable party (to the extent
such information consists of originals or copies of records, documents, reports
or other written materials).
8.6.10. Nature of Obligations. Except with respect to the provisions of
Section 8.1(c) all obligations of Halter in this Agreement are guaranteed
jointly and severally by Acquisition, and vice-versa. Where both Halter and
Acquisition are bound with respect to the same obligation, the obligation shall
be joint and several.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
HALTER MARINE GROUP, INC.
By: /s/ Maureen O. Sullivan
-----------------------------------
Name: Maureen O. Sullivan
Title: Senior Vice President
UTILITY ACQUISITION, INC.
By: /s/ Maureen O. Sullivan
-----------------------------------
Name: Maureen O. Sullivan
Title: Vice-President/Secretary
48
<PAGE>
UTILITY STEEL FABRICATION INC.
By: /s/ Edgar F. Pender
-----------------------------------
Edgar F. Pender
President
/s/ Edgar F. Pender
-----------------------------------
EDGAR F. PENDER
/s/ Melanie Pender
-----------------------------------
MELANIE PENDER
/s/ Amie Pender Guttuso
-----------------------------------
AMIE PENDER GUTTUSO
/s/ Stacie Pender Hollingsworth
-----------------------------------
STACIE PENDER HOLLINGSWORTH
/s/ John Coerver
-----------------------------------
JOHN COERVER, AS TRUSTEE FOR THE
MAURICE S. PENDER TRUST
49
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
UTILITY STEEL FABRICATION INC.
I hereby certify that I am the duly elected Secretary of Utility Steel
Fabrication Inc., a Louisiana corporation, and that the foregoing Agreement was,
in the manner required by law, duly approved by unanimous written consent of the
shareholders of Utility Steel Fabrication Inc. pursuant to Louisiana Revised
Statutes (S) 12:76.
This Certificate is dated November 3, 1997.
________________________________________
____________________, Secretary
50
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
UTILITY ACQUISITION, INC.
I hereby certify that I am the duly elected Secretary of Utility
Acquisition, Inc., a Louisiana corporation, and that the foregoing Agreement
was, in the manner required by law, duly approved by written consent of the sole
shareholder of Utility Acquisition, Inc. pursuant to Louisiana Revised Statutes
(S) 12:76.
This Certificate is dated November 3, 1997.
_____________________________________________
Maureen O. Sullivan, Vice-President/Secretary
51
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
HALTER MARINE GROUP, INC.
I hereby certify that I am the duly elected Secretary of Halter Marine
Group, Inc., a Delaware corporation, and that the foregoing Agreement was not
required to be submitted to the shareholders of Halter Marine Group, Inc.
pursuant to Louisiana Revised Statutes (S) 12:112 or Delaware G.C.L. (S) 252.
This Certificate is dated November 3, 1997.
________________________________________
Maureen O'Connor Sullivan, Secretary
52
<PAGE>
EXECUTION BY CORPORATIONS
Considering the approval of this Agreement by the shareholders of Utility
Steel Fabrication Inc. and Utility Acquisition, Inc., as certified above, this
Agreement is executed by such corporations and by Halter Marine Group, Inc.
acting through their respective presidents or vice presidents, this 3rd day of
November, 1997.
UTILITY STEEL FABRICATION INC.
/s/ Edgar F. Pender
------------------------------------------
Edgar F. Pender
President
UTILITY ACQUISITION, INC.
/s/ Maureen O. Sullivan
------------------------------------------
Maureen O. Sullivan
Vice-President/Secretary
HALTER MARINE GROUP, INC.
/s/ Maureen O. Sullivan
------------------------------------------
Maureen O. Sullivan
Senior Vice President
53
<PAGE>
ACKNOWLEDGMENT AS TO
UTILITY STEEL FABRICATION INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared Edgar F.
Pender who, being duly sworn, declared and acknowledged before me, Notary, in
the presence of the undersigned competent witnesses, that he is the President of
Utility Steel Fabrication Inc. and that in such capacity he was duly authorized
to and did execute the foregoing Agreement on behalf of such corporation, for
the purposes therein expressed and as his and such corporation's free and
voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
54
<PAGE>
ACKNOWLEDGMENT AS TO
UTILITY ACQUISITION, INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared Maureen
O. Sullivan who, being duly sworn, declared and acknowledged before me, Notary,
in the presence of the undersigned competent witnesses, that she is the Vice-
President/Secretary of Utility Acquisition, Inc. and that in such capacity she
was duly authorized to and did execute the foregoing Agreement on behalf of such
Corporation, for the purposes therein expressed and as her and such
Corporation's free and voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
55
<PAGE>
ACKNOWLEDGMENT AS TO
HALTER MARINE GROUP, INC.
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and appeared Maureen
O. Sullivan who, being duly sworn, declared and acknowledged before me, Notary,
in the presence of the undersigned competent witnesses, that she is the Senior
Vice President of Halter Marine Group, Inc. and that in such capacity she was
duly authorized to and did execute the foregoing Agreement on behalf of such
corporation, for the purposes therein expressed and as his and such
corporation's free and voluntary act and deed.
___________________________________
Appearer
WITNESSES:
___________________________________
___________________________________
SWORN TO AND SUBSCRIBED BEFORE ME
this 3rd day of November, 1997.
___________________________________
NOTARY PUBLIC
56
<PAGE>
Exhibit A
List of Shareholders of Utility Steel Fabrication Inc.
------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder Shares
- ----------- ------
<S> <C>
Edgar F. Pender and Melanie Pender 3,155
Amie Pender Guttuso 489
Stacie Pender Hollingsworth 489
John Coerver, as Trustee of the Maurice S. Pender Trust 489
</TABLE>
<PAGE>
Exhibit B
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), dated as of November 3, 1997 (the
"Closing Date"), by and among Utility Acquisition, Inc., a Louisiana corporation
("Buyer"), each of the shareholders ("Shareholders") of Utility Steel
Fabrication Inc., a Louisiana corporation (the "Company") and Hibernia National
Bank, a national banking association, as escrow agent ("Escrow Agent").
Capitalized terms used in this Agreement without definition have the respective
meanings given to them in that certain Agreement and Plan of Merger (the "Merger
Agreement") dated October 31, 1997, by and among Halter Marine Group, Inc., a
Delaware corporation, Buyer, the Company and the Shareholders.
RECITALS
--------
WHEREAS, Buyer and each of the Shareholders are parties to the Merger
--------
Agreement;
WHEREAS, Buyer and each of the Shareholders have agreed to execute this
Agreement pursuant to Section 3.1(b) of the Merger Agreement; and
WHEREAS, the Shareholders have designated Edgar F. Pender to act as their
representative ("Shareholders' Representative") in connection with this Escrow
Agreement.
AGREEMENT
---------
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 hereby agree as follows:
1. Establishment of Escrow.
a. Deposit. Buyer is depositing with Escrow Agent an
amount equal to Three Hundred Fifty Thousand Dollars
($350,000) in immediately available funds (as increased by
any earnings thereon and as reduced by any amounts withdrawn
under Section 5(j), the "Escrow Fund").
b. Escrow Agent. Escrow Agent hereby agrees to act as
escrow agent and to hold, safeguard and disburse the Escrow
Fund pursuant to the terms and conditions of this Agreement.
<PAGE>
2. INVESTMENT OF FUNDS. Except as Buyer and Shareholders' Representative
may from time to time jointly instruct Escrow Agent in writing, the Escrow Fund
shall be invested from time to time, in United States Treasury Bills having a
remaining maturity of 90 days or less or repurchase obligations secured by such
United States Treasury Bills, or deposited and maintained in a money market
deposit account with Escrow Agent, until disbursement of the entire Escrow Fund.
Escrow Agent is authorized to liquidate, in accordance with its customary
procedures, any portion of the Escrow Fund consisting of investments to provide
for payments required to be made under this Agreement. All interest, dividends,
and profits (less any expense incurred as a result of such investments) shall
inure to the benefit of the Shareholders and shall be added to and shall
increase the Escrow Fund.
