<PAGE>
As filed with the Securities and Exchange Commission on September 27, 1999.
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
FRIEDE GOLDMAN INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Mississippi 72-1362492
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
525 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
(601) 352-1107
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
James A. Lowe, III
General Counsel and Secretary
Friede Goldman International Inc.
525 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
(601) 352-1107
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------
copies to:
<TABLE>
<S> <C>
Thomas P. Mason, Esq. John J. Madden, Esq.
Andrews & Kurth L.L.P. Shearman & Sterling
600 Travis, Suite 4200 599 Lexington Avenue
Houston, Texas 77002 New York, New York 10022
(713) 220-4200 (212) 848-4000
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective and the
effective time of the proposed merger of Halter Marine Group, Inc. ("Halter
Marine") with and into Friede Goldman International Inc. ("Friede Goldman"), as
described in the enclosed joint proxy statement/prospectus.
----------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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(d)
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. [_]
Calculation of Registration Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of offering aggregate
securities to be Amount to price per unit offering price Amount of
registered be registered (2) (3) (3) registration fee (4)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value (1) 18,143,021 $5.75 $183,021,701 $50,881
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes associated rights to purchase shares of the registrant's preferred
stock. The rights are not currently separable from the shares of common
stock, par value $0.01 per share, of registrant and are not currently
exercisable.
(2) Consists of up to 18,143,021 shares of common stock, par value $0.01 per
share, of the registrant issuable upon the conversion, pursuant to the
merger described herein, of up to 31,829,861 shares of common stock, par
value $0.01 per share of Halter Marine Group, Inc. (also referred to as
Halter Marine common stock) outstanding on September 23, 1999.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and Rule 457(c), based on the product of $5.75
(the average of the high and low prices of Halter Marine common stock on
September 23, 1999 on the American Stock Exchange) times 31,829,861 (the
number of shares of Halter Marine common stock outstanding and reserved for
issuance upon the exercise of outstanding options to purchase Halter Marine
common stock on September 23, 1999).
(4) Pursuant to Rule 457(b), the calculated fee of $50,881 shall be offset by
the fee of $40,385 paid in connection with the preliminary proxy statement
of Friede Goldman and Halter Marine filed with the SEC on June 24, 1999.
Accordingly, the balance of the registration fee of $10,496 is filed
herewith.
----------------
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[Friede Goldman Logo] [Halter Marine Logo]
Dear stockholders:
The boards of directors of Friede Goldman International Inc., a Mississippi
corporation, and Halter Marine Group, Inc., a Delaware corporation, have
approved a merger between the two companies to create a world leader in the
design, engineering and manufacturing of offshore rigs, vessels and engineered
products. Pursuant to the merger agreement, Halter Marine will merge with and
into Friede Goldman, with Friede Goldman surviving the merger. The name of the
surviving company will be "Friede Goldman Halter, Inc."
Upon completion of the merger, each outstanding share of Halter Marine
common stock will be converted into the right to receive 0.57 shares of common
stock of Friede Goldman, together with a corresponding number of rights to
purchase shares of Friede Goldman preferred stock pursuant to the Friede
Goldman stockholder rights agreement. Each outstanding share of Friede Goldman
common stock will remain outstanding as a share of Friede Goldman Halter common
stock. Friede Goldman and Halter Marine stockholders will own, respectively,
approximately 58.7% and 41.3% of the common stock of the combined company.
The boards of directors of Friede Goldman and Halter Marine have determined
that the merger is in the best interest of their stockholders, and each board
recommends voting "FOR" approval of the merger agreement and the transactions
contemplated by the merger agreement.
The merger cannot be completed unless the stockholders of both companies
approve the merger agreement. We have each scheduled special meetings for our
stockholders to vote on the merger agreement. YOUR VOTE IS VERY IMPORTANT.
You are cordially invited to attend the special meeting of stockholders of
your respective company. In the material accompanying this letter, you will
find a notice of special meeting of stockholders, the joint proxy
statement/prospectus and a proxy card to allow you to vote your shares. We urge
you to read carefully the joint proxy statement/prospectus which more fully
describes the merger agreement, the merger and the transactions contemplated by
the merger agreement. A copy of the merger agreement is attached as Annex A to
the joint proxy statement/prospectus, and a copy of amendment no. 1 to the
merger agreement is attached as Annex B to the joint proxy
statement/prospectus.
The date, times and places of the special meetings are as follows:
<TABLE>
<S> <C>
For Friede Goldman stockholders: For Halter Marine stockholders:
10:00 a.m. on October 28, 1999 10:00 a.m. on October 28, 1999
The Crowne Plaza Great Southern Club
200 East Amite Street One Hancock Plaza, Harbor View Room
Jackson, Mississippi 39201 Gulfport, Mississippi 39501
Whether or not you plan to attend your company's special meeting, it is
important that you vote. Please complete, sign, date and return the proxy card
in the enclosed postage-paid envelope. If you attend the special meeting, you
may vote in person, if you wish, even if you previously returned your proxy
card.
/s/ J. L. Holloway /s/ John Dane III
J. L. Holloway John Dane III
Chairman of the Board, Chairman of the Board,
President and Chief President and Chief
Executive Officer Executive Officer
Friede Goldman Halter Marine
</TABLE>
September 27, 1999
<PAGE>
FRIEDE GOLDMAN INTERNATIONAL INC.
7th Floor BancorpSouth Building
525 East Capitol Street
Jackson, Mississippi 39201
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1999
To the Stockholders of Friede Goldman International Inc.:
A special meeting of the holders of common stock of Friede Goldman
International Inc., a Mississippi corporation, will be held at 10:00 a.m. local
time, on Thursday, October 28, 1999 at The Crowne Plaza, 200 East Amite Street,
Jackson, Mississippi 39201. At the Friede Goldman special meeting, the holders
of common stock of Friede Goldman will:
1. Consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of June 1, 1999, between Halter Marine Group, Inc.,
a Delaware corporation, and Friede Goldman, as amended by Amendment No. 1,
dated as of September 14, 1999, relating to the merger of Halter Marine into
Friede Goldman, with Friede Goldman surviving the merger;
2. Consider and vote upon a proposal to increase, subject to the completion of
the merger, the number of authorized directors to 11;
3. Consider and vote upon a proposal to amend, subject to the completion of the
merger, the provision of Friede Goldman's charter relating to the
indemnification of the officers and directors of Friede Goldman to make it
as favorable as the indemnification provided to the current officers and
directors of Halter Marine under the Halter Marine charter;
4. Consider and vote upon a proposal to amend, subject to the completion of the
merger, the 1997 equity incentive plan (a) to increase the number of shares
available for grant from 10% to 15% of the total number of shares of common
stock outstanding and (b) to increase the number of options which may be
granted to four of the executive officers of Friede Goldman and Halter
Marine pursuant to the transactions contemplated by the merger agreement;
and
5. Transact any other business that may properly come before the special
meeting or any adjournments of the special meeting.
The board of directors has fixed the close of business on Thursday,
September 23, 1999, as the record date for determining which stockholders are
entitled to notice of, and to vote at, the special meeting or any adjournments
of the special meeting. Complete lists of these stockholders will be available
for examination at the offices of Friede Goldman during normal business hours
by any holder of Friede Goldman's common stock, for any purpose relevant to the
special meeting, for a period of 10 days prior to the special meeting.
The board of directors of Friede Goldman unanimously recommends that you
vote "for" the approval and adoption of the merger agreement, as amended, "for"
the proposed increase in the authorized number of directors, "for" the proposed
amendment to the charter, and "for" the proposed amendment to the 1997 equity
incentive plan. The affirmative vote of the holders of a majority of the
outstanding shares of Friede Goldman common stock is required to approve and
adopt the merger agreement. The affirmative vote of 80% of the outstanding
shares of Friede Goldman common stock is required to approve the proposed
amendment to the charter. The affirmative vote of the holders of a majority of
the shares present or represented by duly executed proxy at the special meeting
and entitled to vote on the proposal is required to approve the proposed
increase in the number of authorized directors and the proposed amendment to
the 1997 equity incentive plan. If you do not send in your proxy or vote at the
special meeting, it will have the same effect as if you voted against the
merger.
<PAGE>
Holders of Friede Goldman common stock, even if they expect to be present at
the special meeting, are requested to sign, vote and date the enclosed proxy
and return it promptly in the enclosed envelope. Any stockholder giving a proxy
has the power to revoke it any time prior to the special meeting. Stockholders
who are present at the special meeting may withdraw their proxies and vote in
person.
By Order of the Board of Directors,
/s/ James A. Lowe, III
James A. Lowe, III
General Counsel and Secretary
September 27, 1999
<PAGE>
HALTER MARINE GROUP, INC.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1999
To the Stockholders of Halter Marine Group, Inc.:
A special meeting of the holders of common stock of Halter Marine Group,
Inc., a Delaware corporation, will be held at 10:00 a.m. local time, on
Thursday, October 28, 1999 at the Great Southern Club, One Hancock Plaza,
Harbor View Room, Gulfport, Mississippi 39501. At the Halter Marine special
meeting, the holders of common stock of Halter Marine will:
1. Consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of June 1, 1999, between Halter Marine and Friede
Goldman International Inc., a Mississippi corporation, as amended by
Amendment No. 1, dated as of September 14, 1999, relating to the merger of
Halter Marine with and into Friede Goldman, with Friede Goldman surviving
the merger. In the merger, each outstanding share of Halter Marine common
stock, par value $.01 per share, will be converted into the right to receive
0.57 shares of common stock, par value $.01 per share, of Friede Goldman,
together with a corresponding number of rights to purchase shares of Friede
Goldman preferred stock pursuant to the Friede Goldman stockholder rights
agreement; and
2. Transact any other business that may properly come before the special
meeting or any adjournments or postponements of the special meeting.
The board of directors has fixed the close of business on Thursday,
September 23, 1999 as the record date for determining which stockholders are
entitled to notice of, and to vote at, the special meeting or any adjournments
of the special meeting. Complete lists of these stockholders will be available
for examination at the offices of Halter Marine during normal business hours by
any holder of Halter Marine common stock, for any purpose relevant to the
special meeting, for a period of 10 days prior to the special meeting.
The board of directors of Halter Marine recommends that you vote "for" the
approval and adoption of the merger agreement, as amended. The affirmative vote
of the holders of a majority of the outstanding shares of Halter Marine common
stock is required to approve and adopt the merger agreement.
If you do not send in your proxy or vote at the special meeting, it will
have the same effect as if you voted against the merger.
Holders of Halter Marine common stock, even if they expect to be present at
the special meeting, are requested to sign, vote and date the enclosed proxy
and return it promptly in the enclosed envelope. Any stockholder giving a proxy
has the power to revoke it any time prior to the special meeting. Stockholders
who are present at the special meeting may withdraw their proxies and vote in
person.
By Order of the Board of Directors,
/s/ Maureen O'Connor Sullivan
Maureen O'Connor Sullivan
Senior Vice President, General Counsel
and Secretary
September 27, 1999
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 1999
[Friede Goldman Logo] [Halter Marine Logo]
PROPOSED MERGER--YOUR VOTE IS IMPORTANT
The boards of directors of Friede Goldman International Inc. and Halter
Marine Group, Inc. have approved an agreement to merge the two companies. This
merger is intended to create a larger, more diversified, financially stronger
and more cost efficient enterprise.
Friede Goldman will be the surviving entity in the merger. Upon completion of
the merger, we will change the name of the surviving entity to "Friede Goldman
Halter, Inc."
Halter Marine stockholders will receive 0.57 shares of Friede Goldman common
stock in exchange for each share of the Halter Marine common stock that they
own. Halter Marine stockholders will own approximately 41.3% of the common
stock of the combined company.
Friede Goldman stockholders will continue to own their existing shares of
Friede Goldman common stock after the merger, which will represent
approximately 58.7% of the common stock of the combined company.
The Friede Goldman common stock trades on the New York Stock Exchange under
the symbol "FGI" and the Halter Marine common stock trades on the American
Stock Exchange under the symbol "HLX." Immediately following the completion of
the merger, we will change our trading symbol to "FGH." The common stock of
Friede Goldman Halter will continue to be listed on the New York Stock
Exchange.
We can only complete the merger if the Friede Goldman stockholders and the
Halter Marine stockholders approve the merger agreement, as amended. In
addition, the Friede Goldman stockholders must also approve:
. a proposal to increase the number of authorized directors to 11;
. an amendment to the Friede Goldman charter to make the provision relating to
the indemnification of the officers and directors of Friede Goldman as
favorable as the indemnification provided to the current officers and
directors of Halter Marine under the Halter Marine charter; and
. an amendment to the Friede Goldman 1997 equity incentive plan (a) to increase
the number of shares available for grant from 10% to 15% of the total number
of shares of common stock outstanding and (b) to increase the number of
options which may be granted to four of the executive officers of Friede
Goldman and Halter Marine in connection with the transactions contemplated by
the merger agreement.
We have scheduled special meetings for the Friede Goldman stockholders and
the Halter Marine stockholders to vote on these matters.
Your Vote Is Very Important. Whether or not you plan to attend your special
meeting, please take the time to vote by completing and mailing the enclosed
proxy card to us.
Each of our boards of directors has determined that the terms of the merger
agreement, as amended, are fair to and in the best interests of our
stockholders and has approved and adopted the merger agreement. Accordingly,
the Friede Goldman board of directors unanimously recommends that Friede
Goldman stockholders vote "for" the approval and adoption of the merger
agreement, as amended, the proposal to increase the number of authorized
directors, the amendment of the Friede Goldman charter and the amendment of the
1997 equity incentive plan. The board of directors of Halter Marine recommends
that Halter Marine stockholders vote "for" the approval and adoption of the
merger agreement, as amended.
J. L. Holloway, the Chairman of the board of directors, Chief Executive
Officer and President of Friede Goldman and the beneficial owner of
approximately 42% of the outstanding shares of Friede Goldman common stock, has
agreed to vote the shares he owns in favor of the merger.
This document provides you with detailed information about the merger. We
encourage you to read this entire document carefully.
See "Risk Factors" beginning on page 14 for a discussion of matters you
should consider before voting on the merger.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the merger, the Friede Goldman common stock to be
issued in the merger or the fairness or the merits of the merger or have
determined whether the information contained in this document is accurate or
adequate. Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated September 27, 1999, and is
first being mailed to Friede Goldman stockholders and Halter Marine
stockholders on or about September 28, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Questions and Answers about the Merger..................................... iv
Summary.................................................................... 1
The Companies............................................................ 1
The Merger............................................................... 1
Board Recommendations to Stockholders.................................... 3
Fairness Opinions of Financial Advisors.................................. 3
Material U.S. Federal Income Tax Consequences............................ 3
Accounting Treatment..................................................... 3
Appraisal Rights......................................................... 3
Voting................................................................... 4
The Merger Agreement..................................................... 5
Other Information........................................................ 6
Selected Historical Financial Data....................................... 7
Friede Goldman.......................................................... 7
Halter Marine........................................................... 9
Summary Unaudited Pro Forma Combined Financial Data...................... 10
Comparative Per Share Data............................................... 12
Comparative Per Share Market Price and Dividend Information.............. 13
Risk Factors............................................................... 14
Risks Relating to the Merger............................................. 14
Risks Inherent in the Business of Friede Goldman Halter.................. 16
Forward-Looking Statements................................................. 25
Business of Friede Goldman Halter Following the Merger..................... 27
Recent Developments........................................................ 28
Contract Dispute......................................................... 28
Halter Marine Audit Committee Investigation.............................. 30
The Merger................................................................. 31
General.................................................................. 31
Background of the Merger................................................. 31
Reasons for the Merger; Recommendation of Each Company's Board of
Directors............................................................... 36
Opinions of Financial Advisors........................................... 39
Accounting Treatment..................................................... 48
Material U.S. Federal Income Tax Consequences............................ 48
Regulatory Matters; Legal Matters........................................ 50
Appraisal Rights......................................................... 50
Federal Securities Laws Consequences; Resale Restrictions................ 53
Interests of Directors and Officers in the Merger.......................... 54
</TABLE>
<TABLE>
<S> <C>
The Merger Agreement....................................................... 60
Amendment No. 1.......................................................... 60
Effective Time of the Merger............................................. 60
Exchange and Cancellation of Halter Marine Stock Options................. 61
Halter Marine Employee Benefits.......................................... 61
Conditions to the Merger................................................. 61
Representations and Warranties of Friede Goldman and Halter Marine....... 63
Conduct of the Business of Friede Goldman and Halter Marine Prior to the
Merger.................................................................. 63
No Solicitation of Acquisition Transactions.............................. 64
Conduct of the Business of the Combined Companies Following the Merger... 65
Board, Committees and Officers of Friede Goldman......................... 66
Termination, Amendment or Waiver......................................... 66
Termination Fee.......................................................... 67
Expenses................................................................. 68
Indemnification and Insurance............................................ 68
Other Acquisition Related Agreements....................................... 69
Stockholder's Agreement.................................................. 69
Voting and Proxy Agreement............................................... 71
Friede Goldman Special Meeting............................................. 72
Time and Place; Purpose.................................................. 72
Record Date; Voting Rights and Proxies................................... 80
Solicitation of Proxies.................................................. 80
Quorum................................................................... 81
Required Vote; Failure to Vote and Broker Non-Votes...................... 81
Halter Marine Special Meeting.............................................. 82
Time and Place; Purpose.................................................. 82
Record Date; Voting Rights and Proxies................................... 82
Solicitation of Proxies.................................................. 82
Quorum................................................................... 83
Required Vote; Failure to Vote and Broker Non-Votes...................... 83
Directors and Officers of Friede Goldman Halter Following the Merger....... 84
Comparison of Stockholder Rights........................................... 87
General.................................................................. 87
Mergers and Other Fundamental Transactions............................... 87
Statutory Anti-Takeover Provisions....................................... 87
Mergers Without Stockholder Approval..................................... 88
Appraisal Rights......................................................... 89
Amendments to Charters................................................... 90
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Preferred Stock Purchase Rights.......................................... 90
Cumulative Voting........................................................ 92
Preemptive Rights........................................................ 92
Special Meetings of Stockholders......................................... 92
Stockholder Action by Written Consent.................................... 92
Stockholder Proposals.................................................... 92
Vacancies; Newly Created Directorships................................... 92
Number and Classification of Board of Directors.......................... 93
Removal of Directors..................................................... 93
Amendment of Bylaws...................................................... 93
Description of Friede Goldman Halter Capital Stock......................... 94
Authorized Capital Stock................................................. 94
Common Stock............................................................. 94
Preferred Stock.......................................................... 94
Transfer Agent and Registrar............................................. 94
Stock Exchange Listing; Delisting and Deregistration of Halter Marine
Common Stock............................................................ 94
Legal Matters.............................................................. 95
Experts.................................................................... 95
Future Stockholder Proposals............................................... 95
Where You Can Find More Information........................................ 96
Index To Financial Statements.............................................. F-1
</TABLE>
List of Annexes
<TABLE>
<C> <C> <S>
Annex A -- Agreement and Plan of Merger
Annex B -- Amendment No. 1 to Agreement and Plan of Merger
Annex C -- Stockholder's Agreement
Annex D -- Voting and Proxy Agreement
Annex E -- Amended and Restated Friede Goldman 1997 Equity Incentive Plan
Annex F -- Amendment No. 1 to Amended and Restated Friede Goldman 1997
Equity Incentive Plan
Annex G -- Opinion of Jefferies & Company, Inc.