3. CLAIMS.
a. Notice of Claim. From time to time on or before the date that is
two years following the Closing Date, Buyer may give notice (a "Claim
Notice") to Shareholders' Representative and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "Claim") it
may have pursuant to Section 8.1 of the Merger Agreement. Buyer may deliver
more than one Claim Notice with respect to any underlying set of facts. If
Shareholders' Representative gives notice to Buyer and Escrow Agent
disputing any Claim (a "Counter Notice") within 30 days following receipt
by Escrow Agent of the Claim Notice regarding such Claim, such Claim shall
be resolved as provided in Section 3(b) of this Agreement. If no Counter
Notice is received by Escrow Agent within such 30-day period, then the
dollar amount of damages claimed by Buyer as set forth in its Notice shall
be deemed established for purposes of this Escrow Agreement and the Merger
Agreement and, at the end of such 30-day period, Escrow Agent shall pay to
Buyer the dollar amount demanded in the Claim Notice from (and only to the
extent of) the Escrow Fund. Escrow Agent shall not inquire into or consider
whether a Claim complies with the requirements of the Merger Agreement.
b. Counter Notice. If a Counter Notice is given with respect to a
Claim, Escrow Agent shall make payment with respect thereto only in
accordance with (i) joint written instructions of Buyer and Shareholders'
Representative or (ii) a final non-appealable order of a court of competent
jurisdiction. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to Escrow Agent to the effect
that the order is final and non-appealable. Escrow Agent shall act on such
court order and legal opinion without further question.
4. TERMINATION OF ESCROW. On the day that is two years following the
Closing Date, Escrow Agent shall pay and distribute the then amount of Escrow
Fund to Shareholders allocated as set forth in Schedule A hereto, unless (i) any
Claims are then pending, in which case an amount equal to the aggregate dollar
amount of such Claims (as shown in the Claim Notices for such Claims) shall be
retained by Escrow Agent in the
<PAGE>
Escrow Fund (and the balance paid to Shareholders in such proportions) or (ii)
Buyer has given notice to Shareholders' Representative and Escrow Agent
specifying in reasonable detail the nature of any other Claim it may have
pursuant to Section 8.1 of the Merger Agreement with respect to which it is
unable to specify the amount of Damages, in which case the entire Escrow Fund
shall be retained by Escrow Agent, in either case until it receives joint
written instructions of Buyer and Shareholders' Representative or a final non-
appealable order of a court of competent jurisdiction as contemplated by Section
3(a). Notwithstanding the foregoing, this Agreement shall terminate upon final
disposition by Escrow Agent of the Escrow Fund in accordance with joint written
instructions received by Escrow Agent from Buyer and Shareholders'
Representative terminating this Agreement and directing disposition of the
Escrow Fund.
5. DUTIES OF ESCROW AGENT.
a. Degree of Care. Escrow Agent shall not be under any duty to give
the Escrow Fund held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any
funds held hereunder except as directed in this Agreement. Uninvested funds
held hereunder shall not earn or accrue interest.
b. Liability of Escrow Agent. Escrow Agent shall not be liable,
except for its own gross negligence or willful misconduct and, except with
respect to claims based upon such gross negligence or willful misconduct
that are successfully asserted against Escrow Agent, Buyer and Shareholders
shall jointly and severally indemnify and hold harmless Escrow Agent (and
any successor Escrow Agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with
this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any
cash held by it hereunder in good faith, in accordance with the terms
hereof, including, without limitation, any liability for any delays (not
resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund, or any loss of interest
incident to any such delays.
c. Reliance on Orders and Notices. Escrow Agent shall be entitled to
rely upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it hereunder without being required to determine
the authenticity or the correctness of any fact stated therein or the
propriety or validity of the service thereof. Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine and
may assume that the person purporting to give receipt or advice or make any
statement or execute any document in connection with the provisions hereof
has been duly authorized to do so. Escrow Agent may conclusively presume
that the undersigned representative of any party hereto which is an entity
<PAGE>
other than a natural person has full power and authority to instruct Escrow
Agent on behalf of that party unless written notice to the contrary is
delivered to Escrow Agent.
d. Reliance on Advice of Counsel. Escrow Agent may act pursuant to
the advice of counsel with respect to any matter relating to this Agreement
and shall not be liable for any action taken or omitted by it in good faith
in accordance with such advice.
e. No Direct Interest. Escrow Agent does not have any interest in
the Escrow Fund deposited hereunder but is serving as escrow holder only
and having only possession thereof. Any payments of income from this Escrow
Fund shall be subject to applicable withholding regulations then in force
with respect to United States federal and state taxes. The parties hereto
will provide Escrow Agent with appropriate Internal Revenue Service Forms
W-9 for tax identification number certification, or non-resident alien
certifications. Sections 5(e) and 5(b) shall survive any termination of
this Agreement or the resignation of Escrow Agent.
f. No Representations. Escrow Agent makes no representation as to
the validity, value, genuineness or the collectability of any security or
other document or instrument held by or delivered to it.
g. No Investment Advice. Escrow Agent shall not be called upon to
advise any party as to the wisdom in selling or retaining or taking or
refraining from any action with respect to any securities or other property
deposit ed hereunder.
h. Resignation. Escrow Agent (and any successor Escrow Agent) may,
at any time, resign (i) by giving written notice to Buyer and Shareholders'
Representative (a "Resignation Notice") or (ii) by delivering the Escrow
Fund to any successor Escrow Agent jointly designated, in writing, by the
Buyer and Shareholders' Representative, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any
and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or
(ii) the day which is 30 days after delivery of the Resignation Notice. If
at that time Escrow Agent has not received a designation of a successor
Escrow Agent, Escrow Agent's sole responsibility after that time shall be
to retain and safeguard the Escrow Fund until receipt of a designation of
successor Escrow Agent or a joint written disposition instruction by the
Buyer and Shareholders' Representative or a final non-appealable order of a
court of competent jurisdiction.
i. Dispute of the Parties. In the event of any disagreement between
the other parties hereto resulting in adverse claims or demands being made
in connection
<PAGE>
with the Escrow Fund or in the event that Escrow Agent is in doubt as to
what action it should take hereunder, Escrow Agent may, at its sole
discretion, file a concursus proceeding to resolve said disagreement or
doubt, and (regardless of whether Escrow Agent files a concursus
proceeding) shall be entitled to retain the Escrow Fund until Escrow Agent
shall have received (i) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund or (ii) a
written agreement executed by the other parties hereto directing delivery
of the Escrow Fund, in which event Escrow Agent shall disburse the Escrow
Fund in accordance with such order or agreement. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and non-
appealable. Escrow Agent shall act on such court order and legal opinion
without further question. Escrow Agent shall be indemnified by Buyer and
Shareholders for all cost, including reasonable attorney's fees, in
connection with any concursus proceeding and shall be fully protected in
suspending all or part of its activities under this Escrow Agreement until
a final judgment in any such concursus proceeding is received.
j. Escrow Agent's Compensation. Shareholders shall pay Escrow Agent
annual compensation (as payment in full) for the services to be rendered by
Escrow Agent hereunder in the amount of $2,500 at the time of execution of
this Agreement and $2,500 on each anniversary of the Closing Date
thereafter until this Agreement terminates. Shareholders further agree to
reimburse Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel). Any fees or expenses of Escrow Agent or its counsel that are not
paid as provided for herein may be taken from any property held by Escrow
Agent hereunder.
k. Use of Escrow Agent's Name. No printed or other matter in any
language (including, without limitation, prospectuses, notices, reports and
promotional material) that mentions Escrow Agent's name or the rights,
powers, or duties of Escrow Agent shall be issued by the other parties
hereto or on such parties' behalf unless Escrow Agent shall first have
given its specific written consent thereto.
l. Use of Securities Depositary. The other parties hereto authorize
Escrow Agent, for any securities held hereunder, to use the services of any
United States central securities depositary it reasonably deems
appropriate, including, without limitation, the Depositary Trust Company
and the Federal Reserve Book Entry System.
m. Institution of Legal Process by Escrow Agent. Escrow Agent shall
not be required to institute or defend any action or legal process
involving any matter referred to herein which in any manner affects it or
its duties or liabilities hereunder
<PAGE>
unless or until requested to do so by Buyer or Shareholders' Representative
and then only upon receiving full indemnity in an amount of such character
as it shall require, against any and all claims, liabilities, judgment,
attorney's fees and other expenses of every kind in relation thereto,
except in the case of its own willful misconduct or gross negligence.
n. Payment or Transfer of Monies. Nothing contained herein shall be
deemed to obligate Escrow Agent to pay or transfer any monies hereunder
unless and until such funds are received and collected by Escrow Agent.
6. LIMITED RESPONSIBILITY. This Agreement expressly sets forth all the
duties of Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Agreement against Escrow
Agent. Escrow Agent shall not be bound by the provisions of any agreement among
the Buyer and Shareholders except this Agreement.
7. OWNERSHIP FOR TAX PURPOSES. Shareholders agree that, for purposes of
federal and other taxes based on income, Shareholders shall be treated as the
owners of the Escrow Fund, and that Shareholders will report all income, if any,
that is earned on, or derived from, the Escrow Fund as its income, pro rata
according to their allocable interests in the Escrow Fund, in the taxable year
or years in which such income is properly includible and pay any taxes
attributable thereto.