Annex H -- Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
Annex I -- Article 13 of the Mississippi Business Corporation Act
</TABLE>
-iii-
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What will I receive in the merger?
A: Halter Marine stockholders will receive 0.57 shares of Friede Goldman common
stock in exchange for each share of Halter Marine common stock that they own.
Friede Goldman stockholders will continue to own their existing shares of
Friede Goldman common stock after the merger. Halter Marine stockholders and
Friede Goldman stockholders will own approximately 41.3% and 58.7% of the
common stock of the combined company, respectively.
Q: How do I vote?
A: After reading this document, please fill out and sign your proxy card. Then
mail your signed proxy card in the enclosed return envelope as soon as possible
so that your shares will be represented at your special meeting. If you sign
and send in your proxy card and do not indicate how you want to vote, your
proxy will be counted as a vote in favor of the proposal(s) submitted at your
special meeting.
Q: What happens if I do not return a proxy card?
A: The failure to return a proxy card for Halter Marine stockholders will have
the same effect as voting against the merger. For Friede Goldman stockholders,
failure to return a proxy card will have the same effect as voting against the
merger and the amendment to the charter but will have no effect on the vote on
the proposed increase in the number of authorized directors or the amendment of
the 1997 equity incentive plan.
Q: May I vote in person?
A: Yes. You may attend your special meeting and vote your shares in person,
even if you sign and mail your proxy card.
Q: May I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote at any time before your proxy card is voted at
the special meeting. You can do this in one of the following three ways:
. you can send a written notice stating that you would like to revoke your
proxy;
. you can complete and submit a new proxy card; or
. you can attend the meeting and vote in person. Your attendance alone will
not, however, revoke your proxy.
If you have instructed a broker to vote your shares, you must follow directions
received from your broker to change those instructions.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should instruct your broker to vote your shares, following the
directions provided by your broker.
Q: When do you expect the merger to be completed?
A: We expect to complete the merger promptly after the special meetings. We are
working toward completing the merger as quickly as possible.
Q: What are the tax considerations of the merger?
A: The merger generally will be tax free to you for federal income tax purposes
(other than with respect to cash you may receive instead of fractional shares).
To review the tax considerations of the transaction in greater detail, see page
48.
Q: Whom should I call with questions?
A: If you have any questions about the merger, please call Friede Goldman
Investor Relations, at (601) 352-1107 or Halter Marine Investor Relations, at
(228) 896-0029. In addition, you may contact our proxy solicitor, Corporate
Investor Communications, Inc. toll-free at (877) 460-9336.
-iv-
<PAGE>
SUMMARY
This summary, together with the preceding questions and answers section,
highlights selected information from this document and may not contain all of
the information that is important to you. To understand the merger fully and
for a more detailed description of the legal terms of the merger, you should
read carefully this entire document and the documents to which we have referred
you. See "Where You Can Find More Information" on page 96. The merger agreement
is included as Annex A to this document, and amendment no. 1 to the merger
agreement is included as Annex B to this document. The merger agreement, as
amended, is the legal document that governs the merger. Unless the context
otherwise requires, references in this joint proxy statement/prospectus to the
merger agreement refer to the merger agreement as amended by amendment no. 1.
We have included page references parenthetically to direct you to a more
complete description of the topics presented in this summary.
The Companies
Friede Goldman International Inc.
525 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
Telephone: (601) 352-1107
Friede Goldman International Inc. is a leading provider of offshore drilling
services. The company provides new construction, repair, retrofit and
conversion services for offshore drilling rigs and floating production, storage
and offloading vessels through four shipyards located in the U.S. and Canada.
Friede Goldman operates Friede & Goldman, Ltd., a leading naval architecture
and marine engineering firm for the offshore drilling market. Friede Goldman
also designs, manufactures and markets equipment for the worldwide offshore
industry through its subsidiary Brissonneau & Lotz Marine.
For the year ended December 31, 1998, Friede Goldman had net income of $35.3
million, or $1.43 per share. Friede Goldman generated earnings before interest,
taxes, depreciation and amortization of $62.2 million for the year ended
December 31, 1998. For the six months ended June 30, 1999, Friede Goldman had
net income of $18.0 million, or $.76 per share, and generated earnings before
interest, taxes, depreciation and amortization of $31.9 million.
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Telephone: (228) 896-0029
Halter Marine is a leading provider of design, new construction, conversion
and repair services for ocean-going vessels, offshore drilling rigs and
production platforms and engineered products servicing the offshore energy,
government and commercial markets. Its vessels segment is also the largest
builder of small- to medium-sized ocean-going vessels in the United States.
Halter Marine maintains multiple domestic production facilities and four
international joint ventures.
For the year ended March 31, 1999, Halter Marine had net income of $13.3
million, or $0.46 per share. Halter Marine generated earnings before interest,
taxes, depreciation and amortization of $44.1 million for the year ended March
31, 1999. For the three months ended June 30, 1999, Halter Marine had net
income of $1.9 million, or $.07 per share, and generated earnings before
interest, taxes, depreciation and amortization of $12.0 million.
The Merger
In the merger, Halter Marine will be merged with and into Friede Goldman
with Friede Goldman as the surviving company in the merger. Upon completion of
the merger, we will change the name of the surviving entity to "Friede Goldman
Halter, Inc."
Reasons for the Merger (See page 36)
Completion of the merger will result in Friede Goldman Halter becoming a
comprehensive offshore energy service provider and should enable it to compete
more effectively on a global scale. We believe that Friede Goldman Halter
should be able
<PAGE>
to achieve various synergies, cost savings and other benefits, such as the
following:
. the ability of the combined company to achieve greater efficiencies from
integrating production capacity;
. the diversification of product markets should reduce dependence of the
combined company on the cyclical offshore energy market;
. the ability to pursue additional opportunities for construction of
deepwater exploration and production equipment through the greater
production capacity and larger workforce of the combined company; and
. the ability to combine design and engineering expertise, as well as
integrating the complementary engineered products operations of both
companies, to achieve a broader range of engineered products for a larger
customer base.
What Friede Goldman Stockholders Will Receive in the Merger
Each outstanding share of Friede Goldman common stock will remain
outstanding as a share of common stock of the combined company. Friede Goldman
stockholders will own approximately 58.7% of the common stock of the combined
company.
What Halter Marine Stockholders Will Receive in the Merger (See page 60)
Halter Marine stockholders will receive 0.57 shares of Friede Goldman common
stock in exchange for each share of Halter Marine common stock that they own.
Halter Marine stockholders will own approximately 41.3% of the common stock of
the combined company. In addition, Halter Marine stockholders will receive cash
in lieu of any fractional shares of Friede Goldman Halter common stock.
The total number of shares of Halter Marine common stock estimated to be
outstanding at the effective time of the merger assumes the full exercise of
Halter Marine stock options having a strike price of $6.00 or less.
Directors and Officers of Friede Goldman Halter Following the Merger (See page
84)
In connection with the merger, Friede Goldman will use its best efforts to
increase the size of its board of directors to 11 members. Additionally, Friede
Goldman will cause the board of directors of Friede Goldman Halter to be
comprised of J. L. Holloway, John Dane III, five persons who were members of
the Friede Goldman board of directors on the date of the merger agreement and
four persons who were members of the Halter Marine board of directors on the
date of the merger agreement, as designated by Friede Goldman and Halter
Marine, respectively.
Friede Goldman has designated the following persons, in addition to J. L.
Holloway, as members of the Friede Goldman Halter board of directors: Jerome L.
Goldman, Alan A. Baker, T. Jay Collins, Raymond E. Mabus and Gary L. Kott.
Halter Marine has designated the following persons, in addition to John Dane
III, as members of the Friede Goldman Halter board of directors: Angus R.
Cooper, II, Barry J. Galt, Burt H. Keenan and Kenneth W. Lewis.
For information on these individuals see "Directors and Officers of Friede
Goldman Halter Following the Merger."
After the merger, the management of Friede Goldman Halter will include the
following executive officers:
<TABLE>
<CAPTION>
Position with
Friede Goldman
Name Current Position Halter
---- ---------------- --------------
<S> <C> <C>
J. L. Holloway Chairman of the Chairman of
Board, Chief the Board and
Executive Chief
Officer and Executive
President of Officer
Friede Goldman
John Dane III Chairman of the Vice Chairman
Board, Chief of the Board,
Executive President and
Officer and Chief
President of Operating
Halter Marine Officer
John F. Alford Executive Vice Executive Vice
President of President
Friede Goldman
Rick S. Rees Executive Vice Executive Vice
President and President and
Chief Financial Chief
Officer of Financial
Halter Marine Officer
</TABLE>
2
<PAGE>
Board Recommendations to Stockholders
(See page 38)
Friede Goldman Stockholders
The Friede Goldman board of directors believes that the merger is in your
best interests and unanimously recommends that you vote "for":
. approval of the merger agreement;
. approval of a proposal to increase the number of authorized directors to
11;
. approval of an amendment to the Friede Goldman charter to make the
provision relating to the indemnification of the officers and directors
of Friede Goldman as favorable as the indemnification provided to the
current officers and directors of Halter Marine under the Halter Marine
charter; and
. approval of an amendment to the Friede Goldman 1997 equity incentive plan
to:
. increase the number of shares available for grant; and
. to increase the number of options which may be granted to some executive
officers of Friede Goldman and Halter Marine pursuant to the transactions
contemplated by the merger agreement.
Halter Marine Stockholders
The Halter Marine board of directors believes that the merger is in your
best interests and recommends that you vote "for" approval of the merger
agreement.
Fairness Opinions of Financial Advisors
(See page 39)
In deciding to approve the merger, we considered opinions from our financial
advisors as to the fairness to you of the revised exchange ratio from a
financial point of view.
Friede Goldman received a written opinion dated September 14, 1999 of its
financial advisor, Jefferies & Company, Inc., to the effect that the revised
exchange ratio is fair from a financial point of view to Friede Goldman
stockholders.
Halter Marine received a written opinion dated September 14, 1999 of its
financial advisor, Donaldson, Lufkin & Jenrette Securities Corporation, to the
effect that the revised exchange ratio is fair from a financial point of view
to Halter Marine stockholders.
The full texts of these opinions describe the bases and assumptions on which
they were rendered and are attached to this joint proxy statement/ prospectus
as Annexes G and H. We encourage you to read these opinions carefully before
voting on the merger.
Material U.S. Federal
Income Tax Consequences
(See page 48)
We have structured the merger so that you will not recognize any gain or
loss for U.S. federal income tax purposes as a result of the merger, except for
taxes payable by each Halter Marine stockholder on the difference, if any,
between cash received for fractional shares and the stockholder's adjusted tax
basis in the stockholder's fractional share interest.
As a condition to the merger, both Friede Goldman and Halter Marine must
receive an opinion from their respective tax counsels that the merger will be
tax free unless these conditions are waived. Neither Friede Goldman nor Halter
Marine intends to waive these conditions.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should seek tax advice
for a full understanding of the tax consequences of the merger to you.
Accounting Treatment
(See page 48)
The merger will be accounted for by the combined company under the
"purchase" method of accounting.
Appraisal Rights
(See page 50)
Under Mississippi law, Friede Goldman stockholders will be entitled to
appraisal rights.
3
<PAGE>
Under Delaware law, Halter Marine stockholders do not have any right to an
appraisal of the value of their shares in connection with the merger.
Risks Associated with the Merger (See pages 14 and 28)
You should be aware of and carefully consider the risks relating to the
merger described under "Risk Factors" and items included under "Recent
Developments." These risks include:
. the possible difficulties in combining two companies that have previously
operated independently prior to the merger; and
. that the exchange ratio at which Halter Marine common stock will be
exchanged for Friede Goldman common stock in the merger is fixed and will
not be adjusted for changes in the stock price of either company before
the merger is completed.
Voting
Time and Location of Special Meetings
Friede Goldman. The Friede Goldman special meeting will be held at 10:00
a.m. on Thursday, October 28, 1999, at The Crowne Plaza, 200 East Amite Street,
Jackson, Mississippi 39201.
Halter Marine. The Halter Marine special meeting will be held at 10:00 a.m.
on Thursday, October 28, 1999, at the Great Southern Club, One Hancock Plaza,
Harbor View Room, Gulfport, Mississippi 39501.
Record Date; Voting Power (See pages 80 and 82)
Friede Goldman. You may vote at the Friede Goldman special meeting if you
owned shares as of the close of business on Thursday, September 23, 1999, the
Friede Goldman record date. You may cast one vote for each share of Friede
Goldman common stock you own.
Halter Marine. You may vote at the Halter Marine special meeting if you
owned shares as of the close of business on Thursday, September 23, 1999, the
Halter Marine record date. You may cast one vote for each share of Halter
Marine common stock you own.
Stockholder Vote Required to Approve the Merger
(See pages 81 and 83)
Friede Goldman. Approval of the merger agreement requires the favorable vote
of a majority of the outstanding shares of Friede Goldman common stock.
Approval of the amendment to the Friede Goldman charter requires the favorable
vote of 80% of the outstanding shares of Friede Goldman common stock.
Your failure to vote will have the effect of a vote against:
. the merger; and
. the proposed amendment to Friede Goldman's charter to make the provision
relating to the indemnification of the officers and directors of Friede
Goldman to make it as favorable as the indemnification currently provided
to officers and directors of Halter Marine under the Halter Marine
charter.
The affirmative vote of the holders of a majority of the shares present or
represented by duly executed proxy at the special meeting and entitled to vote
on the matter is required to approve:
. the proposal to increase the number of authorized directors to 11; and
. the proposed amendment to the Friede Goldman 1997 equity incentive plan.
Halter Marine. Approval of the merger agreement requires the favorable vote
of the holders of a majority of the outstanding shares of Halter Marine common
stock.
Your failure to vote will have the effect of a vote against the merger.
Share Ownership and Voting of Management
Friede Goldman. As of the record date for the Friede Goldman special
meeting, Friede Goldman directors, executive officers and their affiliates
owned approximately 46.3% of the outstanding shares of Friede Goldman common
stock.
4
<PAGE>
Mr. J. L. Holloway, Chairman of the board of directors, President and Chief
Executive Officer of Friede Goldman, is the beneficial owner of 9,919,977
shares representing approximately 42% of the outstanding shares of Friede
Goldman common stock. Mr. Holloway has entered into a stockholder's agreement
and a voting and proxy agreement in which he has agreed (1) to vote the shares
of Friede Goldman common stock owned by him "for" approval of the merger and
the related proposals and (2) to a number of restrictions after the merger on
his ability to purchase, sell, solicit and vote shares of Friede Goldman Halter
common stock.
The other officers and directors of Friede Goldman have also indicated to
Friede Goldman their intention to vote in favor of the merger.
Halter Marine. As of the record date for the Halter Marine special meeting,
Halter Marine directors, executive officers and their affiliates owned
approximately 4.2% of the outstanding shares of Halter Marine common stock. The
directors and executive officers of Halter Marine have indicated to Halter
Marine their intention to vote in favor of the merger.
The Merger Agreement
The merger agreement is attached as Annex A to this document, and amendment
no. 1 to the merger agreement is attached as Annex B to this document. We
encourage you to read the merger agreement, as amended, because it is the legal
document that governs the merger.
Amendment No. 1 to the Merger Agreement (See page 60)
On September 14, 1999, Friede Goldman and Halter Marine entered into
amendment no. 1 to the merger agreement. Pursuant to the amendment, the
exchange ratio was revised to 0.57 shares of Friede Goldman common stock for
each share of Halter Marine common stock. The amendment was entered into as a
result of the uncertainties relating to the contract dispute between Friede
Goldman and Ocean Rig ASA, a Norwegian company. See "Risk Factors--Friede
Goldman Could Suffer Adverse Consequences From Contract Dispute With Ocean Rig"
and "Recent Developments--Contract Dispute."
Unless the context otherwise requires, references in this joint proxy
statement/prospectus to the merger agreement refer to the merger agreement as
amended by amendment no. 1.
Conditions to the Merger (See page 61)
We will complete the merger only if the conditions of the merger agreement
are satisfied or, if permitted, waived. These conditions include:
. the adoption and approval of the merger agreement by the stockholders of
Friede Goldman and Halter Marine;
. the amendment to Friede Goldman's charter to increase the number of
authorized directors to 11;
. the approval for listing on the New York Stock Exchange of the shares of
Friede Goldman common stock to be issued in the merger;
. the absence of any law or court order that prohibits the merger;
. all material consents and approvals being obtained;
. the registration statement on Form S-4 filed by Friede Goldman being
effective;
. both parties having complied with their covenants and agreements under
the merger agreement and their representations and warranties being true
and complete, in both cases in all material respects;
. both parties having received tax opinions from their respective outside
counsels concerning the tax-free nature of the merger, and Friede Goldman
having received a tax opinion from its outside counsel that the merger
will not adversely affect the tax consequences of a prior transaction
between Halter Marine and Trinity Industries, Inc.;
. both parties having received "cold comfort" letters from their respective
accountants; and
. bank financing in an amount of at least $175 million having been arranged
for the
5
<PAGE>
surviving corporation as of the effective time on terms reasonably
acceptable to Friede Goldman and Halter Marine.
The party entitled to the benefit of these conditions may waive the
conditions; provided, however, that after the Halter Marine stockholders have
approved the merger, no waiver or extension of the merger agreement which
reduces or changes the consideration paid to the Halter Marine stockholders is
valid unless it is agreed to in writing by Halter Marine and Friede Goldman and
it complies with law.
Termination of the Merger Agreement (See page 66)
We may jointly agree to terminate the merger agreement at any time, even
after stockholder approval. In addition, either of us can terminate the merger
agreement on our own without completing the merger under various circumstances,
including the following:
. the merger is not completed by March 31, 2000, other than due to a breach
of the merger agreement by the terminating party;
. the stockholders of either Friede Goldman or Halter Marine fail to give
the required approvals;
. a court or other governmental authority permanently prohibits the merger;
. the opinion of the financial advisor to the terminating party is
withdrawn or modified in a material adverse manner; or
. the terminating company determines, under specific circumstances, to
accept a superior offer from a third party, provides the other party with
five business days' prior notice and complies with additional
requirements, including payment of a termination fee.
Termination Fee (See page 67)
If the merger agreement is terminated by either party in specific
circumstances involving a business transaction with a third party, the party
entering into the other transaction will be required to pay the other party to
the merger agreement a termination fee of $6.5 million and reimburse the other
party up to $2 million of the other party's out-of-pocket expenses.
Other Information
Regulatory Approvals (See page 50)
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act)
prohibited us from completing the merger until we provided information and
materials to the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, and the specified waiting
period requirements of the HSR Act had expired or been terminated. Early
termination of the required waiting period under the HSR Act with respect to
the merger was granted on August 13, 1999, permitting the merger to proceed
pursuant to the HSR Act.
Comparative Per Share Market Price Information
(See page 13)
Friede Goldman. On June 1, 1999, the last full trading day before the public
announcement of the proposed merger, Friede Goldman common stock closed at
$16.375 per share. On September 23, 1999, Friede Goldman common stock closed at
$10 11/16 per share.
Halter Marine. On June 1, 1999, the last full trading day before the public
announcement of the proposed merger, Halter Marine common stock closed at
$7.3125 per share. On September 23, 1999, Halter Marine common stock closed at
$5 5/8 per share.
6
<PAGE>
Selected Historical Financial Data
Friede Goldman
The following table sets forth summary historical financial data of Friede
Goldman as of the dates and for the periods indicated. The historical financial
data for each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998
are derived from the audited financial statements of Friede Goldman and its
predecessors. The historical financial data for the six months ended July 5,
1998 and June 30, 1999 are derived from unaudited financial statements of
Friede Goldman. The unaudited financial statements of Friede Goldman for the
six months ended July 5, 1998 and June 30, 1999 reflect, in the opinion of
Friede Goldman's management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of its financial
condition and results of operations for these periods. The following data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the historical financial
statements of Friede Goldman and the related notes thereto, the historical
financial statements of the principal predecessor companies, and the related
notes thereto incorporated by reference in this joint proxy
statement/prospectus. See "Where You Can Find More Information" on page 96.
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended
--------------------------------------------- ------------------
July 5, June 30,
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................. $23,891 $19,865 $21,759 $113,172 $382,913 $157,348 $278,645
Cost of revenue......... 18,063 13,510 15,769 75,236 293,712 117,821 232,630
------- ------- ------- -------- -------- -------- --------
Gross profit........... 5,828 6,355 5,990 37,936 89,201 39,527 46,015
Selling, general and
administrative
expenses............... 2,203 3,862 6,674 12,097 32,700 15,824 17,754
------- ------- ------- -------- -------- -------- --------
Operating Income
(loss)................. 3,625 2,493 (684) 25,839 56,501 23,703 28,261
Net interest income
(expense).............. (346) (197) (448) 673 (201) 636 (1,705)
Gain on asset sales .... 808 1,869 349 3,922 (374) (311) 7
Litigation settlement... -- 750 3,467 611 -- -- --
Other................... 23 6 104 165 38 (232) (53)
------- ------- ------- -------- -------- -------- --------
Income before provision
for income taxes....... 4,110 4,921 2,788 31,210 55,964 23,796 26,510
Provision for income
taxes.................. -- -- -- 7,941 20,678 9,411 8,475
------- ------- ------- -------- -------- -------- --------
Net Income.............. $ 4,110 $ 4,921 $ 2,788 $ 23,269 $ 35,286 $ 14,385 $ 18,035
======= ======= ======= ======== ======== ======== ========
Unaudited Pro Forma
Data:
Net income as reported
above.................. $ 4,110 $ 4,921 $ 2,788 $ 23,269
Pro forma provision for
income taxes (1)....... (1,521) (1,821) (1,032) (3,980)
------- ------- ------- --------
Pro forma net income... $ 2,589 $ 3,100 $ 1,756 $ 19,289
======= ======= ======= ========
Earnings per common
share:
Basic................... $ 0.22 $ 0.27 $ 0.15 $ 1.10 $ 1.46 $ 0.59 $ 0.77
Diluted................. 0.22 0.27 0.15 1.09 1.43 0.58 0.76
Pro Forma earnings per
common share:
Basic................... $ 0.14 $ 0.17 $ 0.10 $ 0.92
Diluted................. 0.14 0.17 0.10 0.91
Weighted average common
shares outstanding:
Basic................... 18,400 18,400 18,400 21,065 24,211 24,471 23,369
Diluted................. 18,400 18,400 18,400 21,297 24,599 24,864 23,670
Statement of Cash Flows
Data:
Cash provided by (used
in) operating
activities............. $ 3,094 $ 269 $ 4,875 $ 52,122 $ 21,088 $ 12,034 $(35,598)
Cash provided by (used
in) investing
activities............. 410 (2,410) (3,866) (26,541) (77,299) (61,724) (5,411)
Cash provided by (used
in) financing
activities............. (3,123) 2,581 (706) 29,947 41,156 29,470 7,513
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended
----------------------------------- ----------------
July 5, June 30,
1994 1995 1996 1997 1998 1998 1999
----- ------ ------ ------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Financial Data:
Depreciation and
amortization............ $ 347 $ 425 $ 696 $ 1,609 $ 5,875 $ 1,852 $ 3,696
Capital expenditures..... 1,150 2,670 2,357 26,595 60,738 45,372 5,507
EBITDA................... 4,054 2,919 1,092 28,464 62,376 25,554 31,915
Working Capital.......... 2,370 2,714 1,104 45,522 5,856 6,736 21,230
Net property, plant and
equipment............... 3,582 4,079 5,546 29,752 139,078 108,940 136,861
Total assets............. 8,584 14,980 27,582 142,555 314,560 294,061 306,940
Long-term debt........... 3,217 3,270 2,853 25,767 45,863 31,204 42,588
Stockholders' equity..... 2,681 5,255 6,219 63,805 85,290 79,120 102,849
</TABLE>
- --------
(1) The pro forma provision for income taxes gives pro forma effect to the
application of federal and state income taxes to Friede Goldman as if it
had been a C corporation for tax purposes for all periods presented. Prior
to June 1997, Friede Goldman and its predecessors operated as S
corporations for federal and state income tax purposes. In June 1997, the
stockholders of Friede Goldman and its predecessors made elections
terminating the S corporation status of Friede Goldman and its
predecessors. As a result, Friede Goldman became subject to corporate level
income taxation following the termination of these elections.
(2) EBITDA represents operating income plus depreciation, amortization and non
cash compensation expense related to the issuance of stock and stock
options to employees. EBITDA is not a measure of cash flow, operating
results or liquidity as determined by generally accepted accounting
principles. Friede Goldman has included information concerning EBITDA as
supplemental disclosure because management believes that EBITDA is commonly
accepted as providing useful information regarding a company's historical
ability to incur and service debt. Management of Friede Goldman believes
that factors which should be considered by stockholders in evaluating
EBITDA include, but are not limited to, trends in EBITDA as compared to
cash flows from operations, debt service requirements, and capital
expenditures. Management of Friede Goldman believes that the trends
depicted by Friede Goldman's historical EBITDA reflect historical
fluctuations in Friede Goldman's business and the recent increase in the
level of Friede Goldman's activities. EBITDA as defined and measured by
Friede Goldman may not be comparable to similarly titled measures of other
companies. Furthermore EBITDA should not be considered in isolation or as
an alternative to, or more meaningful than, net income or cash flows
provided by operations as determined in accordance with generally accepted
accounting principles as an indicator of the profitability or liquidity of
Friede Goldman Halter on a pro forma basis.
8
<PAGE>
Halter Marine
The following table sets forth selected financial data and other operating
information of Halter Marine. The selected financial data in the table are
derived from the consolidated financial statements of Halter Marine. The data
should be read in conjunction with the consolidated financial statements,
related notes, and other financial information incorporated by reference in
this document. See "Where You Can Find More Information" on page 96.
<TABLE>
<CAPTION>
Three Months
Year Ended March 31, Ended
------------------------------------------------ ------------------
June 30, June 30,
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
(5)
Contract revenue
earned................. $250,586 $254,294 $406,797 $670,238 $998,149 $209,775 $192,127
Cost of revenue earned.. 207,398 214,559 355,209 589,579 912,131 184,036 172,002
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 43,188 39,735 51,588 80,659 86,018 25,739 20,125
Selling, general and
administrative
expenses............... 13,471 15,911 21,361 38,613 60,442 13,960 13,340
Amortization of excess
of cost over net assets
acquired............... -- -- -- 2,801 5,845 1,371 1,358
-------- -------- -------- -------- -------- -------- --------
Operating income........ 29,717 23,824 30,227 39,245 19,731 10,408 5,427
Interest expense........ 3,844 3,268 3,232 6,600 8,135 1,688 2,972
Other, net.............. (5) (11) (8) 932 (719) (34) (292)
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes.................. 25,878 20,567 27,003 31,713 12,315 8,754 2,747
Provision for income
taxes.................. 10,170 8,102 10,887 9,197 (1,017) 2,626 824
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 15,708 $ 12,465 $ 16,116 $ 22,516 $ 13,332 $ 6,128 $ 1,923
======== ======== ======== ======== ======== ======== ========
Net income per share,
basic (pro forma for
1996) (1).............. $ 0.46 $ 0.59 $ 0.80 $ 0.46 $ 0.21 $ 0.07
======== ======== ======== ======== ======== ========
Net income per share,
diluted (pro forma for
1996) (1).............. $ 0.46 $ 0.59 $ 0.78 $ 0.46 $ 0.21 $ 0.07
======== ======== ======== ======== ======== ========
Net cash provided
(required) by: (2)
Operating activities.... $ 14,803 $ 23,742 $ 12,488 $ 38,324 $ (3,480) $ 18,272 $(18,123)
Investing activities.... (10,443) (15,687) (14,491) (107,697) (62,863) (30,866) (3,762)
Financing activities.... (4,057) (7,907) 8,410 113,440 19,124 (700) 19,510
Other Data: (2)
EBITDA (3).............. 35,136 30,579 38,134 53,106 44,149 15,930 12,009
Depreciation and
amortization........... 5,414 6,744 7,899 15,217 24,607 5,700 6,500
Capital expenditures
(4).................... 6,337 5,568 14,491 40,988 47,863 30,866 3,762
<CAPTION>
March 31, June 30,
------------------------------------------------ ------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data: (2)
Working capital......... $ 40,855 $ 36,601 $ 88,431 $151,057 $134,914 $133,670 $161,417
Total assets............ 124,271 141,374 209,411 499,601 591,780 523,958 604,264
Long-term debt (5)...... 25,000 25,000 52,000 218,215 239,727 218,115 260,258
Total equity............ 54,278 66,743 93,301 151,103 164,949 157,252 166,872
Backlog data............ 244,229 431,292 478,803 817,102 655,976 987,800 535,368
</TABLE>
- --------
(1) Shares outstanding for 1996 have been assumed to be 27,000,000 (the total
number of shares issued to Trinity Industries, Inc. and the public as a
result of the initial public offering, exclusive of the underwriters'
overallotment option of 675,000 shares and adjusted for the three-for-two
stock split) for purposes of calculating pro forma net income per share.
(2) Consolidated financial data for fiscal 1998 reflects the impact of
companies acquired during the year from the dates of acquisition.
(3) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but
rather as a measure of Halter Marine's operating performance and ability to
service debt. EBITDA should not be construed as an alternative to operating
income (determined in accordance with GAAP), as an indicator of Halter
Marine's operating performance or as an alternative to cash flows from
operating activities (determined in accordance with GAAP) as a measure of
liquidity. EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(4) Excludes payments for business acquisitions.
(5) Prior to March 31, 1997, long-term debt represented intercompany notes due
to Trinity Industries, Inc.
9
<PAGE>
Summary Unaudited Pro Forma Combined Financial Data
The following table sets forth summary unaudited pro forma combined
financial data that is presented to give effect to the merger. The information
was prepared based on the following assumptions:
. The merger will be accounted for as a purchase business combination under
generally accepted accounting principles;
. The income statement data is presented as if the merger had been
consummated on January 1, 1998; and
. The balance sheet data is presented as if the merger had been consummated
on June 30, 1999.
You should consider the following:
. The unaudited pro forma combined financial data are not necessarily
indicative of the results of operations or the financial position that
would have occurred had the merger been consummated on January 1, 1998,
nor are they necessarily indicative of future results of operations or
financial position; and
. The unaudited pro forma combined revenue and expense data exclude the
cost savings expected to be realized through the consolidation of the
corporate headquarters of the two companies and the elimination of
duplicate staff and expenses.
The unaudited pro forma combined financial statements should be read
together with the historical consolidated financial statements of Friede
Goldman and Halter Marine incorporated by reference in this document and the
unaudited pro forma condensed combined financial statements contained elsewhere
in this document. See "Where You Can Find More Information" on page 96.
<TABLE>
<CAPTION>
Six Months
Year Ended Ended
December 31, June 30,
1998 1999
------------ ----------
(in millions, except
per share data)
<S> <C> <C>
Income Statement Data
Revenue............................................... $1,381.1 $709.1
Cost of revenue....................................... 1,210.2 626.2
-------- ------
Gross profit........................................ 170.9 82.9
Selling, general and administrative expenses.......... 92.8 45.9
Amortization expense.................................. 2.1 1.1
-------- ------
Operating income.................................... 76.0 35.9
Other income (expense)................................ (15.7) (9.2)
-------- ------
Income before income taxes............................ 60.3 26.7
Income tax provision.................................. 15.3 7.4
-------- ------
Net income............................................ $ 45.0 $ 19.3
======== ======
Earnings per share:
Basic............................................... $ 1.11 $ 0.48
======== ======
Diluted............................................. $ 1.10 $ 0.48
======== ======
Weighted average number of shares outstanding:
Basic............................................... 40.7 39.8
Diluted............................................. 41.0 40.1
Other data:
EBITDA(1)............................................. $ 109.8 $ 56.8
======== ======
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
As of
June 30,
1999
-------------
(in millions)
<S> <C>
Balance Sheet Data
Total assets.................................................... $948.6
Long-term debt, less current maturities......................... 239.9
Stockholders' equity............................................ 296.1
</TABLE>
- --------
(1) EBITDA represents operating income plus depreciation, amortization and non-
cash compensation expense related to the issuance of stock and stock
options to employees. EBITDA is not a measure of cash flow, operating
results or liquidity as determined by generally accepted accounting
principles. Friede Goldman has included information concerning pro forma
EBITDA as supplemental disclosure because management believes that EBITDA
is commonly accepted as providing useful information regarding a company's
ability to incur and service debt. Management of Friede Goldman believes
that factors which should be considered by stockholders in evaluating
EBITDA include, but are not limited to, trends in EBITDA as compared to
cash flow from operations, debt service requirements and capital
expenditures. EBITDA as defined and measured by Friede Goldman may not be
comparable to similarly titled measures of other companies. Furthermore,
EBITDA should not be considered in isolation or as an alternative to, or
more meaningful than, net income or cash flow provided by operations as
determined in accordance with generally accepted accounting principles as
an indicator of Friede Goldman's profitability or liquidity.
11
<PAGE>
Comparative Per Share Data
(Unaudited)
The following table summarizes the per share information for Friede Goldman
and Halter Marine on a historical, pro forma combined and equivalent basis. The
pro forma information gives effect to the merger accounted for by Friede
Goldman as a purchase business combination. You should read this information
together with the historical financial statements (and related notes) included
in the annual reports on Form 10-K and other information that each of Friede
Goldman and Halter Marine has filed with the SEC. See "Where You Can Find More
Information" on page 96. You should not rely on the pro forma combined
information as being indicative of the results that would have been achieved
had the companies been combined or the future results that the combined company
will experience after the merger.