8. MISCELLANEOUS.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail postage
prepaid, return receipt requested, (ii) served by personal delivery, (iii) made
by facsimile transmission, or (iv) sent by overnight courier service to the
receiving parties as follows:
IF TO SHAREHOLDERS'
REPRESENTATIVE: Edgar F. Pender
Utility Steel Fabrication Inc.
60042 Cabiran Rd.
Slidell, LA 70460
Fax: (504) 649-0376
If to Buyer: 13085 Seaway Road
Gulfport, Mississippi 39503
Fax: (601) 897-4866
Attn: John Dane, III
<PAGE>
If to Escrow Agent: Hibernia National Bank
313 Carondelet Street
Suite 701
New Orleans, Louisiana 70130
Fax: (504) 533-2838
Attn: Robert V. Segari
Any such notice or communication shall be deemed to be given, if sent by
registered or certified mail, on the date sent, if delivered in person, on
the date delivered, if made by facsimile transmission, on the date
transmitted, or, if sent by overnight courier service, on the date sent as
evidenced by the bill of lading. Any party sending a notice or other
communication by facsimile transmission shall also send a hard copy of such
notice or other communication by one of the other means of providing notice
set forth in this Section. Any notice or other communication shall be given
to such other representative or at such other address as a party to this
Agreement may furnish to the other party pursuant to this Section.
b. Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the courts of
the State of Louisiana, Parish of Orleans, or, if it has or can acquire
jurisdiction, in the United States District Court for the Eastern District
of Louisiana, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on
any party anywhere in the world.
c. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of
which, when taken together, will be deemed to constitute one and the same.
d. Section Headings. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.
e. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any
such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents referred
to in this Agreement can be discharged by one party, in whole or in part,
by
<PAGE>
a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c)
no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
f. Exclusive Agreement and Modification. This Agreement supersedes
all prior agreements among the parties with respect to its subject matter
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be
modified, cancelled, abrogated or rescinded except by a written agreement
executed by the Buyer, the Shareholders' Representative and the Escrow
Agent. Escrow Agent shall not be bound or in any way affected by any notice
of any modification, cancellation, abrogation or rescission of this
Agreement, or any facts or circumstances affecting or alleged to affect the
rights or liabilities of any other person, unless it has received written
notice satisfactory to it, signed by Buyer and the Shareholders'
Representative.
g. Governing Law. This Agreement shall be governed by the laws of
the State of Louisiana without regard to conflicts of law principles.
h. Binding Effect. The rights created by this Agreement shall inure
to the benefit of, and the obligations related thereby shall be binding
upon, the heirs, successors and assigns of the parties hereto.
i. Representations and Warranties. Each of Buyer and each of the
Shareholders represents and warrants to Escrow Agent, and Escrow Agent
represents and warrants to each of Buyer and each of the Shareholders that
(i) party is duly authorized to enter into this Agreement and the
transactions contemplated hereunder; (ii) this Agreement is a valid and
binding obligation of such party and, to such party's knowledge, does not
conflict with, violate or cause a default under any provisions of federal
or state law or any order, decree, license, permit or the like or any other
agreement or instrument to which such party is a party or by which such
party is bound; and (iii) the officer or officers signing this Agreement on
behalf of such party is duly authorized to do so.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Agreement as of this 3rd day of November, 1997.
BUYER:
UTILITY ACQUISITION, INC.
By:_________________________________
Title:______________________________
SHAREHOLDERS:
____________________________________
EDGAR F. PENDER
____________________________________
MELANIE PENDER
____________________________________
AMIE PENDER GUTTUSO
____________________________________
STACIE PENDER HOLLINGSWORTH
____________________________________
JOHN COERVER, AS TRUSTEE OF THE
MAURICE S. PENDER TRUST
<PAGE>
ESCROW AGENT:
HIBERNIA NATIONAL BANK
By: _______________________________
Title: Vice President and Trust Officer
<PAGE>
Schedule A
ALLOCATION OF ESCROW FUND
<TABLE>
<CAPTION>
==================================================
Percentage of
Shareholder Escrow Fund
--------------------------------------------------
<S> <C>
Edgar F. Pender and 68.26%
Melanie Pender
--------------------------------------------------
Amie Pender Guttuso 10.58%
--------------------------------------------------
Stacie Pender Hollingsworth 10.58%
--------------------------------------------------
John Coerver, as Trustee for the 10.58%
Maurice S. Pender Trust
--------------------------------------------------
--------------------------------------------------
Total Escrow Fund 100%
=====
==================================================
</TABLE>
<PAGE>
EXHIBIT C
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of November 3, 1997, between Halter Marine
Group, Inc., a Delaware corporation (the "Company") and each of the parties
whose signatures appear on the execution pages hereof (each of such parties, a
"Purchaser" and, collectively, the "Purchasers").
WITNESSETH:
----------
WHEREAS, the Company, Utility Acquisition, Inc., a Louisiana corporation
which is a wholly-owned third-tier subsidiary of the Company ("Acquisition
Sub"), Utility Steel Fabrication Inc., a Louisiana corporation ("Utility
Steel"), and the Shareholders of Utility Steel have entered into an Agreement
and Plan of Merger, dated as of October 31, 1997 (the "Merger Agreement"; terms
defined in the Merger Agreement and otherwise not defined herein are used herein
as therein defined), pursuant to which the Company has agreed to acquire Utility
Steel, and Utility Steel has agreed to be merged with and into Acquisition Sub
(the "Merger"); and
WHEREAS, pursuant to Section 3.2(a) of the Merger Agreement, the Company
has agreed, in partial payment of the consideration to be paid in the Merger, to
issue and deliver to the Purchasers an aggregate of 221,250 shares (each a
"Halter Share" and collectively, the "Halter Shares") of the Company's Common
Stock, par value $.01 per share ("Common Stock);
NOW THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
1. PURCHASE OF COMMON STOCK. Subject to all of the terms and conditions
of this Agreement, the Purchasers hereby subscribe for and purchase, and the
Company hereby issues and sells to the Purchasers, the Halter Shares in the
amounts set forth on the execution pages hereof. Concurrent with the execution
of this Agreement, Halter has delivered to the Purchasers one or more stock
certificates representing the number of Halter Shares set forth beneath the
names of such Purchasers on the signature pages hereof, registered in the name
of such Purchasers and bearing the legend set forth in Section 2(b).
2. PURCHASERS' REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Purchaser
represents and warrants to the Company as follows:
<PAGE>
(a) Investment Intention. Such Purchaser is acquiring the Halter
Shares solely for his or her own account for investment and not with a view
to or for sale in connection with any distribution thereof in any
transaction or series of transactions that would be in violation of the
securities laws of the United States or any state thereof. Each Purchaser
agrees that he or she will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Halter Shares
(or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of any Halter Shares), except in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
of the Securities and Exchange Commission (the "Commission") thereunder,
and in compliance with applicable state securities or "blue sky" laws. Each
Purchaser further understands, acknowledges and agrees that none of the
Halter Shares may be transferred, sold, pledged, hypothecate or otherwise
disposed of unless (i) (A) such disposition is pursuant to an effective
registration statement under the Securities Act, (B) such disposition
(including but not limited to any transfer, sale, pledge, hypothecation or
other disposition of the Halter Shares by each Purchaser to any of his or
her affiliates, or by any such affiliate to another such affiliate) is
exempt from the provisions of Section 5 of the Securities Act and each
Purchaser shall have delivered to the Company an opinion of counsel, which
opinion of counsel shall be reasonably satisfactory to the Company, to the
effect that such disposition is exempt from the provisions of Section 5 of
the Securities Act or (C) a no-action letter from the Commission,
reasonably satisfactory to the Company, shall have been obtained with
respect to such disposition and (ii) such disposition is pursuant to
registration under any applicable state securities laws or an exemption
therefrom.
(b) Legend. Each Purchaser acknowledges that the certificate or
certificates representing the Halter Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH DISPOSITION
IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (B) SUCH
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5
OF SUCH ACT AND THE HOLDER HEREOF SHALL HAVE DELIVERED
TO THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, TO THAT EFFECT, OR (C) A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE
BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii)
SUCH DISPOSITION IS PURSUANT TO
<PAGE>
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE PROVISIONS OF A SUBSCRIPTION AGREEMENT, DATED AS
OF NOVEMBER 3, 1997, AND NEITHER THIS CERTIFICATE NOR
THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR
OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO
THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS SET
FORTH IN SECTION 5.2.5 OF THE AGREEMENT AND PLAN OF
MERGER, DATED AS OF OCTOBER 31, 1997, BETWEEN THE
COMPANY, UTILITY ACQUISITION, INC., UTILITY STEEL
FABRICATION INC. AND THE SHAREHOLDERS NAMED THEREIN,
WHICH PROVIDES FOR CERTAIN REGISTRATION RIGHTS WITH
RESPECT TO THE SHARES REPRESENTED BY THIS CERTIFICATE."