<TABLE>
<CAPTION>
Six
Months
Year Ended Ended
December 31, June 30,
1998(1) 1999(2)
------------ --------
<S> <C> <C>
Historical--Friede Goldman:
Earnings Per Share
Basic................................................. $1.46 $0.77
Diluted............................................... 1.43 0.76
Book Value Per Share (3)................................ 3.48 4.39
Cash Dividends Per Share................................ -- --
Historical--Halter Marine:
Earnings Per Share
Basic................................................. $0.46 $0.12
Diluted............................................... 0.46 0.12
Book Value Per Share (3)................................ 5.70 5.78
Cash Dividends Per Share................................ -- --
Pro Forma Combined--Friede Goldman Halter:
Earings Per Share
Basic................................................. $1.11 $0.48
Diluted............................................... 1.10 0.48
Book Value Per Share (3)................................ 6.70 7.43
Cash Dividends Per Share................................ -- --
Equivalent Pro Forma Halter Marine (4):
Earnings Per Share
Basic................................................. $0.63 $0.27
Diluted............................................... 0.63 0.27
Book Value Per Share (3)................................ 3.82 4.24
Cash Dividends Per Share................................ -- --
</TABLE>
- --------
(1) The statement of operations information for this column includes
information for the year ended December 31, 1998 for Friede Goldman and the
year ended March 31, 1999 for Halter Marine.
(2) The statement of operations information for this column includes
information for the six months ended June 30, 1999 for both Friede Goldman
and Halter Marine.
(3) Book value per share is shown as of the end of the respective periods
presented.
(4) Halter Marine's equivalent pro forma amounts have been calculated by
multiplying Friede Goldman Halter's pro forma net earnings, cash dividends
and book value per share amounts by the exchange ratio of 0.57 shares of
Friede Goldman common stock for each share of Halter Marine common stock,
so that Halter Marine's equivalent pro forma share amounts are comparable
to the respective values of one share of Halter Marine common stock.
12
<PAGE>
Comparative Per Share Market Price and Dividend Information
Beginning on July 22, 1997 through November 30, 1998, Friede Goldman's
common stock was traded on the Nasdaq National Market. On December 1, 1998,
Friede Goldman's common stock began trading on the NYSE. The table below sets
forth, for the calendar quarters indicated, the reported high and low sales
prices of Friede Goldman common stock, as quoted on the Nasdaq National Market
through November 30, 1998 and on the NYSE from December 1, 1998 through
September 23, 1999 for the periods indicated. The reported high and low closing
prices and dividends declared of Halter Marine common stock are as reported on
the American Stock Exchange Composite Tape for the calendar quarters indicated.
<TABLE>
<CAPTION>
Friede Goldman Halter Marine
Common Stock (1) Common Stock (2)
---------------------------- -----------------------------
Market Price Cash Market Price Cash
------------- Dividends -------------- Dividends
High Low Declared High Low Declared
---- --- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter (3)..... $-- $-- -- $11 53/64 $ 8 59/64 --
Second Quarter........ -- -- -- 17 9 43/64 --
Third Quarter (4)..... 30 11 13/16 -- 32 5/64 15 7/8 --
Fourth Quarter........ 46 1/2 26 1/8 -- 40 3/16 23 1/8 --
1998
First Quarter......... 34 13/16 21 1/2 -- 27 1/8 13 3/8 --
Second Quarter........ 41 1/2 26 1/4 -- 19 13 9/16 --
Third Quarter......... 29 5/8 10 1/2 -- 17 13/16 8 1/6 --
Fourth Quarter........ 18 3/16 10 7/16 -- 10 1/6 4 1/2 --
1999
First Quarter......... 17 3/16 9 7/8 -- 7 3/16 3 5/16 --
Second Quarter........ 14 3/8 11 3/16 -- 8 4 1/4 --
Third Quarter (through
September 23, 1999).. 14 10 11/16 -- 6 5/8 4 7/8 --
</TABLE>
- --------
(1) After adjustment for a two-for-one stock split in October 1997.
(2) After adjustment for a three-for-two stock split in October 1997.
(3) The period indicated for Halter Marine is January 1, 1997 through March 31,
1997.
(4) The period indicated for Friede Goldman is July 22, 1997 through September
30, 1997.
On June 1, 1999, the last trading day prior to the announcement by Friede
Goldman and Halter Marine that they had reached an agreement concerning the
merger, the closing sale price of Friede Goldman common stock as reported on
the NYSE Composite Transactions was $16.375 per share, and the closing sale
price of Halter Marine common stock as reported on the American Stock Exchange
Composite Transactions was $7.3125 per share.
On September 23, 1999, the closing price of Friede Goldman common stock as
reported on the NYSE Composite Transactions was $10 11/16 per share, and the
closing sale price of Halter Marine common stock as reported on the American
Stock Exchange Composite Transactions was $5 5/8 per share.
Friede Goldman stockholders and Halter Marine stockholders are urged to
obtain current market quotations prior to making any decision with respect to
the merger.
13
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors, in addition to the
other information contained or incorporated by reference in this joint proxy
statement/prospectus, in determining how to vote at the Friede Goldman special
meeting and the Halter Marine special meeting.
Risks Relating to the Merger
The Market Value of Friede Goldman Common Stock that the Halter Marine
Stockholders Will Receive in the Merger May Decrease Prior to and Following the
Merger.
Halter Marine stockholders will not receive consideration in the merger with
a set market value or a minimum market value. If the merger is completed, each
share of Halter Marine common stock will be converted into 0.57 shares of
Friede Goldman common stock. No adjustment will be made to the number of shares
of Friede Goldman common stock to be received by Halter Marine stockholders in
the event of any increase or decrease in the market price of Halter Marine
common stock or Friede Goldman common stock.
The market prices of Halter Marine common stock and Friede Goldman common
stock when the merger takes place may vary from the market prices on the date
of this joint proxy statement/prospectus. On June 1, 1999 (the last trading day
prior to the execution of the merger agreement), the closing market prices of
Friede Goldman common stock and Halter Marine common stock were $16.375 and
$7.3125, respectively. During the twelve-month period ending on September 23,
1999 (the most recent practicable date prior to the printing of this joint
proxy statement/prospectus), the closing market price of Friede Goldman common
stock varied from a low of $9 5/16 to a high of $19 3/16 and the closing market
price of Halter Marine common stock varied from a low of $3 11/16 to a high of
$11 5/8. In addition, the market value of Friede Goldman Halter stock may be
volatile after the merger is completed for the reasons described under
"--Friede Goldman Halter's Stock Price Could Be Volatile."
Integrating Business Operations May Be Disruptive to Friede Goldman Halter's
Business.
The combination of Friede Goldman and Halter Marine involves the integration
of separate companies that prior to the closing of the merger transaction have
operated independently and have different corporate cultures. The process of
combining the companies may be disruptive to our businesses and may cause an
interruption of, or a loss of momentum in, these businesses as a result of the
following difficulties, among others:
. loss of key employees;
. failures or delays in getting new contracts with present and potential
customers of Friede Goldman or Halter Marine as a result of their
concerns related to the integration of Friede Goldman and Halter Marine;
. possible inconsistencies in standards, controls, procedures and policies
between Friede Goldman and Halter Marine and the need to implement,
integrate and harmonize various business-specific operating procedures
and systems, as well as company-wide financial, accounting, information
and other systems; and
. the diversion of management's attention from the day-to-day business of
Friede Goldman Halter as a result of the need to deal with integration
issues and the possible need to add management resources to do so.
These disruptions and difficulties, if they occur, may cause Friede Goldman
Halter to fail to realize the revenue enhancements and operating efficiencies
that we currently expect to result from the integration and may cause material
adverse short-term and long-term effects on the operating results and financial
condition of Friede Goldman Halter.
14
<PAGE>
Uncertainties in Realizing Expected Revenue Enhancements and Operating
Efficiencies.
Even if Friede Goldman Halter is able to integrate the operations of the
companies successfully, we cannot assure you that the integration will result
in the realization of the full benefits of the revenue enhancements and
operating efficiencies that we currently expect to result from the integration
or that the benefits will be achieved within the time frame that we currently
expect.
. Revenue enhancements and operating efficiencies are inherently difficult
to estimate and may not materialize as expected.
. The expected revenue enhancements and operating efficiencies from the
merger may be offset by costs incurred in integrating the companies.
. The expected revenue enhancements and operating efficiencies from the
merger may also be offset by one-time and continuing increases in other
expenses, by operating losses or by problems in the business unrelated to
the merger.
Friede Goldman Halter's Stock Price Could Be Volatile.
The market price of Friede Goldman Halter common stock could fluctuate
significantly in response to various factors, including:
. problems relating to the integration of the companies;
. problems in achieving revenue enhancements and operating efficiencies;
. actual and estimated earnings and cash flows;
. quarter-to-quarter variations in operating results;
. changes in market conditions in the offshore oil and gas industry;
. changes in general economic conditions;
. fluctuations in the securities markets in general;
. operating results differing from analysts' estimates; and
. changes in analysts' earnings estimates.
Loss of Key Personnel May Have a Material Adverse Impact on Friede Goldman
Halter.
The operations of the combined company will be managed by a small number of
key executive officers, the loss of any of whom could have a material adverse
effect on Friede Goldman Halter. Although various key employees of Friede
Goldman and Halter Marine have been granted new employment contracts with
respect to the combined company, we cannot assure you that those individuals
will become employed or remain with Friede Goldman Halter. The loss of those
individuals could have a material adverse effect on the combined company.
Friede Goldman Halter Will Have in Place a Stockholder Rights Plan and Our
Chairman and Chief Executive Officer Will Beneficially Own Approximately 24% of
the Outstanding Common Stock of the Combined Company; This Could Discourage
Other Companies from Attempting to Acquire Us.
Friede Goldman adopted its stockholder rights plan in December 1998 and
shortly thereafter distributed rights to each of its stockholders. The shares
of Friede Goldman that stockholders of Halter Marine will receive in the merger
will also have these rights attached to their shares. While we believe that the
rights plan is designed to strengthen our ability to negotiate with potential
acquirors and to protect our stockholders from coercive or abusive takeover
tactics, the overall effect of the rights plan may be to delay, defer or
prevent a change in control or the removal of existing management.
15
<PAGE>
The Chairman of the board of directors and Chief Executive Officer of the
combined company, J. L. Holloway, will beneficially own approximately 24% of
the outstanding shares of common stock of the combined company. Mr. Holloway
has entered into a stockholder's agreement which will restrict his ability to
dispose of these shares. The size of Mr. Holloway's holdings and the
restrictions contained in the stockholder's agreement could also delay, defer
or prevent a change in control or the removal of existing management. See
"Other Acquisition Related Agreements--Stockholder's Agreement" on page 69.
Risks Inherent in the Business of Friede Goldman Are Not Identical to Risks
Inherent in the Business of Halter Marine.
If the merger is completed, Friede Goldman Halter will be subject to all of
the risks set forth below in "Risks Inherent in the Business of Friede Goldman
Halter." In addition, the former Friede Goldman stockholders will be exposed to
additional risks that are currently risks particular to Halter Marine, and the
former Halter Marine stockholders will be exposed to additional risks that are
currently risks particular to Friede Goldman.
Risks currently specific to Halter Marine that former Friede Goldman
stockholders will be exposed to after the merger include the following:
. a significant percentage of revenues of the combined company will be
derived from construction and conversion contracts from customers who
operate in industries other than the offshore oil and gas industry,
including commercial and governmental customers. Therefore, the combined
company could be adversely affected by reductions in the level of
shipbuilding activity by customers in these other industries, including
those resulting from a reduction in the funding of shipbuilding and
conversion programs by governmental customers such as the U.S. Navy; and
. the combined company will be exposed to higher levels of debt and
interest expense than Friede Goldman alone.
Risks currently specific to Friede Goldman that former Halter Marine
stockholders will be exposed to after the merger include the following:
. the contingency of specified payments pursuant to default provisions
under some of Friede Goldman's acquisition agreements;
. the contingency of financial penalties upon the failure to maintain
minimum employment levels at Friede Goldman's Marystown facilities and a
shipyard in Pascagoula, Mississippi; and
. an increased dependence on revenue from construction and conversion
projects related to the offshore oil and gas industry.
The remaining risks described in "Risks Inherent in the Business of Friede
Goldman Halter" are generally shared by Friede Goldman and Halter Marine.
Risks Inherent in the Business of Friede Goldman Halter
Friede Goldman Halter's Business and Operations Will Depend on the Offshore
Oil and Gas Drilling Industry; Changes in That Industry Could Materially
Adversely Affect Friede Goldman Halter's Operating Results.
A significant portion of Friede Goldman Halter's business will depend
principally upon conditions prevailing in the offshore drilling industry,
including factors such as:
. the level of demand for the services of offshore drilling contractors,
including the demand for specific types of offshore drilling rigs having
required drilling capabilities or technical specifications;
16
<PAGE>
. the prices that offshore drilling contractors are experiencing and expect
to receive in the near term and the long term;
. the level of activity in offshore oil and gas exploration, development
and production;
. the costs of exploring for, producing and delivering oil and gas;
. the sale and expiration dates of offshore leases in the United States and
overseas;
. the discovery rate of new oil and gas reserves in offshore areas;
. local and international political and economic conditions; and
. the ability of oil and gas companies to access or generate capital
sufficient to fund capital expenditures for offshore exploration,
development and production activities.
Over the past several years, oil and natural gas prices and the level of
offshore drilling activity have fluctuated substantially. A significant or
prolonged reduction in oil and natural gas prices or the expectation that
prices will be lower in the future would likely depress offshore drilling and
development activity which would reduce demand for Friede Goldman Halter's
services and could result in a material adverse effect on the combined
company's operating results.
The business of Friede Goldman Halter, including the types of projects it
undertakes, will also be affected by other factors affecting offshore drilling
contractors, including factors such as:
. the condition and drilling capabilities of the existing offshore drilling
rigs operated by offshore drilling contractors; and
. the relative costs of building a new offshore drilling rig with advanced
capabilities versus the costs of retrofitting or converting an existing
offshore drilling rig to provide similar capabilities.
Competition and Excess Capacity Could Put Downward Pressure on Friede
Goldman Halter's Pricing and Profit Margins.
The shipbuilding and offshore rig construction and conversion industries are
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, 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, and the decline in the construction of vessels utilized in the
offshore energy industry. As a result of these factors, competition by U.S.
shipbuilders for domestic commercial projects has increased significantly and
has resulted in downward pressure on pricing and profit margins and may
continue to do so in the future. Recently, there was an increase in demand for
vessel construction, conversion and repair services, and this increased demand
resulted in the redeployment of previously idle shipyard capacity or other
shipyards shifting their focus to the types of products and services currently
provided by us. In addition, due to the increased demand for fabrication
services involving the offshore oil and gas industry, it is possible that land
or facilities with water access to the Gulf of Mexico that were previously not
used in the fabrication business could be converted to use for this purpose.
Any of these events could increase the amount of competition experienced by us,
which could have a material adverse effect on our revenue and profit.
Friede Goldman Halter will face competitive pressures at every level of the
offshore rig construction, conversion, retrofitting and repair markets. Friede
Goldman Halter will compete in a global market for new rig construction
projects against domestic, European and Asian new rig construction firms. This
market is highly competitive because, among other things, some of our foreign
competitors receive substantial subsidies from their governments and are able
to take advantage of lower labor costs. Similarly, for larger rig conversion
and retrofit projects, we will face intense competition from both domestic and
foreign firms. For smaller rig conversion, retrofit and repair projects, we
will compete against numerous companies based principally on the Gulf Coast. In
addition, shipyards and other companies not previously engaged in the business
can enter the market for these smaller conversion, retrofitting and repair
projects quickly and at relatively low cost.
17
<PAGE>
Friede Goldman Halter Will Have a Higher Debt Level than Friede Goldman
Which May Require the Allocation of a Substantial Portion of Operating Cash
Flow to Pay Interest.
Friede Goldman Halter will have higher levels of debt and interest expense
than Friede Goldman on a stand-alone basis. The increased debt level will
require us to use a substantial portion of Friede Goldman's operating cash flow
to pay interest on our debt instead of for other corporate purposes. The
following table compares debt, leverage and interest coverage statistics for
Friede Goldman and for Friede Goldman Halter on a pro forma basis:
<TABLE>
<CAPTION>
Pro Forma
Friede Goldman
Friede Goldman Halter
-------------- --------------
<S> <C> <C>
Total long-term debt as of June 30, 1999
(thousands).................................... $42,588 $239,946
Debt/capitalization ratio as of June 30, 1999... 29.3% 44.8%
Ratio of EBITDA to interest expense for the year
ended December 31, 1998........................ 28.0x 6.1x
</TABLE>
The unaudited pro forma combined information should be read together with
the historical consolidated financial statements of Friede Goldman and Halter
Marine incorporated by reference in this document and the unaudited pro forma
condensed combined financial statements contained elsewhere in this document.
EBITDA represents operating income plus depreciation, amortization and non-cash
compensation expense related to the issuance of stock and stock options to
employees. Debt/capitalization ratio is calculated as long-term debt less
current maturities divided by the sum of long-term debt less current maturities
and total stockholders' equity. Ratio of EBITDA to interest expense is
calculated as EBITDA, as defined above, divided by total interest expense.
Friede Goldman Halter Could Bear Financial Losses in Connection with
Contracts Structured on a Fixed-Price Basis or Contracts Containing Liquidated
Damages Provisions.
A significant portion of Friede Goldman's and Halter Marine's existing
contracts are on a fixed-price basis. We would be liable for the full amount of
any cost overruns under these fixed-price contracts. We generally attempt to
cover anticipated increased costs through an estimation of these costs, which
is reflected in the original price of the contract. However, 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. The results of operations and financial condition of the combined
company could be materially adversely affected if significant contracts are
underpriced or revenue and gross profits on large projects are different from
those originally estimated.