(c) Securities Law Matters. Each Purchaser acknowledges receipt of
advice from the Company that (i) the Halter Shares have not been registered
under the Securities Act or any state securities of "blue sky" laws, (ii)
the Halter Shares must be held indefinitely and such Purchaser must
continue to bear the economic risk of the investment in the Halter Shares
unless the Halter Shares are subsequently registered under the Securities
Act and such state laws or an exemption from registration is available,
(iii) when and if the Halter Shares may be disposed of without registration
in reliance upon Rule 144 promulgated under the Securities Act ("Rule
144"), such disposition can be made only in accordance with the terms and
conditions of such Rule and (iv) a notation shall be made in the
appropriate records of the company indicating that the Halter Shares are
subject to restrictions on transfer set forth in this Agreement and
appropriate stop-transfer restrictions will be issued to the Company's
stock transfer agent with respect to the Halter Shares. Prior to any
transfer or attempted transfer of Halter Shares other than the sale of such
shares pursuant to registration under the Securities Act, the Purchasers
agree to give notice to the Company of their intention to effect such
transfer. The notice shall describe the manner and circumstances of the
proposed transfer in detail and shall contain an undertaking to furnish
such other information as may be required to enable Halter's counsel to
render the opinions referred to below, and shall give the identity and
address of the Shareholder's counsel. The Company shall promptly submit a
copy of the notice to its counsel, and the following provisions shall
apply:
(i) If, in the opinion of the Company's counsel or counsel to the
Purchasers which is reasonably satisfactory to the Company, the proposed
transfer may be effected without registration of the Halter Shares under
the Securities Act, the Company shall, as
<PAGE>
promptly as practicable, so notify the Shareholders who will then be
entitled to transfer the Halter Shares in accordance with the terms of the
notice delivered by the Purchasers to the Company.
(ii) If, in the opinion of the Company's counsel or counsel to
the Purchasers which is reasonably satisfactory to the Company, the
proposed transfer of the Halter Shares may not be effected without
registration under the Securities Act, the Company shall, as promptly as
practicable, so notify the Purchasers, and the Purchasers shall not be
allowed to effect the proposed transfer except pursuant to an offering
registered under the Securities Act.
(iii) The foregoing restrictions on transfer of Halter Shares
shall terminate as to any Purchaser as soon as the provisions of Rule
144(k) under the Securities Act (or any successor rule) become available to
such Purchaser and the Company shall at such time, upon request of any
Purchaser, cause Halter's transfer agent to reissue certificates to such
Purchaser not containing any legend relating to resales of unregistered
securities.
(d) Compliance with Rule 144. If any of its Halter Shares are to be
disposed of in accordance with Rule 144, such Purchaser shall transmit to
the Company an executed copy of Form 144 (if required by Rule 144) no later
than the time such form is required to be transmitted to the Commission for
filing and such other documentation as the Company may reasonably require
to assure compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The financial situation of such Purchaser
is such that it can afford to bear the economic risk of holding the Halter
Shares for an indefinite period, and such Purchaser can afford to suffer
the complete loss of his or her investment in the Halter Shares.
(f) Access to Information. (i) Such Purchaser has participated in the
preparation and negotiation of the Merger Agreement and has carefully
reviewed the public filings made by the Company and its subsidiaries and
the materials furnished to it in connection with the transaction
contemplated thereby and hereby, (ii) such Purchaser has been granted the
opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the
Halter Shares and (iii) the knowledge and experience of such Purchaser in
financial and business matters in such that he or she is capable of
evaluating the merits and risks of his or her investment in the Halter
Shares.
(g) Registration Covenant. Such Purchaser acknowledges and agrees
that he or she shall be entitled to the rights and subject to the
obligations set forth under Section 5.2.5 of the Merger Agreement with
respect to the registration covenant provided for therein.
<PAGE>
3. Representations and Warranties of the Company. The Company
represents and warrants to each Purchaser that (a) the Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Louisiana, (b) this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and legally binding obligation of the Company enforceable against the
Company in accordance with its terms, and (c) the Halter Shares have been
duly authorized and validly issued and are fully paid and non-assessable.
The Company acknowledges and agrees that each Purchaser is entitled to the
rights and subject to the obligations set forth under Section 5.2.5 of the
Merger Agreement with respect to the registration covenant provided for
therein.
4. Miscellaneous.
(a) Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
(b) Entire Agreement. This Agreement, the Merger Agreement and the
other Transaction Agreements (when executed and delivered) constitute the
entire agreement and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject
matter hereof.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same instrument.
(d) Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect
of rendering the provision in question inoperative or unenforceable in any
other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any
extent whatsoever.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana (regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law).
(f) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors
and permitted assigns.
(g) No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto
and their respective heirs, successors and permitted assigns.
<PAGE>
(h) Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of
the party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature,
or as a waiver of any of such provisions, rights or privileges hereunder.
The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at
law or in equity.
(i) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or a Purchaser without the prior written consent
of the other party.
IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Purchasers have duly executed this Agreement as of the date first above
written.
HALTER MARINE GROUP, INC.
By:_______________________________
Name:__________________________
Title:_________________________
_______________________________
EDGAR F. PENDER AND MELANIE
PENDER
151,026 Halter Shares
_______________________________
AMIE PENDER GUTTUSO
23,408 Halter Shares
<PAGE>
_______________________________
STACIE PENDER HOLLINGSWORTH
23,408 Halter Shares
_______________________________
JOHN COERVER, AS TRUSTEE OF
THE MAURICE S. PENDER TRUST
23,408 Halter Shares
<PAGE>
EXHIBIT D
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on November 3,
1997, (the "Effective Date") by and among Edgar F. Pender (the "Employee") and
Utility Acquisition, Inc., a Louisiana corporation ("Acquisition"). Capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
that certain Agreement and Plan of Merger, dated as of October 31, 1997 (the
"Merger Agreement"), by and among Acquisition, Employee, Utility Steel
Fabrication Inc., a Louisiana corporation (the "Company"), and Halter Marine
Group, Inc., a Delaware corporation ("Halter"). This Employment Agreement is
being executed and delivered in accordance with Section 6.2.4 of the Merger
Agreement.
RECITALS
WHEREAS, Acquisition, Employee, Company and Halter have entered into the
Merger Agreement whereby (i) all of the issued and outstanding common stock, no
par value of the Company will be converted into the right to receive the number
of shares of Halter Common Stock and the cash consideration as set forth in the
Merger Agreement and (ii) the Company will be merged with and into Acquisition
(the "Merger");
WHEREAS, the Company owns, designs, manufactures, sells and distributes
cranes, topping equipment and other equipment used by the marine, offshore and
oil field drilling industries (the "Business") within the parishes of Orleans,
St. Tammany, St. Bernard, St. Charles, Assumption, Pointe Coupee, West
Feliciana, East Baton Rouge, West Baton Rouge, St. Martin, Lafourche,
Terrebonne, Vermillion, Jefferson Davis, Calcasieu and Iberville in the state of
Louisiana (the "Territory"); and
WHEREAS, Acquisition and Employee have agreed to enter into an agreement
whereby Employee will be employed by Acquisition as more fully set forth herein
for the time period set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Term. Subject to the provisions for termination as provided herein,
the term of this Agreement shall be three (3) years commencing on the Effective
Date (the "Term").
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2. Employment. During the Term, Employee shall serve as the President
and chief operating officer of the operations of Acquisition as the successor in
the Merger to the Company (and its wholly owned subsidiary, J&B Company, Inc.
("J&B")). Acquisition hereby employs Employee to devote his personal services
to the affairs of Acquisition and J&B (collectively, the "Acquired Companies"),
and the Employee hereby accepts such employment pursuant to the terms and
conditions herein set forth. During the Term, Employee shall well and
faithfully render and perform such other services as may be assigned to him by
or under the authority of Acquisition's Board of Directors. Employee will
devote such time and efforts to the business and affairs of the Acquired
Companies as shall be necessary to perform such services and any other services
assigned to him by the Board of Directors and shall be at all times, when so
engaged, subject to the direction and control of the Board of Directors.
Employee shall render such services to the best of his ability and shall use his
best efforts to promote the interest of the Acquired Companies.
3. Compensation.
a. Base Salary. As compensation for the services rendered by the
Employee, Acquisition shall pay the Employee during the Term a base salary
(the "Base Salary") at the rate of Two Hundred Fifty Thousand and no/100
($250,000) per year less such amounts as are required to be withheld by
applicable law and regulations. Base Salary shall be paid twice each
calendar month, or at more frequent intervals as determined by Acquisition
in its sole discretion.
b. Profit Bonus.
(i) As additional compensation, Employee shall earn an annual
bonus (the "Profit Bonus") for any Bonus Fiscal Year equal to the
aggregate of (1) six point two five (6.25%) percent times the Combined
Pre-Tax Profits of the Acquired Companies greater than $1,000,000 and
less than or equal to $3,000,000 and (2) three (3%) percent times the
Combined Pre-Tax Profits of the Acquired Companies in excess of
$3,000,000.
(ii) The Profit Bonus shall be payable on or before the day
that is sixty days following the end of each Bonus Fiscal Year. In any
Bonus Fiscal Year in which Employee does not provide services for the
entire Bonus Fiscal Year, Employee's Bonus shall be calculated on a
pro rata basis determined by calculating the Bonus for the entire
Bonus Fiscal Year and multiplying by a ratio the numerator of which is
the number of full calendar months Employee provided services during
the Bonus Fiscal Year pursuant to this Agreement and the denominator
of which is twelve.
(iii) As used herein, the phrase "Combined Pre-Tax Profits of
the Acquired Companies" shall mean for any Bonus Fiscal Year the net
income of Acquisition and J&B determined on a consolidated basis in
accordance with generally accepted
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accounting principles. Employee acknowledges that Acquisition may
merge itself and/or J&B into one or more direct or indirect
subsidiaries of Halter. If Acquisition's and/or J&B's operations are
merged, combined or commingled with the operations of any other direct
or indirect subsidiary of Halter, the phrase "Combined Pre-Tax Profits
of the Acquired Companies" shall mean for any Bonus Fiscal Year the
net income arising from the utilization of or attributable to the
assets of Acquisition and/or J&B as shown on the accounting records of
Acquisition, J&B or any direct or indirect subsidiary of Halter as
determined by Halter in good faith.
(iv) As used herein, the phrase "Bonus Fiscal Year" shall mean
any full fiscal year or any shortened period ending on the last day of
Acquisition's fiscal year end. Employee acknowledges that Acquisition
intends to change the fiscal year end of the Acquired Companies. If
any Bonus Fiscal Year is a period of less than twelve months as a
result of the change of such fiscal year end, then the ranges for the
Combined Pre-Tax Profits of the Acquired Companies set forth in
Sections 3(b)(i)(1) and 3(b)(ii)(2) in calculating the Profit Bonus
shall be reduced by a ratio the numerator of which is the number of
months in any such shortened Bonus Fiscal Year and the denominator of
which is number twelve.
4. Benefits. Employee shall be allowed to participate in any benefits
package offered to all employees of Acquisition pursuant to its terms.
5. Termination.
a. Termination upon Death. If the Employee dies during the Term,
this Employment Agreement shall terminate, except that the Employee's legal
representatives shall be entitled to receive any earned but unpaid
compensation.
b. Termination upon Disability. If, during the Term, the Employee
becomes physically or mentally disabled, whether totally or partially, so
that the Employee is unable substantially to perform his services hereunder
for (i) a period of three (3) consecutive months, or (ii) shorter periods
aggregating three (3) months during any six (6) month period, Acquisition
may at any time after the last day of the three (3) consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of three (3) months, by written notice to the Employee, terminate
the Term of the Employee's employment hereunder. Nothing in this Section
5(b) shall be deemed to extend the Term.
c. Termination for Cause. If the Employee (i) materially neglects
his duties hereunder after fifteen (15) days written notice and opportunity
to cure, (ii) is convicted of any crime or offense (other than a minor
traffic violation or a similar offense), (iii) fails or refuses to comply
materially with the reasonable oral or written policies or directives of
Acquisition (or its authorized representatives), after fifteen (15) days
written notice and opportunity to cure, (iv) is guilty of misconduct in
connection with the performance of his
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duties hereunder or (v) materially breaches affirmative or negative
covenants or undertakings hereunder after fifteen (15) days written notice
and opportunity to cure, Acquisition may at any time by written notice (the
date such notice is given pursuant to this Agreement being the "Notice
Date") to the Employee, terminate the Term of the Employee's employment
hereunder and the Employee shall have no right to receive any compensation
or benefit hereunder on and after the Notice Date.
d. Effect of Termination. Upon termination of Employee's employment
for any reason all obligations of Acquisition for Base Salary, Profit
Bonus, and benefits (if any) shall thereupon cease, except for the pro-
rated Base Salary and Profit Bonus payable to the date of termination.
6. Inventions and Intellectual Property.
a. Inventions. All ideas, inventions, and other developments or
improvements conceived or reduced to practice by Employee, alone or with
others, during the term of this Agreement, whether or not during working
hours, that are within the scope of the Business or that relate to or
result from any of the Employer's work or projects or the services provided
by Employee to Acquisition pursuant to this Agreement, shall be the
exclusive property of Acquisition. Employee agrees to assist Acquisition,
at its expense, to obtain patents on any such patentable ideas, inventions,
and other developments, and agrees to execute all documents necessary to
obtain such patents in the name of Acquisition.
b. Intellectual Property. All right, title, and interest of every
kind and nature, whether now known or unknown, in and to any intellectual
property, including without limitation, any inventions, patents,
trademarks, service marks, copyrights, films, scripts, ideas, creations,
and properties invented, created, written, developed, furnished, produced,
or disclosed by Employee (collectively, the "Intellectual Property"), in
the course of rendering services to Acquisition under and pursuant to this
Agreement, shall be and remain the sole and exclusive property of
Acquisition for any and all purposes and uses, and Employee shall have no
right, title, or interest of any kind or nature in or to such property, or
in or to any results and/or proceeds from such property. To the extent that
such Intellectual Property does not fit within the definition of work for
hire under the Copyright Act of 1976 or any such successor law, all rights
to the Intellectual Property, including without limitation all copyright
and trademark rights, are by this Agreement assigned to Acquisition. All
Intellectual Property may, in Acquisition's sole discretion, be registered
in the U.S. Copyright Office or in the U.S. Patent and Trademark Office, as
appropriate, in the name of Acquisition. Employee shall assist Acquisition
in obtaining, defending and enforcing its rights in or registrations of the
Intellectual Property by providing evidence, testimony, and documents
concerning Employee's or Acquisition's use of the Intellectual Property.
7. Non-Competition/Confidentiality.
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a. Non-Competition. The Employee acknowledges and agrees that
Acquisition is engaged in the Business throughout the Territory. The
Employee agrees that it will refrain from carrying on or engaging in a
business similar to that of, or which competes with, the Business within
the Territory for a period commencing with the day (such day being the
("Termination Day") that is the earlier of the expiration of this Agreement
or the termination of this Agreement pursuant to Section 5 and ending on
the day that is the second (2nd) anniversary of the Termination Day (the
"Non-Compete Period"). In furtherance of the foregoing, the Employee agrees
that, during the Non-Compete Period, it will not, directly or indirectly,
either; (i) have an ownership interest in (whether as proprietor, partner,
equity holder or otherwise), (ii) be an employee, officer, director or
general or managing partner of, or hold a similar position in, (iii) act as
agent, broker or distributor for or adviser or consultant to, or (iv) in
any way promote, market or otherwise assist any person, firm, corporation,
or business entity which is engaged or which they reasonably know is
undertaking to become engaged, in the Business in the Territory. The
ownership as a passive investment of stock of a Publicly-Held Company
engaged in the Business within the Territory shall not be a violation of
this Section 7(a). As used herein the term "Publicly-Held Company" shall
mean any corporation, limited liability company, partnership, or other
similar entity which has any class of stock, certificate of interest,
certificate of participation, investment contract, or any other security
representing an equity or ownership interest (regardless of the class or
rights of any such equity or ownership interest) (i) registered with the
Securities Exchange Commission pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Act") or exempt from registration pursuant to
Section 12(g)(2)(B) or 12(g)(2)(G) of the Act, (ii) listed on any national
securities exchange or regional securities exchange, or (iii) otherwise
required to be registered pursuant to Section 12(g) of the Act.
b. No Solicitation. Employee hereby agrees that, during the Non-
Compete Period, it will not (i) directly or indirectly recruit, solicit or
otherwise induce or influence any employee or agent of Acquisition or
Halter to discontinue such employment, agency or other relationship with
Acquisition or Halter or (ii) employ or seek to employ or cause any person
or entity engaged in the Business (a "Competitor") to employ or seek to
employ, any person who is at such time employed by the Company or was
employed by the Company at any time within six (6) months prior to the date
the Employee or the Competitor employs or seeks to employ such person.
c. Confidentiality.