The construction of offshore drilling rigs involves complex design and
engineering and equipment and supply delivery coordination throughout
construction periods that may exceed two years. It is not unusual in such
circumstances to encounter design, engineering, equipment delivery schedule
changes and other factors that impact the builder's ability to complete
construction of the rig in accordance with the original contractual delivery
schedule. Our rig construction contracts generally require the customer to
compensate us for additional work or expenses incurred due to customer
requested change orders or failure of the customer to provide us with design or
engineering information or equipment, if specified in the contract for the
customer to provide these items. Under these circumstances, we generally
negotiate with the customer with respect to the amount of compensation to be
paid to us following the time at which the change order was requested or the
customer failed to provide us with items required by the contract to be
provided by the customer to us. We are subject to the risk that we are unable
to obtain, through negotiation, arbitration, litigation or otherwise, adequate
amounts to compensate us for the additional work or expenses incurred by us due
to customer requested change orders or failure by the customer to timely
provide items required to be provided by the customer. A failure to obtain
adequate compensation for these matters could require us to record an
adjustment to amounts of revenue and gross profit that were recognized in prior
periods under the percentage of completion accounting method. Any such
adjustments, if substantial, could have a material adverse effect on our
results of operations and financial condition.
18
<PAGE>
Additionally, many of Friede Goldman's and Halter Marine's existing
contracts contain provisions requiring the payment by either Friede Goldman or
Halter Marine of liquidated damages in the event that the company fails to meet
specified performance deadlines. We cannot assure you that Friede Goldman
Halter will not be required to make payments under these liquidated damages
provisions or that the requirement to make payments will not have a material
adverse effect on Friede Goldman Halter's operating results.
Friede Goldman Could Suffer Adverse Consequences from Contract Dispute with
Ocean Rig.
In December 1997 and June 1998, Friede Goldman entered into contracts to
construct two semisubmersible drilling rigs for Ocean Rig ASA, a Norwegian
company. Friede Goldman commenced construction of one rig in June 1998 and the
other in January 1999. In late July and early August 1999, Friede Goldman
initiated discussions with Ocean Rig with respect to anticipated delays in the
completion and delivery of the two rigs from the original delivery dates of
August 26, 1999 and November 23, 1999. Friede Goldman has asserted that Ocean
Rig is responsible for the delays due to Ocean Rig-initiated design changes and
late delivery by Ocean Rig of information and equipment required to be provided
to Friede Goldman by Ocean Rig pursuant to the terms of the construction
contracts.
As a result of the delays, Friede Goldman expects that the aggregate cost to
construct the two rigs will increase significantly. Friede Goldman entered into
negotiations with Ocean Rig in early August for the purpose of seeking
compensation from Ocean Rig for additional costs and delay damages resulting
from the Ocean Rig-initiated design changes and late deliveries of information
and equipment. In connection with these negotiations, Ocean Rig denied
responsibility for causing the delivery delays and indicated that it would seek
delay damages from Friede Goldman in the event that the delivery dates were not
met.
On August 16, 1999, Friede Goldman and Ocean Rig entered into an agreement
providing for new delivery dates of March 31, 2000 and June 30, 2000 for the
two rigs. As part of this agreement, Ocean Rig agreed to make all payments when
due and as construction milestones are met in accordance with the two
contracts. Ocean Rig made milestone payments of $28 million and $14 million to
Friede Goldman on August 19, 1999 and September 14, 1999, respectively, with
respect to the two rigs. The agreement also required both parties to submit
supporting documentation relating to their respective claims and required the
parties to meet to negotiate a resolution of their dispute. The parties
provided each other the required information and conducted meetings in late
August to discuss a resolution of the dispute. A resolution between the parties
was not reached during these meetings and fast track arbitration with respect
to the claims was initiated by Ocean Rig in London, England on September 3,
1999.
Friede Goldman intends to assert an arbitration claim in excess of $75
million seeking compensation for additional costs and delay damages relating to
the construction of the two rigs. Ocean Rig has indicated that it intends to
seek liquidated damages and damages at large for delay of up to a total of $28
million.
Neither the amount of potential claims for additional compensation due to
Friede Goldman nor the maximum amount of liquidated damages potentially payable
to Ocean Rig under the contracts have been finally determined. Based on
settlement negotiations that have occurred subsequent to the initiation of
arbitration proceedings, Friede Goldman believes that it is likely that a
settlement will be reached that provides recovery to Friede Goldman of a
significant amount of its total additional costs, including direct contract-
related costs and a portion of its fixed costs and corporate overhead, incurred
on these contracts. However, for financial reporting purposes, until an
ultimate resolution of the matter is reached, Friede Goldman will recognize
revenue only to the extent of direct contract-related costs incurred, as
required by generally accepted accounting principles to account for claims.
Accordingly, if the matter is not resolved by the time Friede Goldman reports
its third quarter results, Friede Goldman expects the net impact of the
accounting for the unresolved claim and related additional costs incurred and
for the timing of recognition of related revenues and expenses will be a
reduction in after-tax earnings in the third quarter of $0.20 to $0.30 per
share of Friede Goldman common stock. The actual amount of the charge to
earnings is dependent on, among other things, management's evaluation of the
status of the arbitration proceedings and settlement negotiations and
management's estimate
19
<PAGE>
of the percentage of completion of the projects at the end of the quarter. Once
the matter is settled, under percentage of completion accounting, Friede
Goldman will be required to adjust revenues and estimated costs for the two
projects in the period in which the settlement occurs. This could result in an
adjustment to earnings depending on the amount ultimately recovered and the
timing of recognition of the related costs. The impact of each $5 million
change in the amount of ultimate recovery by Friede Goldman has the effect of
increasing or decreasing the earnings per share impact of the matter in the
third quarter by approximately $0.07 to $0.09 per share of Friede Goldman
common stock (after tax), based on management's estimate of the expected
percentage of completion at the end of the quarter.
Based on Friede Goldman's most recent estimate of the amount of the charge
it may be required to take in the third quarter if the matter is not resolved
prior to the release of its results, Friede Goldman may report a loss from
operations in the third quarter of 1999. The actual results will be dependent
on, among other things, the level of activity of Friede Goldman's other
projects, timing of the award of any new projects and other factors typically
influencing operating results. In the event that a settlement is not reached
that permits Friede Goldman to recover substantially all of its direct claim-
related costs or if it is ultimately determined in an arbitration proceeding
that Friede Goldman is not entitled to additional compensation or that Ocean
Rig is entitled to significant liquidated damages, the impact on Friede
Goldman's operating results for the period in which such a determination is
made would be materially and adversely affected to a significantly greater
extent than that described above. Conversely, to the extent settlement
negotiations or the arbitration proceedings result in Friede Goldman's
recovering an amount in excess of its direct claim-related costs, operating
results for the period in which such a determination is made would be favorably
impacted.
In addition, if Friede Goldman does not recover damages from Ocean Rig for
additional costs on a timely basis, Friede Goldman may be required to seek
additional borrowing capacity to fund its working capital requirements. In this
regard, Friede Goldman increased its borrowing capacity under its existing
revolving credit facility, from $25 million to $45 million, in early September
1999 and had total borrowings of $20.7 million under this facility as of
September 17, 1999.
In connection with the amendment to the merger agreement entered into on
September 14, 1999, it is a condition to the closing of the merger that bank
financing of at least $175 million will have been arranged for the combined
company as of the effective time of the merger on terms reasonably acceptable
to Friede Goldman and Halter Marine and that, in the reasonable judgement of
both Friede Goldman and Halter Marine, would meet the needs of the combined
company. Friede Goldman currently has a $45 million credit facility and Halter
Marine currently has a $125 million credit facility. We cannot assure you that
bank financing in this amount will be obtained on terms reasonably acceptable
to either Friede Goldman or Halter Marine.
For additional information, see "Recent Developments--Contract Dispute."
Risk of Collection of Amounts Owed to Friede Goldman by Ocean Rig.
Ocean Rig is an independent offshore drilling contractor that commenced
operations in 1996. Ocean Rig generated revenues of approximately $2.6 million
and approximately $0.9 million for the year ended December 31, 1998 and the six
months ended June 30, 1999, respectively. Ocean Rig reported net losses (as
determined by United States generally accepted accounting principles) of
approximately $20.2 million and approximately $5.7 million for the year ended
December 31, 1998 and the six months ended June 30, 1999, respectively. Ocean
Rig also reported that, as of June 30, 1999, it had cash and cash equivalents
of approximately $174 million of which approximately $132 million was
restricted by its loan agreements for payment of scheduled rig investments and
construction interest expenses. Ocean Rig reported stockholders' equity (as
determined by United States generally accepted accounting principles) of
approximately $329 million as of June 30, 1999. The foregoing dollar amounts
were computed utilizing a conversion ratio of 7.83 Norwegian kroner for each
United States dollar, the exchange ratio as quoted by Bloomberg on June 30,
1999.
On September 6, 1999, Ocean Rig announced that its lenders under its $100
million credit facility have advised Ocean Rig that it will not be able to
borrow under this facility until Ocean Rig raises additional equity
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financing and until the issues surrounding the delayed delivery of the rigs
from Friede Goldman are resolved. On September 17, 1999, Ocean Rig announced
that it reached an agreement with its lenders with respect to modifications to
the terms of its existing credit facility as a result of which, subject to
certain conditions, Ocean Rig will be permitted to borrow up to $40 million
under the facility prior to the delivery of the Bingo 9000-2 rig currently
being constructed by Friede Goldman and up to an additional $35 million after
the delivery of the Bingo 9000-2 rig, currently scheduled for delivery on or
prior to June 30, 2000. Ocean Rig also announced plans to issue $90 million of
equity in a proposed offering that it expects to complete by the end of
September 1999 or shortly thereafter. Ocean Rig stated that any borrowing under
the facility is contingent on completion of the equity issue and subject to the
settlement of the dispute with Friede Goldman. Ocean Rig also stated that the
modified terms of the credit facility will permit the payment by Ocean Rig of
up to $30 million to Friede Goldman with respect to the dispute and, to the
extent Ocean Rig raises more than $90 million in its proposed equity offering,
Ocean Rig will be permitted to pay the excess amount to Friede Goldman with
respect to the dispute. Ocean Rig also stated in its September 17 announcement
that it believed, based on various assumptions, that the proceeds from the
planned $90 million equity offering and borrowings under the revised credit
facility would be sufficient to facilitate the completion of its committed rig
investments and provide a reasonable cash buffer to handle contingencies and
adverse market conditions. Based on the present financial condition of Ocean
Rig and the uncertainty related to whether it will complete an equity offering
or restore its borrowing availability under its credit facility, there can be
no assurance that Ocean Rig will have the financial resources to make a
substantial cash payment to Friede Goldman pursuant to any negotiated
settlement or arbitration award. In the event that any such payment or recovery
by Friede Goldman were to involve receipt of other assets owned by Ocean Rig,
Friede Goldman may not be able to readily sell these assets for cash on terms
acceptable to Friede Goldman.
Friede Goldman Halter's Business Involves Significant Operating Risks.
Friede Goldman Halter's activities will involve the fabrication,
refurbishment and repair of large steel structures, including drilling rigs and
production units. These activities have inherent risks associated with them
that could result in significant injury and loss of life, severe damage and
destruction of property and suspension of operations. These risks include:
. operating hazards, including the operation of cranes and other heavy
machinery;
. the structural failure of a drilling rig or vessel;
. liabilities associated with a defect in design or a failure or
malfunction of a product developed or manufactured by Friede Goldman
Halter;
. marine accidents, including collisions with other vessels and sinkings;
and
. physical damage of Friede Goldman Halter's facilities caused by
hurricanes or flooding.
Litigation arising from any of these occurrences may result in Friede
Goldman Halter being named as a defendant in lawsuits asserting large claims.
Although we maintain and will continue to maintain insurance that we consider
to be economically prudent, we cannot assure you that this insurance will be
sufficient or effective under the circumstances. A successful claim for which
Friede Goldman Halter is not fully insured could have a material adverse effect
on the combined company.
Friede Goldman Halter's Business Will Depend on a Few Significant Customers.
The top five customers of Halter Marine accounted for approximately 37.8% of
gross revenue in fiscal 1999 and 44.5% of gross revenue in fiscal 1998. The top
five customers of Friede Goldman accounted for approximately 82.2% of gross
revenue in fiscal 1998 and 87.4% of gross revenue in fiscal 1997. We expect
that a significant portion of Friede Goldman Halter's revenues in any fiscal
year will be derived from a few customers due to the relatively large nature of
many of the projects historically undertaken by the two companies and to the
relatively small number of potential customers for projects related to the
offshore oil and gas industry. The loss of a significant customer could result
in a substantial loss of Friede Goldman Halter's revenue and could have a
material adverse effect on the combined company.
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Construction and conversion contracts from the U.S. Navy are important to
our marine vessel business segment. Contracts from the U.S. Navy accounted for
9.1% and 12.0% of gross revenues generated by Halter Marine's marine vessels
segment for the year ended March 31, 1999 and the quarter ended June 30, 1999,
respectively. Contracts from the U.S. Navy accounted for 12.2% and 14.5% of
Halter Marine's total backlog at March 31, 1999 and June 30, 1999,
respectively. The reduced level of shipbuilding activity by the U.S. Navy
during the past decade has resulted in fewer contracts and workforce reductions
in the shipbuilding industry and has significantly intensified competition.
Furthermore, we cannot assure you that the shipbuilding and conversion programs
currently in progress will continue to be funded, or that those planned in the
future by the U.S. Navy and other branches of the U.S. military will be
implemented. Purchases of vessels by the U.S. government are generally subject
to uncertainties inherent in the budgeting and appropriations process, which is
affected by political events over which we have no control. Any significant
reduction in the level of congressional appropriations for shipbuilding
programs could have a material adverse effect on our vessels business.
Friede Goldman Halter Could Be Materially Adversely Affected by Government
Regulation.
Friede Goldman Halter's business and operations will be subject to and
affected by various types of governmental regulation, including numerous
federal, state and local environmental protection laws and regulations.
Compliance with these laws is increasingly complex and expensive. Friede
Goldman Halter could be held strictly liable for damages to natural resources
or threats to public health and safety, without regard to our negligence or
fault. We could also be held liable for the conduct of or conditions caused by
others or for acts of Friede Goldman, Halter Marine or the combined company
that were in compliance with all applicable laws at the time the acts were
performed. Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative and civil penalties and criminal
prosecution.
Since we will depend on the demand for our services from the oil and gas
industry, changing taxes, price controls and other laws and regulations which
affect the oil and gas industry in general could impact the operations of the
combined company. The adoption of laws and regulations curtailing exploration
and development drilling would adversely affect our operations by limiting
demand for our services. We cannot determine to what extent operations and
earnings of Friede Goldman Halter may be affected by new legislation, new
regulations or changes in existing regulations.
Recently Acquired Businesses of Friede Goldman and Halter Marine and
Businesses Acquired by the Combined Company in the Future Will Expose Friede
Goldman Halter to Increased Operating Risks.
On January 1, 1998, Friede Goldman acquired facilities located at Marystown,
Newfoundland Canada and on February 5, 1998, it acquired four subsidiaries of
France Marine S.A. During fiscal 1998, Halter Marine acquired Texas Drydock,
Inc., Bludworth Bond Shipyard, Inc. and facilities located in Gulfport,
Mississippi and Sabine, Texas from McDermott International, Inc. During fiscal
1998, Halter Marine also acquired four companies, which included AmClyde
Engineered Products, Inc., Utility Steel Fabrication, Inc., Fritz Culver, Inc.
and McElroy Machine & Manufacturing Co., Inc. In addition, the combined company
may seek to acquire other businesses in the future. This expansion exposes
Friede Goldman Halter to additional business and operating risk and
uncertainties, including:
. our ability to effectively manage the expanded activities;
. our ability to realize our investment in the expanded facilities; and
. our ability to meet the contract obligations included in our backlog.
If we are unable to manage this expansion efficiently or effectively, or if
we are unable to attract and retain additional qualified management personnel
to run the expanded operations, this could result in a material adverse effect
on the combined company.
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Use of Percentage of Completion Accounting by Friede Goldman Halter Could
Result in Material Charges Against the Earnings of the Combined Company.
Most of Friede Goldman Halter's revenue will be earned on a percentage-of-
completion basis. Accordingly, contract price and cost estimates are reviewed
periodically as the work progresses, and adjustments to income proportionate to
the percentage of completion are reflected in the period when the estimates are
revised. To the extent that these adjustments result in a reduction or
elimination of previously reported profits, the combined company would have to
recognize a charge against current earnings, which may be significant depending
upon the size of the project or the adjustment.
Incorrect Estimates of Expected Revenue Resulting from Friede Goldman
Halter's Backlog of Projects May Have a Material Adverse Effect on the Combined
Company.
Friede Goldman Halter's backlog is based on management's estimate of future
revenue attributable to:
. the remaining revenue to be earned under projects as to which a customer
has authorized us to begin work or purchase materials; and
. projects that have been awarded to Friede Goldman Halter as to which we
have not commenced work.
Substantially all of the projects in Friede Goldman Halter's backlog are
subject to change or termination by the customer, which could substantially
reduce the amount of backlog currently reported and could have a material
adverse effect on Friede Goldman Halter's revenue, net income and cash flow.