(i) Acknowledgment. Employee acknowledges that Employee has
occupied or will occupy a position of trust and confidence with
Acquisition and/or Halter and has or may become familiar with the
following, any and all of which constitute confidential information of
Acquisition, Halter, or any affiliates thereof, (collectively, the
"Confidential Information"): (A) any and all trade secrets concerning
the business and affairs of Acquisition or Halter, data, know-how,
inventions and ideas, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, compositions,
improvements, devices, know-how,
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inventions, discoveries, concepts, ideas, designs, methods and
information) of Acquisition or Halter and any other information,
however documented, of Acquisition or Halter that is a trade secret;
(B) any and all information concerning the business and affairs of
Acquisition or Halter (which includes historical financial statements,
financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key
personnel, personnel training and techniques and materials) however
documented; and (C) any and all notes, analysis, compilations,
studies, summaries, and other material prepared by or for Employee
containing or based, in whole or in part, on any information included
in the foregoing.
(ii) Confidential Information. Employee acknowledges and agrees
that all Confidential Information known or obtained by Employee,
whether before or after the date hereof, is the property of
Acquisition and/or Halter. Therefore, Employee agrees that Employee
will not, at any time, disclose to any unauthorized persons,
corporations, partnerships, limited liability companies or other
entities or use for his own account or for the benefit of any third
party any Confidential Information, whether Employee has such
information in Employee's memory or embodied in writing or other
physical form, without Acquisition's or Halter's written consent,
unless and to the extent that the Confidential Information is or
becomes generally known to and available for use by the public other
than as a result of Employee's fault or the fault of any other person
or entity bound by a duty of confidentiality to Acquisition, Halter or
any affiliate thereof. Employee agrees to deliver to Acquisition or
Halter , at Acquisition's or Halter's request, all documents,
memoranda, notes, plans, records, reports, and other documentation,
models, components, devices, or computer software, whether embodied in
a disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of Acquisition or
Halter and any other Confidential Information that Employee may then
possess or have under Employee's control.
8. Miscellaneous.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail
postage prepaid, return receipt requested, (ii) served by personal
delivery, (iii) made by facsimile transmission, or (iv) sent by overnight
courier service to the receiving parties as follows:
If to Acquisition: 13085 Seaway Road
Gulfport, MS 39503
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Fax: (601) 897-4803
Attn: John Dane, III
With a copy to: McGlinchey Stafford
2777 Stemmons Freeway
Suite 925
Dallas, Texas 75207
Fax: (214) 860-9700
Attn: Lawrence B. Mandala
If to Employee: Edgar F. Pender
Utility Steel Fabrication Inc.
60042 Cabiran Rd.
Slidell, LA 70460
Fax: (504) 649-0376
With a copy to: Sessions & Fishman, L.L.P.
201 St. Charles Avenue
Thirty-Fifth Floor
New Orleans, LA 70170-3500
Fax: (504) 582-1555
Attn: Peter S. Title
Any such notice or communication shall be deemed to be given, (i) if sent
by registered or certified mail, on the date sent; (ii) if delivered in
person, on the date delivered; (iii) if made by facsimile transmission, on
the date transmitted; or, (iv) if sent by overnight courier service, on the
date sent as evidenced by the bill of lading. Any party sending a notice or
other communication by facsimile transmission shall also send a hard copy
of such notice or other communication by one of the other means of
providing notice set forth in this Section 8(a). Any notice or other
communication shall be given to such other representative or at such other
address as a party to this Agreement may furnish to the other party
pursuant to this Section 8(a).
b. No Waiver. The failure of any party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement,
or the waiver or any breach of any of the terms and conditions of this
Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred.
c. Binding Effect. This Agreement shall be binding on and inure to
the benefit of the respective heirs, successors and assigns of the parties.
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d. Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Louisiana.
e. Entire Agreement. This Agreement along with additional documents
referred to herein shall constitute the entire agreement among the parties
and any prior understanding or representation of any kind preceding the
date of this Agreement shall not be binding upon any party.
f. Interpretation. Notwithstanding any provision in this Agreement
to the contrary, the parties agree that this Agreement shall be interpreted
without giving effect to any principle of construction that would otherwise
require this Agreement to be construed against a party that drafted it
solely because such party drafted this Agreement.
g. Modification. Any modification of this Agreement or additional
obligation assumed by any party in connection with this Agreement shall be
binding only if placed in writing and signed by the parties.
h. Paragraph Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not be
used to explain, modify or simplify, or aid in the interpretation of the
provisions of this Agreement.
i. Severability. If a court of competent jurisdiction finds any
provision of the Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
j. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is considered an original and shall be binding
upon the party executing the same, but all of such counterparts shall
constitute the same agreement.
k. Assignment of Rights. The rights and obligations of the Employee
under this Agreement are personal rights and obligations of the Employee
and may not be assigned or transferred to any other person, firm,
corporation, or other entity without the prior, express, and written
consent of Acquisition. Acquisition may assign or transfer its rights under
this Agreement (a) to Halter or any entity of which Halter, directly or
indirectly, owns more than fifty (50%) percent of the voting interest or
(b) to any third party in Acquisition's sole discretion provided that (i)
Acquisition shall remain solidarily liable with such assignee or transferee
for the payment of the Base Salary and Profit Bonus and (ii) any such
assignee or transferee expressly assumes the obligations of Acquisition
provided under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
EMPLOYEE UTILITY ACQUISITION, INC.
____________________________ ___________________________________
Edgar F. Pender Maureen O. Sullivan
Vice-President/Secretary
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EXHIBIT E
FORMS OF NON-COMPETITION AGREEMENTS
THIS NON-COMPETITION AGREEMENT (the "Agreement"), entered into this 3rd day
of November, 1997 (the "Effective Date"), is by and between Utility Acquisition,
Inc., a Louisiana corporation ("Acquisition"), and Edgar F. Pender (the
"Shareholder"). Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in that certain Agreement and Plan of Merger (the
"Agreement"), dated as of October 31, 1997, by and among Halter Marine Group,
Inc., a Delaware corporation ("Halter"), Acquisition, Utility Steel Fabrication
Inc., a Louisiana corporation (the "Company") and the Shareholders of the
Company.
RECITALS
WHEREAS, Halter, Acquisition, the Company and the Shareholders of the
Company have entered into the Merger Agreement, pursuant to which the Company
will be merged with and into Acquisition;
WHEREAS, Shareholder is the principal shareholder of the Company and as
such, pursuant to the Merger Agreement, is selling to Acquisition all of his
interest in, including the goodwill of, the Company, for the consideration set
forth in the Merger Agreement;
WHEREAS, the Company owns, designs, manufactures, fabricates, sells and
distributes cranes, topping equipment and other equipment used by the marine and
offshore and oilfield drilling industries (the "Business") within the parishes
of Orleans, St. Tammany, St. Bernard, St. Charles, Assumption, Pointe Coupee,
West Feliciana, East Baton Rouge, West Baton Rouge, St. Martin, Lafourche,
Terrebonne, Vermillion, Jefferson Davis, Calcasieu and Iberville in the State of
Louisiana (the "Territory"); and
WHEREAS, Section 6.2.4 of the Merger Agreement requires that a
noncompetition agreement be executed and delivered by the Shareholder as a
condition to the consummation of the transactions contemplated by the Merger
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Consideration. In conjunction with the Merger as set forth in the
Merger Agreement, Acquisition has executed the Merger Agreement and will pay to
the Shareholder the consideration set forth therein. The Shareholder
acknowledges and agrees that the execution of the Merger
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Agreement and the payment of the consideration set forth therein constitutes
good and valuable consideration for the covenants and agreements of the
Shareholder in this Agreement.
2. Noncompetition and Nonsolicitation.
a. Noncompetition. The Shareholder acknowledges and agrees that the
Company is engaged in the Business throughout the Territory. The
Shareholder agrees that he will refrain from carrying on or engaging in a
business similar to that of, or which competes with, the Business within
the Territory for a period commencing with the Closing and ending on the
day that is the second (2nd) anniversary of the Closing (the "Non-Compete
Period"). In furtherance of the foregoing, the Shareholder agrees that,
during the Non-Compete Period, it will not, directly or indirectly, either:
(i) have an ownership interest in (whether as proprietor, partner, equity
holder or otherwise), (ii) be an employee, officer, director or general or
managing partner of, or hold a similar position in, (iii) act as agent,
broker or distributor for or adviser or consultant to, or (iv) in any way
promote, market or otherwise assist any person, firm, corporation, or
business entity which is engaged, or which they reasonably know is
undertaking to become engaged, in the Business within the Territory. The
ownership as a passive investment by the Shareholder of less than three
percent (3%) of the outstanding shares of the capital stock of a Publicly-
Held Company engaged in the Business within the Territory shall not be a
violation of this Section 3. As used herein the term "Publicly-Held
Company" shall mean any corporation, limited liability company,
partnership, or other similar entity which has any class of stock,
certificate of interest, certificate of participation, investment contract,
or any other security representing an equity or ownership interest
(regardless of the class or rights of any such equity or ownership
interest) (i) registered with the Securities Exchange Commission pursuant
to Section 12 of the Securities Exchange Act of 1934 (the "Act") or exempt
from registration pursuant to Sections 12(g)(2)(B) or 12(g)(2)(G) of the
Act, (ii) listed on any national securities exchange or regional securities
exchange, or (iii) otherwise required to be registered pursuant to Section
12(g) of the Act.
b. No Solicitation. The Shareholder hereby agrees that, during the
Non-Compete Period, he will not, other than in the good faith performance
of his duties as an officer of the Company, (i) directly or indirectly
recruit, solicit or otherwise induce or influence any employee or agent of
the Company, to discontinue such employment, agency or other relationship
with the Company or (ii) employ or seek to employ or cause any person or
entity engaged in the Business (a "Competitor") to employ or seek to
employ, any person who is at such time employed by the Company or was
employed by the Company at any time within six (6) months prior to the date
the Shareholder or the Competitor employs or seeks to employ such person.
3. Confidentiality.
a. Acknowledgment. The Shareholder acknowledges that:
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(i) the Shareholder has occupied a position of trust and
confidence with the Company prior to the date hereof and has become
familiar with the following, any and all of which constitute
confidential information of the Company and Acquisition (collectively,
the "Confidential Information"): (A) any and all trade secrets
concerning the business and affairs of the Company, data, know-how,
compositions, inventions and ideas, past, current and planned research
and development, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, compositions,
improvements, devices, know-how, inventions, discoveries, concepts,
ideas, designs, methods and information, of the Company and any other
information, however documented, of the Company that is a trade
secret; (B) any and all information concerning the business and
affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and
materials) however documented; and (C) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or
for the Company containing or based, in whole or in part, on any
information included in the foregoing;
(ii) the provisions of this Agreement are reasonable and
necessary to protect and preserve the Company's business; and
(iii) the Company and Acquisition would be irreparably damaged
if the Shareholder were to breach this Agreement.
b. Confidential Information. The Shareholder acknowledges and
agrees that all Confidential Information known or obtained by the
Shareholder, whether before or after the date hereof, is the property of
the Company. Therefore, the Shareholder agrees that the Shareholder will
not, at any time, disclose to any unauthorized persons, corporations,
partnerships, limited liability companies or other entities or use for the
Shareholder's own account or for the benefit of any third party any
Confidential Information, whether the Shareholder has such information in
the Seller's memory or embodied in writing or other physical form, without
Acquisition's written consent, unless and to the extent that the
Confidential Information is or becomes generally known to and available for
use by the public other than as a result of the Shareholder's fault or the
fault of any other person or entity bound by a duty of confidentiality to
the Company or any affiliate thereof. Upon Acquisition's request, the
Shareholder agrees to deliver to Acquisition , all documents, memoranda,
notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the
businesses, operations, or affairs of the Company and
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any other Confidential Information that the Shareholder may then possess or
have under the Shareholder's control.
4. Notice to Others. The Shareholder hereby agrees that Acquisition or
any of its affiliates may disclose the non-competition provisions of this
Agreement to any person or entity.
5. Remedies. The Shareholder acknowledges that any violation of this
Agreement may cause irreparable harm to the Company and that damages are not an
adequate remedy. The Shareholder, therefore, agrees that the Company shall be
entitled to injunctive relief, including temporary, preliminary and permanent
injunctions, by an appropriate court in the appropriate jurisdiction, enjoining,
prohibiting and restraining the Shareholder from the continuance of any such
violation, in addition to any monetary damages which might occur by reason of
the violation of this Agreement. The remedies provided in this Agreement are
cumulative and shall not exclude any other remedies to which any party to this
Agreement may be entitled under this Agreement or other applicable law, and the
exercise of a remedy shall not be deemed an election excluding any other remedy
(any such claim by the other party to this Agreement being hereby waived).
6. Miscellaneous.
a. Notice. Any notice or other communication provided for hereunder
will be in writing and may be (i) sent by registered or certified mail
postage prepaid, return receipt requested, (ii) served by personal
delivery, (iii) made by facsimile transmission, or (iv) sent by overnight
courier service to the receiving parties as follows:
If to the Company: 13085 Seaway Road
Gulfport, Mississippi 39503
Fax: (601) 897-4866
Attn: John Dane, III
With a copy to: McGlinchey Stafford
2777 Stemmons Freeway
Suite 925
Dallas Texas 75201
Fax: (214) 860-9754
Attn: Lawrence B. Mandala
If to Shareholder: Edgar F. Pender
Utility Steel Fabrication Inc.
60042 Cabiran Rd.
Slidell, LA 70460
Fax: (504) 649-0376
With a copy to: Sessions & Fishman, L.L.P.
<PAGE>
201 St. Charles Avenue
Thirty-Fifth Floor
New Orleans, LA 70170-3500
Fax: (504) 582-1555
Attn: Peter S. Title
Any such notice or communication shall be deemed to be given, if sent by
registered or certified mail, on the date sent; if delivered in person, on
the date delivered; if made by facsimile transmission, on the date
transmitted; or, if sent by overnight courier service, on the date sent as
evidenced by the bill of lading. Any party sending a notice or other
communication by facsimile transmission shall also send a hard copy of such
notice or other communication by one of the other means of providing notice
set forth in this Section 6(a). Any notice or other communication shall be
given to such other representative or at such other address as a party to
this Agreement may furnish to the other party pursuant to this Section
6(a).
b. No Waiver. The failure of any party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement,
or the waiver or any breach of any of the terms and conditions of this
Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred.
c. Binding Effect. This Agreement shall bind and inure to the
benefit of the respective heirs, successors and assigns of the parties.
d. Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Louisiana.
e. Entire Agreement. This Agreement and the documents referred to
herein shall constitute the entire agreement among the parties and any
prior understanding or representation of any kind preceding the date of
this Agreement shall not be binding upon any party.
f. Interpretation. Notwithstanding any provision in this Agreement
to the contrary, the parties agree that this Agreement shall be interpreted
without giving effect to any principle of construction that would otherwise
require this Agreement to be construed against a party that drafted it
solely because such party drafted this Agreement.
g. Modification. Any modification of this Agreement or additional
obligation assumed by any party in connection with this Agreement shall be
binding only if placed in writing and signed by the parties.
<PAGE>
h. Paragraph Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not be
used to explain, modify or simplify, or aid in the interpretation of the
provisions of this Agreement.
i. Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
j. Scope. It is the express intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies of the State of Louisiana. It is
understood and agreed by the parties hereto that should any portion,
provision or clause of this Agreement be deemed too broad to permit
enforcement to its full extent, then it shall be enforced to the maximum
extent permitted by law, and each of the Company and the Shareholder hereby
consents and agrees that such scope may be judicially modified accordingly
in any proceeding brought to enforce such restriction.
k. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is considered an original and shall be binding
upon the party executing the same, but all of such counterparts shall
constitute the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
UTILITY ACQUISITION, INC.
__________________________________
Maureen O. Sullivan
Vice-President/Secretary
__________________________________
EDGAR F. PENDER
91
<PAGE>
EXHIBIT F
Form of Shareholder's Release
THIS SHAREHOLDERS' RELEASE (the "Release"), is entered into this 3rd of
November, 1997, by and between Utility Acquisition, Inc., a Louisiana
corporation ("Buyer"), and the undersigned shareholders (the "Shareholders") of
Utility Steel Fabrication Inc., a Louisiana corporation (the "Company"). This
Release is being executed and delivered in accordance with Section 6.2.4 of the
Agreement and Plan of Merger, dated as of October 31, 1997 (the "Agreement") by
and among Halter Marine Group, Inc., a Delaware corporation (the "Parent"),
Buyer, the Company and the Shareholders. Capitalized terms used in this Release
without definition have the respective meanings given to them in the Agreement.
RECITAL
WHEREAS, the undersigned, being all of the Shareholders of the Company,
acknowledge that the execution and delivery of this Release is a condition to
Buyer's obligation to effect the merger of the Company with and into Buyer
pursuant to the Agreement and that Buyer is relying on this Release in
consummating such transaction.
AGREEMENT
Each Shareholder, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
in order to induce Parent and Buyer to cause the merger of the Company into
Buyer pursuant to the Agreement, hereby agrees as follows:
1. Each Shareholder, on behalf of himself, and his heirs, successors,
representatives, and agents (together with the Shareholder, the "Releasing
Party"), hereby releases and forever discharges Buyer, Parent, the Company and
each of their past, present and future officers, directors, representatives,
affiliates, stockholders, controlling persons, subsidiaries, parents,
successors, insurers, and assigns (other than the Releasing Party)
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, that the Releasing Party
now has, has ever had or may hereafter have against the respective Releasees on
account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing Date, including, but not limited
to, any rights to payment, indemnification, or reimbursement from the Company,
whether pursuant to the articles of incorporation or bylaws of the Company,
contract or otherwise and whether or not relating to claims for payment,
indemnification or reimbursement pending on, or asserted after, the Closing
Date; provided, however, that nothing contained herein shall operate to release
any obligations of Buyer or Parent arising under the Agreement.