Of the $873.3 million of the combined backlog of Friede Goldman and Halter
Marine as of June 30, 1999, approximately $280.3 million relates to projects
with drilling rig contractors that have contracts to provide drilling rig
services to Petrobras, the Brazilian oil and gas company. The Friede Goldman
project relates to a $143.5 million contract for the new construction of a
Friede & Goldman, Ltd. designed Millennium S.A. semisubmersible offshore
drilling rig that is subject to the customer securing construction financing,
which financing is expected to be secured in the third quarter of 1999. Friede
Goldman has not commenced construction of this rig. The Halter Marine projects
consist of two Amethyst offshore drilling rigs which are currently under
construction at Halter Marine shipyards. As of June 30, 1999, the remaining
amount of backlog attributable to these two projects was $136.8 million. Friede
Goldman and Halter Marine have become aware that Petrobras is reviewing its
contractual commitments with the drilling rig contractors for offshore drilling
rig services. In the event that Petrobras determines to terminate its drilling
rig services contracts with either or both of the companies which are customers
of Friede Goldman and Halter Marine, it is likely that the affected customers
would attempt to terminate their rig construction contracts with Friede Goldman
and Halter Marine. In such event, the amount of backlog of the combined company
would be materially and adversely affected, and any recovery of damages by
Friede Goldman or Halter Marine from these customers for breach of contract may
not adequately compensate Friede Goldman or Halter Marine for the loss of
revenue that would otherwise be expected from the completion of these projects.
Friede Goldman Halter May Be Adversely Affected If Our Year 2000 Remediation
Efforts Are Not Successful.
Friede Goldman Halter will be dependent upon the proper functioning of our
computer systems and the ability of our suppliers to continue servicing Friede
Goldman Halter without interruption through the Year 2000. If the potential
Year 2000 problem is not remedied, potential risks include business slowdowns
or suspensions, reputational harm, and legal liability for breach of contract
or personal injury. This could have a material adverse effect on the business,
financial condition and results of operations of Friede Goldman Halter. Friede
Goldman and Halter Marine each have implemented a program to alter, validate or
replace Year 2000 sensitive software and other information technology. We
cannot assure you that these Year 2000 programs will be effective.
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Friede Goldman Halter May Have Difficulties Maintaining an Adequate Labor
Force.
While Friede Goldman's and Halter Marine's shipyards are not currently
experiencing labor shortages, shortages of skilled labor could limit Friede
Goldman Halter's ability to increase production to an extent that Friede
Goldman Halter might otherwise desire. We can give you no assurance regarding
whether significant labor shortages will be experienced at one or more of
Friede Goldman Halter's shipyards in the future.
Friede Goldman Halter Will Be Subject to Acquisition Default Provisions
Under Some of its Acquisition Agreements.
In connection with the acquisition of F&G Ltd. in December 1996 by a
predecessor to Friede Goldman, Friede Goldman Halter became obligated to pay
the former owner:
. design and licensing payments on sales by F&G Ltd. of designs for new-
build vessels; and
. specified payments in the event Friede Goldman fails to design at least
20% of the new-build vessels ordered by U.S.-based drilling companies
(subject to a maximum payment of $1 million per year), in each case with
respect to a 10-year period that commenced in December 1996.
In the event that Friede Goldman Halter fails to make these required
payments, the former owner will have the right to:
. require Friede Goldman Halter to return all F&G Ltd. assets purchased by
Friede Goldman (including the design for drilling rigs and production
units in existence at the time of the acquisition but excluding the name
Friede & Goldman and derivatives thereof and excluding new designs
developed by Friede Goldman or Friede Goldman Halter after the
acquisition); and
. terminate the consulting and other provisions of the acquisition.
No payments were due in 1998 under these provisions.
If Friede Goldman Halter Does Not Maintain Minimum Employment Levels, It May
Be Subject to Financial Penalties.
In connection with Friede Goldman's acquisition of the Marystown facilities
and the construction of a shipyard in Pascagoula, Mississippi (the FGO East
Facility), Friede Goldman agreed to maintain minimum levels of employment at
each facility and we will be subject to financial penalties if we fail to do
so. Under the terms of the acquisition of the Marystown Facilities, Friede
Goldman became obligated to maintain a minimum of 1.2 million employee manhours
(including manhours for management, labor, salaried and hourly employees) with
respect to the shipyard operations acquired by Friede Goldman for each of the
1998, 1999 and 2000 calendar years. Friede Goldman agreed to pay liquidated
damages of Cdn. $10 million for 1998 and Cdn. $5 million in 1999 and 2000 if
the minimum number of manhours is not attained in that year. The 1.2 million
minimum manhour requirement was met in 1998. As of June 30, 1999, Friede
Goldman had recorded approximately 459,000 manhours for the first six months of
1999 and it is uncertain whether the 1.2 million manhours requirement will be
met in 1999.
In connection with the construction of a Friede Goldman facility, the County
of Jackson, Mississippi, agreed to dredge the ship channel and build roads and
other infrastructure. However, in the event that Friede Goldman Halter does not
maintain a minimum employment level of 400 jobs at the facility for each year
during the primary term of its 20-year lease, Friede Goldman Halter could face
statutory penalties under Mississippi law, which include the repayment of the
remaining balance of the $6 million loan incurred by the county to finance
these improvements. No payments were due in 1998 related to either of the above
obligations.
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FORWARD-LOOKING STATEMENTS
This document and documents referred to in this document include "forward-
looking statements" as defined by the SEC. The "forward-looking statements" are
those concerning the companies' plans, synergies, expectations and objectives
for future operations. When used or referred to in this document, these
forward-looking statements may be preceded by, followed by, or otherwise
include the words "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "projects," or similar expressions, or statements that some events
or conditions "will" or "may" occur. All statements, other than statements of
historical facts, included in this document that address activities, events or
developments that the companies expect, believe or anticipate will or may occur
in the future are forward-looking statements and include statements relating to
the following matters:
. completion of the proposed merger;
. future financial performance;
. future results of operations;
. prospects for commercial or government contracts;
. pro forma financial information;
. financial position and liquidity;
. ability to take advantage of new vessel construction and conversion
opportunities;
. labor and supply costs; and
. selling, general and administrative costs.
These statements occur in:
. ""Questions and Answers About the Merger;"
. ""Summary;"
. ""Selected Historical Financial Data;"
. ""Risk Factors;"
. ""Business of Friede Goldman Halter Following the Merger;"
. ""Comparative Per Share Market Price and Dividend Information;"
. ""Comparative Per Share Data;"
. ""The Merger--Reasons for the Merger; Recommendation of Each Company's
Board of Directors;"
. ""The Merger--Opinions of Financial Advisors;" and
. Statements contained elsewhere in this document concerning Friede
Goldman's and Halter Marine's plans for their growth and future
operations or financial position.
These forward-looking statements are based on assumptions, which the
companies believe are reasonable, but which are subject to a wide range of
uncertainties and business risks including:
. risks of reduced levels of demand for our products and services resulting
from reduced levels of capital expenditures of oil and gas companies
relating to offshore drilling and exploration activity and reduced levels
of capital expenditures of offshore drilling contractors. Levels of
capital expenditures may be affected by prevailing oil and natural gas
prices, expectations about future oil and natural gas prices, the costs
of exploring for, producing and delivering oil and gas, the sale and
expiration dates of offshore leases in the United States and overseas,
the discovery rate of new oil and gas reserves in
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offshore areas, local and international political and economic
conditions, the ability of oil and gas companies to access or generate
capital sufficient to fund capital expenditures for offshore exploration,
development and production activities, and other factors;
. risks related to expansion of operations, either at our shipyards or one
or more other locations;
. operating risks relating to conversion, retrofit and repair of drilling
rigs, new construction of drilling rigs and production units and the
design of new drilling rigs;
. contract bidding risks;
. risks related to dependence on significant customers;
. risks related to the failure to realize the level of backlog estimated by
us due to determinations by one or more customers to change or terminate
all or portions of projects included in the estimation of backlog; and
. risks related to regulatory and environmental matters.
Factors that could cause actual results to differ materially from those
anticipated are discussed in both companies' periodic filings with the SEC,
including Friede Goldman's Annual Report on Form 10-K for the year ended
December 31, 1998 and the Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999 and Halter Marine's Annual Report on Form 10-K
for the year ended March 31, 1999. We cannot assure you that developments
affecting Friede Goldman, Halter Marine, or the combined company will be those
anticipated by us.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this document regarding each company's business which
are not historical facts are "forward-looking statements" that involve risks
and uncertainties. For a discussion of the risks and uncertainties which could
cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors--Risks Relating to the Merger" on page 14 of this
document.
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BUSINESS OF FRIEDE GOLDMAN HALTER FOLLOWING THE MERGER
The combination of Friede Goldman and Halter Marine is intended to create a
larger, more diversified, financially stronger and more cost efficient
enterprise. We believe we will be an industry leader in each of the three
business segments in which we operate: (1) offshore drilling rigs, (2) marine
vessels and (3) engineered products. On a pro forma basis, our combined backlog
of projects at June 30, 1999 in these segments totaled $873.3 million, which
includes a $143.5 million contract subject to the customer securing financing.
Our pro forma backlog at June 30, 1999 for each of the three segments was as
follows: offshore drilling rigs ($565.8 million), marine vessels ($238.4
million) and engineered products ($69.1 million).
Business Segments
Offshore Drilling Rigs. We will operate eight shipyards in Texas,
Mississippi and Canada where we will build and equip offshore drilling and
production rigs and floating production systems and perform related services,
including the conversion, retrofit, repair and modification of offshore
drilling rigs. We believe that the combination of the facilities and personnel
of Friede Goldman and Halter Marine will provide us with the ability to
undertake additional deepwater construction and conversion projects and will
increase our ability to compete for larger projects. We will also provide
design services for new construction rigs through our Friede & Goldman, Ltd.
subsidiary.
Marine Vessels. We will be the fourth largest shipbuilder and the largest
builder of small- to medium-sized ocean-going vessels in the United States. We
will operate nine shipyards in Florida, Mississippi, Louisiana, and Canada
principally dedicated to the construction of marine vessels, although several
of the facilities will also perform work on rigs or engineered products. The
types of vessels we will construct include:
. offshore support vessels and double hull fuel barges for energy service
companies;
. oceanographic research and survey ships, high speed patrol boats and
ferries for domestic and foreign governments; and
. tugboats, towboats and offshore barges for other commercial enterprises.
In addition to the new construction of marine vessels, we will operate five
facilities for the repair and conversion of marine vessels.
Engineered Products. We will design, manufacture and market a diverse line
of engineered products with a global presence in the offshore energy industry.
We intend to combine the European and Asian operations of Friede Goldman's
Brissonneau & Lotz Marine subsidiary with Halter Marine's domestic brands,
which include AmClyde, Fritz Culver and McElroy. Our engineered products will
include cranes, derricks, winches, hoists, jacks, capstans, tuggers, locking
devices, turret bearings and other related deck equipment for offshore rigs and
other marine vessels.
Strategic Benefits of the Merger
Friede Goldman and Halter Marine are developing plans to integrate their
operations immediately after the merger to take full advantage of the benefits
that the merger will create. Those benefits include:
Availability of new construction opportunities. We believe that we will
be able to pursue additional opportunities for the construction of
drillships, deepwater semisubmersibles and floating production systems
because of the following:
. our greater production capacity and larger workforce;
. our ability to perform work from shipyards in several domestic and
international locations; and
. our ability to capitalize on existing relationships with customers and
joint venture partners.
Opportunity to offer a broader range of engineered products and services
on an integrated basis. With the integration of the complementary
engineered product divisions of Friede Goldman and Halter Marine, we will
be able to market a broader range of engineered products to a larger
customer base. In addition, the combination of the design and engineering
expertise of Friede Goldman and Halter Marine
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will enable us to develop more effectively new offshore rigs, vessels and
marine equipment to meet the diverse needs of a larger customer base.
Diversification. While prior to the merger Friede Goldman was entirely
dependent on the offshore energy market, our presence in the commercial and
government markets on a combined basis, particularly in the marine vessel
construction market, will reduce our dependence on any one industry
following the completion of the merger.
Increased financial strength and flexibility. Our larger capitalization
should enhance our access to capital and make available additional forms of
cost effective financing. This should allow us to manage more effectively
capital costs and to pursue further growth opportunities.
Opportunity to realize cost savings. We believe that operational and
organizational consolidation will allow for substantial overhead cost
savings. We believe this can be achieved through the consolidation of our
corporate headquarters in Gulfport, Mississippi, and the elimination of
duplicative staff and expenses.
RECENT DEVELOPMENTS
Contract Dispute
In December 1997 and 1998, Friede Goldman entered into contracts to
construct two semisubmersible drilling rigs for Ocean Rig ASA, a Norwegian
company. Friede Goldman commenced construction of one rig in June 1998 and the
other in January 1999. In late July and early August 1999, Friede Goldman
initiated discussions with Ocean Rig with respect to anticipated delays in the
completion and delivery of the two rigs from the original delivery dates of
August 26, 1999 and November 23, 1999. Friede Goldman has asserted that Ocean
Rig is responsible for the delays due to Ocean Rig-initiated design changes and
late delivery by Ocean Rig of information and equipment required to be provided
to Friede Goldman by Ocean Rig pursuant to the terms of the construction
contracts.
As a result of the delays, Friede Goldman expects that the aggregate cost to
construct the two rigs will increase significantly. Friede Goldman entered into
negotiations with Ocean Rig in early August for the purpose of seeking
compensation from Ocean Rig for additional costs and delay damages resulting
from the Ocean Rig-initiated design changes and late deliveries of information
and equipment. In connection with these negotiations, Ocean Rig denied
responsibility for causing the delivery delays and indicated that it would seek
delay damages from Friede Goldman in the event that the delivery dates were not
met.
On August 16, 1999, Friede Goldman and Ocean Rig entered into an agreement
providing for new delivery dates of March 31, 2000 and June 30, 2000 for the
two rigs. As part of this agreement, Ocean Rig agreed to make all payments when
due and as construction milestones are met in accordance with the two
contracts. Ocean Rig made milestone payments of $28 million and $14 million to
Friede Goldman on August 19, 1999 and September 14, 1999, respectively, with
respect to the two rigs.
The August 1999 agreement also provides that each of Friede Goldman and
Ocean Rig reserve all claims each may have against the other with respect to
the original contract, including claims that Friede Goldman may have against
Ocean Rig for compensation for additional costs incurred by Friede Goldman and
for delays suffered by Friede Goldman due to actions of Ocean Rig and including
claims that Ocean Rig may have against Friede Goldman for liquidated damages
for failure to meet the original delivery dates for the rigs. In addition, a
claim for additional liquidated damages may be made by Ocean Rig if the revised
delivery dates are not met. The agreement also required both parties to submit
supporting documentation relating to their respective claims and required the
parties to meet to negotiate a resolution of their dispute. The parties
provided each other the required information and conducted meetings in late
August to discuss a resolution of the dispute. A resolution between the parties
was not reached during these meetings and fast track arbitration with respect
to the claims was initiated by Ocean Rig in London on September 3, 1999.
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Friede Goldman intends to assert an arbitration claim in excess of $75
million to compensate it for additional costs and delay damages relating to the
construction of the two rigs. Ocean Rig has indicated that it intends to seek
liquidated damages and damages at large for delay of up to a total of $28
million. Friede Goldman believes that the contract provisions limit Ocean Rig's
claims for all types of delay damages to approximately $6 million per rig
(approximately $13 million for both rigs). Friede Goldman, based on the advice
of its outside counsel and its marine construction advisors, believes that
Ocean Rig has no substantive basis for recovery and that Friede Goldman has a
substantial basis for significant recovery on its claims for contract changes
and damages arising from Ocean Rig-initiated design changes and late delivery
by Ocean Rig of information and equipment to be provided to Friede Goldman by
Ocean Rig pursuant to the terms of the construction contracts.
Neither the amount of potential claims for additional compensation due to
Friede Goldman nor the maximum amount of liquidated damages potentially payable
to Ocean Rig under the contracts have been finally determined. Based on
settlement negotiations that have occurred subsequent to the initiation of
arbitration proceedings, Friede Goldman believes that it is likely that a
settlement will be reached that provides recovery to Friede Goldman of a
significant amount of its total additional costs, including direct contract-
related costs and a portion of its fixed costs and corporate overhead, incurred
on these contracts. However, for financial reporting purposes, until an
ultimate resolution of the matter is reached, Friede Goldman will recognize
revenue only to the extent of direct contract-related costs incurred, as
required by generally accepted accounting principles to account for claims.
Accordingly, if the matter is not resolved by the time Friede Goldman reports
its third quarter results, Friede Goldman expects the net impact of the
accounting for the unresolved claim and related additional costs incurred and
for the timing of recognition of related revenues and expenses will be a
reduction in after-tax earnings in the third quarter of $0.20 to $0.30 per
share of Friede Goldman common stock. The actual amount of the charge to
earnings is dependent on, among other things, management's evaluation of the
status of the arbitration proceedings and settlement negotiations and
management's estimate of the percentage of completion of the projects at the
end of the quarter. Once the matter is settled, under percentage of completion
accounting, Friede Goldman will be required to adjust revenues and estimated
costs for the two projects in the period in which the settlement occurs. This
could result in an adjustment to earnings depending on the amount ultimately
recovered and the timing of recognition of the related costs. The impact of
each $5 million change in the amount of ultimate recovery by Friede Goldman has
the effect of increasing or decreasing the earnings per share impact of the
matter in the third quarter by approximately $0.07 to $0.09 per share of Friede
Goldman common stock (after tax), based on management's estimate of the
expected percentage of completion at the end of the quarter.
Based on Friede Goldman's most recent estimate of the amount of the charge
it may be required to take in the third quarter if the matter is not resolved
prior to the release of its results, Friede Goldman may report a loss from
operations in the third quarter of 1999. The actual results will be dependent
on, among other things, the level of activity of Friede Goldman's other
projects, timing of the award of any new projects and other factors typically
influencing operating results. In the event that a settlement is not reached
that permits Friede Goldman to recover substantially all of its direct claim-
related costs or if it is ultimately determined in an arbitration proceeding
that Friede Goldman is not entitled to additional compensation or that Ocean
Rig is entitled to significant liquidated damages, the impact on Friede
Goldman's operating results for the period in which such a determination is
made would be materially and adversely affected to a significantly greater
extent than that described above. Conversely, to the extent settlement
negotiations or the arbitration proceedings result in Friede Goldman's
recovering an amount in excess of its direct claim-related costs, operating
results for the period in which such a determination is made would be favorably
impacted.
In addition, if Friede Goldman does not recover damages from Ocean Rig for
additional costs on a timely basis, Friede Goldman may be required to seek
additional borrowing capacity to fund its working capital requirements. In this
regard, Friede Goldman increased its borrowing capacity under its existing
revolving credit facility, from $25 million to $45 million, in early September
1999 and had total borrowings of $20.7 million under this facility as of
September 17, 1999.
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In connection with the amendment to the merger agreement entered into on
September 14, 1999, it is a condition to the closing of the merger that bank
financing of at least $175 million will have been arranged for the combined
company as of the effective time of the merger on terms reasonably acceptable
to Friede Goldman and Halter Marine and that, in the reasonable judgement of
both Friede Goldman and Halter Marine, would meet the needs of the combined
company. Friede Goldman currently has a $45 million credit facility and Halter
Marine currently has a $125 million credit facility.
Ocean Rig is an independent offshore drilling contractor that commenced
operations in 1996. Ocean Rig has not conducted any operations other than
activities relating to the arrangement of the construction of offshore drilling
rigs and the revising of debt and equity capital to fund the construction of
the rigs. Ocean Rig has reported losses for the year ended December 31, 1998
and the six months ended June 30, 1999. In the event that Ocean Rig is required
to make a cash payment to Friede Goldman pursuant to a negotiated settlement or
an arbitration award, there can be no assurance that Ocean Rig will have the
financial resources to make such a payment. See "Risk Factors--Risk of
Collection of Amounts Owed to Friede Goldman by Ocean Rig."
Halter Marine Audit Committee Investigation
On August 9, 1999, the Audit Committee of the Halter Marine board of
directors reported on the conclusions reached as a result of its investigation
into the operations of one of Halter Marine's facilities in Mississippi. The
Committee concluded that six former employees of Halter Marine, including a
senior officer who was a director of the company until June 1999, appear to
have engaged in one or more schemes to defraud Halter Marine and to convert
assets of the company to their own use. All persons employed by or associated
with Halter Marine who are believed to have knowingly participated in these
schemes have been terminated or have resigned their positions with Halter
Marine.
The Audit Committee concluded, among other things, that these activities did
not result from material weaknesses in Halter Marine's internal control
policies. The committee also concluded that Halter Marine's internal audit
function be strengthened, and the committee made other specific recommendations
designed to minimize such risks in the future, all of which were unanimously
adopted by the board of directors. On August 9, 1999, Halter Marine filed with
the SEC a report on Form 8-K, which is incorporated by reference in this
document, describing the report of the Audit Committee and the actions
undertaken by Halter Marine as a result of the Audit Committee's findings and
recommendations.
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THE MERGER
General
The following summarizes the material terms of the merger agreement, as
amended. A copy of the merger agreement is included in this joint proxy
statement/prospectus as Annex A, and a copy of amendment no. 1 to the merger
agreement is included in this joint proxy statement/prospectus as Annex B. The
merger agreement and amendment no. 1 are incorporated in this document by
reference. We urge you to read the merger agreement and amendment no. 1 in
their entirety for a more complete description of the terms and conditions upon
which the merger is to be effected.
If the merger agreement is approved and adopted by the stockholders of
Friede Goldman and Halter Marine and all conditions to the merger agreement are
satisfied or waived, Halter Marine will be merged with and into Friede Goldman,
with Friede Goldman being the surviving corporation. Friede Goldman's charter
will be amended to change the name of Friede Goldman to "Friede Goldman Halter,
Inc."
Background of the Merger
In April 1998, John Alford, the Executive Vice President of Friede Goldman,
met with Rick Rees, the Executive Vice President and Chief Financial Officer of
Halter Marine, in New Orleans, Louisiana to express Friede Goldman's interest
in combining the two companies. In July 1998, J. L. Holloway, the Chairman and
Chief Executive Officer of Friede Goldman, met with John Dane III, the
Chairman, President and Chief Executive Officer of Halter Marine, in Destin,
Florida to discuss the possibility of a strategic combination of the two
companies.
On October 16, 1998, Messrs. Holloway, Dane and Rees met in Jackson,
Mississippi to discuss a possible merger of the two companies. On October 20,
1998, Messrs. Dane and Holloway discussed by telephone possible organizational
structures for a combined company. On October 21, 1998, Messrs. Dane and
Holloway met in Biloxi, Mississippi to continue discussing a potential merger,
including organizational and management issues and relative valuations of the
two companies. On October 23, 1998, Messrs. Dane, Rees, Holloway and Alford met
in Gulfport, Mississippi to continue these discussions. At these meetings, the
representatives of the two companies discussed a stock for stock merger in
which stockholders of neither company would receive any premium over the
trading prices of their common stock.
During the week of October 19, 1998, counsel for Halter Marine provided a
draft merger agreement and related agreements to counsel for Friede Goldman
providing for a stock for stock merger. On October 23, 1998, Halter Marine and
Friede Goldman executed a confidentiality agreement concerning confidential and
proprietary information of both companies.
On October 27, 1998, Halter Marine engaged Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") as its financial advisor with respect to any
sale or business combination of Halter Marine.
On October 27, 1998, at a regularly scheduled meeting of the Halter Marine
board of directors, Halter Marine's executive management, financial advisors
and outside counsel informed the Halter Marine board of directors of the status
of discussions related to a possible merger with Friede Goldman. Executive
management of Halter Marine first discussed the businesses of Friede Goldman,
the strategic implications of the proposed merger in relation to the businesses
of Halter Marine and other matters. Outside counsel for Halter Marine then
discussed the terms of the draft merger agreement and related agreements and
other legal matters. Representatives of DLJ advised the Halter Marine board of
directors concerning the anticipated market reaction to the proposed merger.
Following discussion, the Halter Marine board of directors authorized
management to proceed with a mutual due diligence review of the two companies.
On October 27, 1998, at a special meeting of the board of directors of
Friede Goldman, Friede Goldman's executive management, financial advisors and
outside counsel informed Friede Goldman of matters related to a
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possible merger with Halter Marine. The executive management of Friede Goldman
discussed the businesses of Halter Marine, the strategic implications of a
merger in relation to the businesses of Friede Goldman, the financial
implications of a merger with Halter Marine with respect to the Friede Goldman
stockholders and the contemplated management structure of the combined company
and related employment agreement matters. Representatives of Jefferies & Co.
("Jefferies") then advised the Friede Goldman board of directors with respect
to financial matters related to the merger and outside counsel discussed the
terms of the draft Merger Agreement and related agreements. On October 27,
1998, Friede Goldman engaged Jefferies as its financial advisor to evaluate a
possible strategic combination with Halter Marine.
On October 28, 1998, the Friede Goldman board of directors held an
additional meeting to discuss the proposed merger and various business and
financial considerations related to the proposed merger. At this meeting, the
Friede Goldman board of directors authorized management to proceed with a due
diligence review of Halter Marine and ratified the engagement of Jefferies as
financial advisor with respect to the proposed merger. From October 28 through
October 30, 1998, Friede Goldman and Halter Marine conducted a due diligence
review of each other's business and operations and their respective counsel
discussed the draft merger agreement and related agreements.
On October 29, 1998, the board of directors of Friede Goldman met to
continue discussions with respect to the proposed merger and related financial
and legal matters.
On October 30, 1998, the parties terminated merger discussions because they
were unable to reach agreement on the terms and structure of the transaction.
No further discussions concerning a merger combination between the two
companies were held for the next four months.
On March 3, 1999, John Alford, the Executive Vice President of Friede
Goldman, telephoned Emile Dumesnil, the Vice President of Halter Marine, and
suggested a meeting to discuss the possibility of a strategic transaction
between Friede Goldman and Halter Marine. Messrs. Alford and Dumesnil met in
Biloxi, Mississippi on March 4, 1999 and discussed the advantages and
disadvantages of a possible business combination.
On March 31, 1999, Messrs. Dumesnil and Alford met in New Orleans, Louisiana
to continue their discussions of a possible merger transaction, including
issues related to integration of management and corporate cultures of the two
companies. On April 1, 1999, Messrs. Holloway, Dane, Alford and Dumesnil met in
New Orleans, Louisiana to continue these discussions. Messrs. Holloway and Dane
agreed to consider exploring a strategic combination of the two companies in a
stock for stock transaction with an exchange ratio that would provide to the
stockholders of Halter Marine a premium over Halter Marine's 30-day average
trading price.
On April 9, 1999, Halter Marine and Friede Goldman executed a
confidentiality agreement concerning confidential and proprietary information
of both companies.
On April 9, 1999, Friede Goldman's outside counsel provided a draft merger
agreement and related agreements to Halter Marine and its outside counsel.
On April 26, 1999, at a regularly scheduled meeting of the board of
directors of Halter Marine, board members were informed of the status of the
discussions between Halter Marine and Friede Goldman. At this meeting, Halter
Marine's executive management discussed the strategic implications of the
proposed transaction, the status of the due diligence review by the two
companies and other matters. In addition, the board established a Strategic
Options Committee consisting of Messrs. Dane and Rees, Ken W. Lewis and Burt
Keenan for the purpose of considering and reporting to the board on strategic
options available to Halter Marine by way of sale, merger or otherwise.
On May 12, 1999, Mr. Alford telephoned Mr. Dane to discuss the possibility
of proceeding with a merger transaction and commencing a mutual due diligence
review.
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On May 17, 1999, Mr. Dane informed the Strategic Options Committee of the
Halter Marine board of directors about the status of discussions with Friede
Goldman. On May 19, 1999, the Strategic Options Committee authorized Mr. Dane
to continue discussions with Friede Goldman concerning a possible strategic
combination of the two companies.
On May 19, 1999, the board of directors of Friede Goldman held a meeting to
discuss the possibility of a merger with Halter Marine. At this meeting, the
board of directors authorized the management of Friede Goldman to proceed with
a due diligence review of Halter and to proceed with negotiations of the merger
agreement and related agreements.
On May 22, 1999, executive officers of Halter Marine and Friede Goldman and
their respective legal and financial advisors met in New Orleans to discuss a
draft merger agreement, stockholder's agreement, voting and proxy agreement and
some employment agreements.
On May 23 through 25, 1999, the parties conducted a due diligence review of
each other. As part of this due diligence investigation, members of Halter
Marine and Friede Goldman management and their respective financial advisors
met in New Orleans to discuss the business and operations of the two companies.
For the next week, an extensive exchange of documents and other information
occurred in support of a mutual due diligence process.
On May 25, 1999, at a special meeting of Halter Marine's board of directors,
Halter Marine's executive management, financial advisors and outside counsel
updated the Halter Marine board of directors on matters related to a possible
merger with Friede Goldman. Executive management of Halter Marine first
discussed a range of values that had been discussed by representatives of the
two companies for the proposed transaction, the businesses of Friede Goldman,
the strategic implications of the proposed merger in relation to the businesses
of Halter Marine and other matters. Outside counsel for Halter Marine then
discussed the terms and conditions of the draft merger agreement, the
stockholder's agreement, the voting and proxy agreement and employment
agreements with Messrs. Holloway, Dane, Alford and Rees, the status of the
negotiations with Friede Goldman and other legal matters. DLJ made a
presentation to the Halter Marine board of directors concerning the valuation
methodologies that would be used to evaluate the financial terms of the
proposed merger after negotiation of an exchange ratio. Following extensive
discussion, the Halter Marine board of directors authorized management to
continue to pursue the proposed merger.
On May 25, 1999, at a special meeting of Friede Goldman's board of
directors, Friede Goldman's executive management, financial advisors and
outside counsel updated the Friede Goldman board of directors on matters
related to a possible merger with Halter Marine. Executive management of Friede
Goldman discussed a range of values that had been discussed by representatives
of the two companies for the proposed transaction, the businesses of Halter
Marine, the strategic implications of the proposed merger in relation to the
businesses of Friede Goldman and other matters. Outside counsel for Friede
Goldman then discussed the terms and conditions of the draft merger agreement,
the stockholder's agreement, the voting and proxy agreement and the employment
agreements with Messrs. Holloway, Dane, Alford and Rees, and the status of the
negotiations with Halter Marine. Jefferies made a presentation to the Friede
Goldman board of directors concerning the valuation methodologies that would be
used to evaluate the financial terms of the proposed merger after negotiation
of an exchange ratio. Following extensive discussion, the Friede Goldman board
of directors authorized management to continue to pursue the proposed merger.
During the week of May 24, 1999, members of Halter Marine and Friede Goldman
management and representatives of DLJ and Jefferies engaged in a series of
discussions and negotiations by telephone concerning a range of values for the
proposed merger transaction. On May 31, 1999, Messrs. Alford, Dane, Rees and
Dumesnil met in New Orleans, Louisiana to negotiate the exchange ratio. These
negotiations resulted in a final proposal by Friede Goldman of a merger
transaction in which Halter Marine stockholders would receive approximately
0.4614 shares of Friede Goldman common stock for each share of Halter Marine
common stock.
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During the period from May 22 through June 1, 1999, counsel for the two
companies continued to negotiate the terms of the proposed merger agreement,
the stockholder's agreement, the voting and proxy agreement and employment
agreements.
On the afternoon of June 1, 1999, at a special meeting of the Halter Marine
board of directors held in Houston, Texas, Halter Marine's executive management
updated the board of directors on the proposed exchange ratio and outside
counsel then reviewed the proposed terms of the merger agreement, stockholder's
agreement and voting and proxy agreement and employment agreements with Messrs.
Holloway, Dane, Alford and Rees. At that meeting, DLJ made a presentation to
the Halter Marine board of directors concerning the financial terms of the
proposed merger and delivered its oral opinion to the Halter Marine board of
directors, subsequently confirmed in writing, to the effect that, and based
upon the assumptions made, matters considered and limits of review as set forth
in the opinion, the exchange ratio was fair from a financial point of view to
Halter Marine's stockholders. After discussion, the Halter Marine board of
directors, with the exception of one director, determined that the merger was
in the best interests of the stockholders and approved the merger and resolved
to recommend that the Halter Marine stockholders vote to adopt the merger
agreement. The single dissenting director was Mr. Daniel J. Mortimer. Prior to
the meeting, Mr. Mortimer had resigned his position as an officer of Halter
Marine, citing his disagreement with an investigation which had been undertaken
by the audit committee of the Halter Marine board. See "Recent Developments--
Halter Marine Audit Committee Investigation" on page 32. Mr. Mortimer indicated
that he was voting against the merger as not being in the interests of the
Halter Marine stockholders, again citing the ongoing investigation. Mr.
Mortimer expressed no view as to the relative merits of the merger. Without
citing the merger, Mr. Mortimer subsequently resigned from the Halter Marine
board on June 10, 1999.
On the afternoon of June 1, 1999, the Friede Goldman board of directors held
a special meeting to discuss the proposed merger with Halter Marine. At that
meeting, the executive management of Friede Goldman discussed the results of
its due diligence review of Halter Marine, the strategic and financial
implications of the proposed merger and the proposed exchange ratio for the
issuance of Friede Goldman common stock in exchange for the Halter Marine
common stock. Jefferies also made a presentation to the Friede Goldman board of
directors concerning the financial terms of the proposed merger and delivered
its oral opinion to the Friede Goldman board of directors, subsequently
confirmed in writing, to the effect that, and based upon the assumptions made,
matters considered and limits of review as set forth in the opinion, the
exchange ratio was fair from a financial point of view to the Friede Goldman
stockholders. Outside counsel then reviewed the proposed terms of the merger
agreement, stockholder's agreement, voting and proxy agreement and employment
agreements for each of Messrs. Holloway, Dane, Alford and Rees. After
discussion, the board of directors unanimously determined that the merger is in
the best interests of the stockholders of Friede Goldman and approved the
merger agreement and resolved to recommend that the Friede Goldman stockholders
vote to adopt the merger agreement.
The merger agreement was signed by both Halter Marine and Friede Goldman on
June 1, 1999 and the transaction was announced by a joint press release.
In early August 1999, Friede Goldman advised Halter Marine of developments
relating to the construction of two offshore drilling rigs by Friede Goldman
for Ocean Rig. These developments involved a dispute between Friede Goldman and
Ocean Rig with respect to the cause for construction delays that are expected
to result in delayed delivery of the two rigs from the original delivery dates
of August 26, 1999 and November 23, 1999. Friede Goldman has asserted that
Ocean Rig is responsible for the delays due to Ocean Rig initiated design
changes and late delivery by Ocean Rig of information and equipment required to
be provided to Friede Goldman by Ocean Rig pursuant to the terms of the
construction contracts. Friede Goldman believes that it will incur significant
additional costs as a result of the customer caused delays. Friede Goldman
intends to pursue arbitration claims seeking compensation for contract changes
and other damages in excess of $75 million. Ocean Rig has indicated that it
does not agree with the cause of the extended delivery dates and, on
September 3, 1999, initiated a fast track arbitration proceeding in London,
England. Ocean Rig has indicated
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that it intends to assert an arbitration claim for liquidated damages and
damages at large for delay of up to a total of $28 million against Friede
Goldman. See "Recent Developments--Contract Dispute."