92
<PAGE>
2. Each Shareholder hereby irrevocably agrees not to assert, directly or
indirectly, any claim or demand, or to commence, institute or cause to be
commenced or instituted, any proceeding of any kind against any Releasee, based
upon any matter purported to be released hereby.
3. Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Shareholder shall indemnify and hold harmless
each Releasee from and against any and all loss, liability, claim, damage
(including, without limitation, incidental and consequential damages) or expense
(including, without limitation, costs of investigation and defense and
reasonable attorney's fees) whether or not involving third party claims, arising
directly or indirectly from or in connection with (i) the assertion by or on
behalf of the Releasing Party of any claim or other matter purported to be
released pursuant to this Release and (ii) the assertion by any third party of
any claim or demand against any Releasee which claim or demand arises directly
or indirectly from, or in connection with, any assertion by or on behalf of the
Releasing Party against such third party of any claims or other matters
purported to be released pursuant to this Release.
4. If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
5. This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Louisiana without
regard to its principles of conflicts of law.
6. All words used in this Release will be construed to be of such gender
or number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Release as of the date first above written.
___________________________________
EDGAR F. PENDER
___________________________________
MELANIE PENDER
___________________________________
AMIE PENDER GUTTUSO
93
<PAGE>
___________________________________
STACIE PENDER HOLLINGSWORTH
___________________________________
JOHN COERVER, AS TRUSTEE OF THE
MAURICE S. PENDER TRUST
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<PAGE>
EXHIBIT 4.4
================================================================================
HALTER MARINE GROUP, INC.
AND
THE BANK OF NEW YORK,
RIGHTS AGENT
_________________
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 23, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <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.................................... 11
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 of Rights Certificates.................................. 14
Section 9. Reservation and Availability of Capital Stock........................ 14
Section 10. Preferred Stock Record Date.......................................... 16
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.............................. 27
Section 15. Rights of Action..................................................... 27
Section 16. Agreement of Rights Holders.......................................... 28
Section 17. Rights Certificate Holder Not Deemed a Stockholder................... 29
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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<TABLE>
<S> <C>
Section 21. Change of Rights Agent............................................... 32
Section 22. Issuance of New Rights Certificates.................................. 33
Section 23. Redemption and Termination........................................... 33
Section 24. Exchange............................................................. 34
Section 25. Notice of Certain Events............................................. 36
Section 26. Notices.............................................................. 36
Section 27. Supplements and Amendments........................................... 37
Section 28. Successors........................................................... 38
Section 29. Determinations and Actions by the Board of Directors, etc............ 38
Section 30. Benefits of this Agreement........................................... 38
Section 31. Severability......................................................... 38
Section 32. Governing Law........................................................ 39
Section 33. Counterparts......................................................... 39
Section 34. Descriptive Headings................................................. 39
</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>
RIGHTS AGREEMENT
This Rights Agreement, dated as of September 23, 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 23, 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
23, 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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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>
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>
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>
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>
"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
23, 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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"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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"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 upon ten days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such co-Rights Agent.
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). The Company shall give the
Rights Agent prior written notice of the Distribution Date. As soon as
practicable after the Distribution Date, the Rights Agent will send at the
Company's expense, 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
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fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(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 23, 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
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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. The Company
shall instruct the Rights Agent in writing of the Rights which should be so
legended and shall supply the Rights Agent with such legended Right
Certificates.
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. The Right Certificates shall be in a machine printable format and in a
form reasonably satisfactory to the Rights Agent. 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.
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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 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 designated 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 designated 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
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<PAGE>
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 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 designated 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 $47, 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
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<PAGE>
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 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
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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 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 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.
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.
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(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 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
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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 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
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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-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
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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 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
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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 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
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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 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
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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 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, with
simultaneous written notice to the Rights Agent, 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.
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(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
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,
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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.
(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
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with Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall not be
deemed to have knowledge of such adjustment unless and until it shall have
received such certificate.
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
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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.
(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
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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
(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). Notwithstanding anything in this Agreement to
the contrary, the prior written consent of the Rights Agent must be obtained in
connection with any supplemental agreement which alters the rights or duties of
the Rights Agent.
(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.
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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 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
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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 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 designated 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.
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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
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 such compensation
as shall be agreed in writing between the Company and the Rights Agent 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 and all loss, liability, damage, claim 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, without limitation,
the costs and expenses (including counsel fees 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, to be genuine and to be signed and executed by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
The provisions of this Section 18 shall survive the expiration of the
Rights and 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
all or substantially all of 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
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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.
(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
only the duties and obligations expressly imposed by this Agreement, and no
implied duties or obligations shall be read into this Agreement against the
Rights Agent, 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 of its selection
(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, provided, however, that in no event
shall the Rights Agent be responsible for consequential, special or punitive
damages.
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(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
Rights Certificates after the Rights Agent's 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, nor shall the
Rights Agent be responsible for the legality of the terms hereof in its capacity
as an administrative agent.
(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 or for
any delay in acting while waiting for those instructions..
(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
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act, omission, default, neglect or misconduct; provided, however, that
reasonable care was exercised in the selection 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.
(1) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such non-
execution.
(m) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
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
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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, 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
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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 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
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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 with
simultaneous written notice to the Rights Agent, 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 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.
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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 the Rights Agent and
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 the Rights Agent and
each registered holder of a Rights Certificate (or if occurring prior to the
Distribution Date, the registered holders of Common Stock), in accordance 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
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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 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
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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 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
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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 NEW YORK 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.
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: /s/ John Dane III
-----------------------------------------
John Dane III
President and CEO
THE BANK OF NEW YORK, as Rights Agent
By: /s/ John Sivertsen
-----------------------------------------
John Sivertsen
Vice President
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<PAGE>
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 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.
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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
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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>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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,
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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>
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>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER September 23, 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 23, 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 23, 2006 Expiration
at the designated 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
$47 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 23, 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.
B-1
<PAGE>
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 designated 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>
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>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of September 23, 1996
ATTEST: HALTER MARINE GROUP, INC.
________________________ By ________________________________
Secretary Title:
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
By ________________________________
Authorized Signature
B-4
<PAGE>
[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 an "eligible guarantor institution" meeting the
requirements of the Rights Agent, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Rights Agent in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
B-5
<PAGE>
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 an "eligible guarantor institution" meeting the
requirements of the Rights Agent, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Rights Agent in addition to, or in substitution for, STAMP,
all in accordance with 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>
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 taxpayer 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 taxpayer identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, 199__
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Rights Agent, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Rights Agent in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
B-7
<PAGE>
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 an "eligible guarantor institution" meeting the
requirements of the Rights Agent, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Rights Agent in addition to, or in substitution for, STAMP,
all in accordance with 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>
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 23, 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 23, 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 $47 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 23, 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 23, 2006 Expiration, unless earlier
redeemed or exchanged by the Company as described below.
C-1
<PAGE>
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 number of outstanding Rights associated with a share of Common
Stock, or the number of Fractional Shares of 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 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 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 Preferred Stock that are not integral multiples
of a Fractional Share are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Preferred Stock
C-2
<PAGE>
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 of Directors (in certain
circumstances, with the concurrence of the Continuing Directors) in order
C-3
<PAGE>
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>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-39379) and related Prospectus of Halter
Marine Group, Inc. for the registration of 835,484 shares of its common stock
and to the incorporation by reference therein of our report dated May 8, 1997
(except Note 15, as to which the date is May 16, 1997), with respect to the
consolidated financial statements of Halter Marine Group, Inc. included in its
Annual Report (Form 10-K) for the year ended March 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
New Orleans, Louisiana
November 24, 1997
<PAGE>
EXHIBIT 23.2
The Board of Directors
Halter Marine Group, Inc.:
We consent to the reference to our firm under the heading "Experts" and to the
incorporation by reference in Amendment No.1 to the registration statement on
Form S-3 of Halter Marine Group, Inc. of our report dated November 22, 1996,
except as to Note 9, which is as of May 16, 1997, with respect to the
consolidated balance sheets of Texas Drydock, Inc. and subsidiary as of
September 30, 1995 and 1996, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the years in the
period then ended, which report appears in the Form 8-K/A of Halter Marine
Group, Inc. dated October 21, 1997.
/s/ KPMG Peat Marwick LLP
New Orleans, Louisiana
November 24, 1997