From mid-August to early September, Friede Goldman provided information to
senior management of Halter Marine relating to the contract dispute with Ocean
Rig, including the status of negotiations relating to a possible settlement of
the dispute. During this period, senior management of Halter Marine,
representatives of DLJ, and a marine construction contract expert engaged by
DLJ reviewed information provided to them by Friede Goldman with respect to the
matters in dispute with Ocean Rig. On August 5 and 18, 1999, Jefferies
interviewed Halter Marine senior management to update its earlier due diligence
and to review the status on projects since the completion of its previous due
diligence.
On September 1, 1999, Halter Marine's board of directors held a special
informational meeting in which Halter Marine's executive management, financial
advisors and outside counsel updated the board of directors on the status of
the contract between Friede Goldman and Ocean Rig. In addition, the executive
management and DLJ reviewed the additional due diligence performed by them on
the contract, including the diligence performed by the two independent
consultants retained by DLJ. On September 3, 1999, Friede Goldman publicly
announced in a press release that it intended to pursue its claims against
Ocean Rig in an arbitration to take place in London, England. On September 9,
1999, the board of directors of Halter Marine held another special
informational meeting in which it was further apprised of the status of the
contract and the results of the review by DLJ's consultants. Halter Marine's
board of directors and executive management discussed the possibility of a
revision to the exchange ratio and management suggested and the board agreed
that the due diligence review of the contract should continue with a view
toward analyzing the uncertainties of the dispute and the effect of such
uncertainties on the merger and the exchange ratio.
At a meeting held on September 10, 1999 the executive management of Friede
Goldman and Halter Marine discussed changing the exchange ratio relating to the
merger to 0.57 in order to provide the stockholders of Halter Marine a larger
percentage of the combined company. The executive management of Halter Marine
advised Friede Goldman that it would recommend the revised exchange ratio of
0.57 to the Halter Marine board of directors. Senior management of Friede
Goldman advised senior management of Halter Marine that they would recommend
the revised exchange ratio to the board of directors of Friede Goldman.
On the morning of September 13, 1999, the Friede Goldman board of directors
met to discuss the status of the Ocean Rig contract dispute and to consider the
proposal from Halter Marine to revise the exchange ratio. On September 13,
1999, Friede Goldman and its outside counsel received a draft of a proposed
amendment to the merger agreement from Halter Marine and its outside counsel.
On the afternoon of September 14, 1999, the Friede Goldman board of directors
held a special meeting to discuss the proposed amendment to the merger
agreement relating to the exchange ratio and a proposed additional condition to
closing with respect to a credit facility for the combined company of not less
than $175 million. At that meeting, the executive management of Friede Goldman
discussed the proposed amendment to the merger agreement, including the
background for the proposed revision to the exchange ratio and the prospects
for obtaining a $175 million credit facility for the combined company.
Jefferies made a presentation to the Friede Goldman board of directors
concerning the financial implications of the revised terms of the merger,
including the revised exchange ratio, and delivered its oral opinion to the
Friede Goldman board of directors, subsequently confirmed in writing, to the
effect that, and based on the assumptions made, matters considered and limits
of review as set forth in such opinion, the revised exchange ratio was fair
from a financial point of view to the Friede Goldman stockholders. Outside
counsel reviewed the terms of the proposed amendment to the merger agreement.
After discussion, the Friede Goldman board of directors (with one member
absent) unanimously determined that the merger, on the amended terms, is in the
best interest of the stockholders of Friede Goldman, approved the amendment to
the merger agreement and resolved to recommend that the Friede Goldman
stockholders vote to adopt the merger agreement as amended.
On the afternoon of September 14, 1999, at a special meeting of Halter
Marine's board of directors, the executive management updated the board of
directors on the proposed revised exchange ratio and the proposed amendment to
the merger agreement. At that meeting, DLJ made a presentation to the board of
directors in
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which it reviewed the revised terms of the merger, including the revised
exchange ratio and delivered its oral opinion to the Halter Marine board of
directors, subsequently confirmed in writing, to the effect that, and based
upon the assumptions made, matters considered and limits of review as set forth
in such opinion, the revised exchange ratio was fair from a financial point of
view to Halter Marine stockholders. After discussion, the Halter Marine board
of directors unanimously determined that the merger, on its revised terms, was
in the best interests of the stockholders and approved the merger and resolved
to recommend the merger agreement, as amended, to the Halter Marine
stockholders.
During the evening of September 14, 1999, the amendment to the merger
agreement was finalized and signed by both Friede Goldman and Halter Marine and
the terms of the amendment were announced by a joint press release.
Reasons for the Merger; Recommendation of Each Company's Board of Directors
Friede Goldman and Halter Marine believe that the merger will create
significant value for their respective stockholders. Friede Goldman and Halter
Marine have a unique opportunity to take advantage of the complementary
strategic fit of their businesses, with growth opportunities not available to
either company on its own. Both boards of directors believe that the merger
agreement and the terms of the merger are fair to, and in the best interests
of, their respective stockholders and recommend that the stockholders vote
"for" the adoption of the merger agreement.
Each of Friede Goldman and Halter Marine believe that the combined company
can achieve enhanced earnings by:
. achieving greater efficiencies from integrating the production capacity
of the two companies, adopting strategic sourcing initiatives and sharing
the best operational practices utilized by the two companies;
. realizing annual cost savings through the merger, including through the
consolidation of the corporate headquarters of the two companies and the
elimination of duplicative staff and expenses;
. pursuing additional opportunities for construction of deepwater
exploration and production equipment, including deepwater
semisubmersibles, drillships and floating production systems, through the
greater production capacity and larger workforce of the combined company,
increasing capacity to perform work from shipyards in several domestic
and foreign locations and capitalizing on existing relationships with
customers and joint venture partners;
. integrating the complementary engineered products operations of both
companies to achieve a broader range of engineered products and
increasing the opportunity to sell engineered products to a larger
customer base; and
. combining the design and engineering expertise of the two companies to
enable the combined company to develop new offshore rigs, vessels and
marine equipment to meet customer needs and to market to a larger
customer base.
In reaching their decision to recommend the merger to their stockholders,
each company's board of directors consulted with each of their respective
managements, as well as their respective financial and legal advisors, and
considered the following factors:
. information regarding the financial performance and condition, business
operations and prospects of each of Friede Goldman and Halter Marine, and
each company's respective future performance and prospects as a separate
entity and on a combined basis;
. current industry, economic and market conditions and how they relate to
business combinations or strategic alliances in the oilfield services
industry;
. recent and historical prices of Friede Goldman's common stock and Halter
Marine's common stock;
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. the potential enhancement of revenues based on the combined company's
attractiveness as a comprehensive provider of design, engineering and
manufacturing services to the offshore oil and gas industry, resulting
from the complementary capabilities, broader product lines and
strengthened financial base of the combined company;
. the financial analyses provided to them by their respective financial
advisors, as described below, and the respective opinions of each
company's financial advisors that the exchange ratio is fair from a
financial point of view to the stockholders of that company, as
applicable;
. the consolidation benefits that are expected to be available to the
combined entity, primarily in the form of improved efficiencies from
operations and corporate cost reductions;
. the ability of the combined company to optimize production capacity and
reduce costs to better compete on a global scale against foreign
competitors;
. discussions with management concerning the results of their due diligence
investigation of the other company;
. the likelihood that the merger would be completed; and
. the proposed structure of the transaction and the other terms of the
merger agreement and related agreements including:
. an exchange ratio that provides certainty about the number of shares
of Friede Goldman common stock that will be issued in the merger;
. the expected treatment of the merger as a tax-free reorganization;
. the ability of each company to respond to unsolicited alternative
acquisition proposals which the board of directors of that company
determines, after consultation with its financial advisors, would
result in a transaction more favorable to that company's stockholders
than the merger;
. the provisions of the merger agreement that may require the party
entering into another transaction, in circumstances involving the
termination of the merger agreement, to pay the other party to the
merger agreement a termination fee and reimburse the other party's
out-of-pocket expenses; and
. restrictions on specified transactions by each of the companies
during the period prior to the completion of the merger.
Each of the boards of directors of Friede Goldman and Halter Marine
considered additional factors when evaluating the transaction. The board of
directors of Friede Goldman considered the following factors:
. the diversification of product markets achieved through Halter Marine's
presence in the commercial and government markets and the resulting
effect of reducing the dependence of the combined company on the cyclical
offshore energy market;
. the increased levels of debt and interest costs that the combined company
would have compared to Friede Goldman on a stand-alone basis;
. the continued board representation for the current Friede Goldman
stockholders through the six seats on the Friede Goldman Halter board of
directors and the continued role of Friede Goldman's Chairman, President
and Chief Executive Officer as Chairman of the board of directors and
Chief Executive Officer of the combined company and of Friede Goldman's
Executive Vice President as Executive Vice President of the combined
company; and
. the risk that we will not be able to obtain bank financing reasonably
acceptable to us and that, in our reasonable judgment, would meet the
needs of the combined company.
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The board of directors of Halter Marine considered these additional factors:
. the then-current and historical market prices of Halter Marine common
stock and Friede Goldman common stock and the premium that the exchange
ratio in the merger represented over the average trading prices for
Halter Marine common stock immediately preceding announcement of the
merger and over periods of time preceding the announcement;
. the continued representation for the current Halter Marine stockholders
through the five seats on the Friede Goldman Halter board of directors
and the continued role of Halter Marine's Chairman and Chief Executive
Officer as Vice Chairman of the board of directors, President and Chief
Operating Officer of the combined company and of Halter Marine's Chief
Financial Officer as Chief Financial Officer of the combined company;
. the risk that there will be an unfavorable resolution of the contract
dispute between Friede Goldman and Ocean Rig;
. the risk that Ocean Rig will not have the financial resources to make a
substantial payment to Friede Goldman under its contract or that such
payment would be on terms not acceptable to us; and
. the risk that we will not be able to obtain bank financing reasonably
acceptable to us and that, in our reasonable judgment, would meet the
needs of the combined company.
Each company's board of directors also considered some risks and potential
disadvantages associated with the merger, including:
. the risk that the operations of the two companies may not be successfully
integrated;
. the potential disruptive effects of the merger on the business and
operations of Friede Goldman and Halter Marine, as applicable;
. the risk that expected cost savings may not be realized to the degree
anticipated;
. the risk that the merger might not be completed as a result of a failure
to satisfy the conditions to the merger agreement, including antitrust
regulatory approvals;
. the potential adverse effect on each company's business, operations and
financial condition should it not be possible to complete the merger, as
well as adverse effects resulting from the expenses incurred by each
company in connection with the merger and the possibility of having to
pay a termination fee to the other party to the merger agreement; and
. other matters described under "Risk Factors."
Each company's board of directors individually determined that the potential
advantages of the merger substantially outweigh the risks and disadvantages
described above. The above discussion of the factors considered by each
company's board of directors is not intended to be exhaustive but is believed
to include all material factors considered by each company's board of
directors. In reaching its decision to approve the merger, each company's board
of directors did not quantify or assign any relative weights to the factors
considered, and individual directors may have given different weights to
different factors.
After considering all of the factors described above, at a meeting held on
June 1, 1999, Friede Goldman's board of directors unanimously approved the
merger agreement and the related transactions. At a meeting on September 14,
1999, Friede Goldman's board of directors unanimously approved amendment no. 1
to the merger agreement. At a meeting held on June 1, 1999, Halter Marine's
board of directors, with one director voting against, approved the merger
agreement and the related transactions. At a meeting held on September 14,
1999, Halter Marine's board of directors unanimously approved amendment no. 1
to the merger agreement.
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In considering the recommendation of the Friede Goldman board of directors
and the Halter Marine board of directors with respect to the merger, the merger
agreement and the related transactions, Friede Goldman and Halter Marine
stockholders should be aware that some officers and directors of Friede Goldman
and Halter Marine have interests in the proposed merger that are different from
and in addition to the interests of Friede Goldman and Halter Marine
stockholders generally. Each of the Friede Goldman and the Halter Marine board
of directors was aware of these additional conflicts of interests and
considered them in approving the merger and merger agreement. For a description
of these interests, see "Interests of Directors and Officers in the Merger"
that begins on page 57 of this document.
The Friede Goldman board of directors and the Halter Marine board of
directors each believe that the merger agreement and the terms of the merger
are fair to, and in the best interests of, Friede Goldman and Halter Marine
stockholders, respectively, and recommend that the stockholders of Friede
Goldman and Halter Marine, respectively, vote "for" the adoption of the merger
agreement.
In addition to voting "for" the approval and adoption of the merger, the
Friede Goldman board of directors also recommends that the stockholders for
Friede Goldman vote "for" each of the following:
. an amendment to Friede Goldman's 1997 equity incentive plan (1) to
increase the number of shares available for grant from 10% to 15% of the
total number of shares of common stock outstanding and (2) to increase
the number of options which may be granted to some executive officers of
Friede Goldman and Halter Marine pursuant to the transactions
contemplated by the merger agreement;
. a proposal to increase the number of authorized directors to 11; and
. an amendment to Friede Goldman's charter to provide indemnification to
the officers and directors of the combined company that is as favorable
as the indemnification provided to the current officers and directors of
Halter Marine under the Halter Marine charter.
Opinions of Financial Advisors
Friede Goldman's Financial Advisor
The Friede Goldman board of directors engaged Jefferies act as its financial
advisor in connection with the transaction contemplated by the merger
agreement. The Friede Goldman board of directors selected Jefferies on the
basis of its knowledge of Friede Goldman and Halter Marine as well as its
knowledge of the oil field services industry. The Friede Goldman board of
directors instructed Jefferies, in its role as financial advisor, to evaluate
the fairness, from a financial point of view, to the holders of shares of
Friede Goldman common stock, of the consideration to be paid by the holders
pursuant to the merger agreement and, in this regard, to conduct investigations
as Jefferies deemed appropriate. No limitations were placed by the board of
directors or management of Friede Goldman with respect to the investigations
made or the procedures followed by Jefferies in preparing and rendering its
opinion, and Friede Goldman and its management cooperated fully with Jefferies
in connection therewith.
On June 1, 1999, Jefferies rendered its written opinion to the Friede
Goldman board of directors to the effect that, based upon and subject to some
matters stated in its opinion, as of the date of the opinion, the exchange
ratio was fair to the holders of Friede Goldman common stock from a financial
point of view. Subsequent to June 1, 1999, Friede Goldman and Halter Marine
renegotiated the exchange ratio (as discussed under "The Merger--Background of
the Merger") and on September 14, 1999 the merger agreement was amended to
provide for an exchange ratio of 0.57 shares of Friede Goldman common stock for
each share of Halter Marine common stock. On September 14, 1999, Jefferies
issued its opinion to the board of directors of Friede Goldman that, as of such
date and based upon and subject to the matters reviewed with the Friede Goldman
board, the revised exchange ratio was fair from a financial point of view to
the holders of Friede Goldman common stock. Some financial analyses used by
Jefferies in connection with rendering the Jefferies opinion to the Friede
Goldman board of directors are summarized under "Analyses by Jefferies" below.
The following discussion gives effect to this exchange ratio.
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<PAGE>
The full text of the Jefferies opinion, which sets forth, among other
things, assumptions made, procedures followed, matters considered, and
limitations on the review undertaken, is attached as Annex G to this joint
proxy statement/prospectus. Friede Goldman stockholders are urged to, and
should, read the Jefferies opinion carefully and in its entirety. The Jefferies
opinion was provided to the Friede Goldman board of directors and is directed
only to the fairness, from a financial point of view, of the exchange ratio to
holders of shares of Friede Goldman common stock according to the merger
agreement, and it does not address any other aspect of the merger. The summary
of the Jefferies opinion set forth in this joint proxy statement/prospectus is
qualified in its entirety by reference to the full text of the opinion.
In conducting its analysis and rendering its opinion, Jefferies reviewed and
considered the financial and other factors as were deemed appropriate under the
circumstances including, among others, the following:
. the merger agreement;
. the historical and current financial condition and results of operations
of Friede Goldman and Halter Marine, including:
. the Annual Reports on Form 10-K of Friede Goldman for the years ended
December 31, 1997 and 1998;
. the Quarterly Reports on Form 10-Q of Friede Goldman for the quarters
ended March 31, 1999 and June 30, 1999;
. the Annual Reports on Form 10-K of Halter Marine for the years ended
March 31, 1997, 1998 and 1999; and
. the Quarterly Reports on Form 10-Q of Halter Marine for the quarters
ended December 31, 1998 and June 30, 1999;
. non-public financial and non-financial information prepared by the
management of Friede Goldman and Halter Marine, which data was made
available to us in our role as financial advisor to Friede Goldman;
. published information regarding the financial performance and operating
characteristics of a selected group of companies which we deemed
comparable;
. business prospects of Friede Goldman and Halter Marine as projected by
the management of Friede Goldman and Halter Marine;
. the historical and current market prices for Friede Goldman common stock
and Halter Marine common stock and for the equity securities of other
companies with businesses that we consider relevant to our inquiry;
. publicly available information; and
. the nature and terms of other recent acquisition transactions in the oil
service industry.
Jefferies met with officers and employees of Friede Goldman and Halter Marine
to discuss the foregoing as well as other matters that it believed relevant to
its opinion.
Jefferies also took into account general economic, monetary, political,
market and other conditions as they existed at the time of giving the Jefferies
opinion, as well as its experience in connection with similar transactions and
securities valuation generally. In connection with its review, Jefferies did
not independently verify any of the foregoing information and relied on the
information being complete and accurate in all material respects. In addition,
Jefferies did not make any evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of Friede Goldman or Halter Marine, nor
was Jefferies furnished with any evaluation or appraisal. Jefferies assumed
that the merger would be accounted for using the purchase method of accounting
for business combinations.
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<PAGE>
The Jefferies opinion did not address Friede Goldman's underlying business
decision to effect the merger or constitute a recommendation to any stockholder
of Friede Goldman as to how a stockholder should vote with respect to the
merger. Also, the Jefferies opinion did not imply any conclusion as to the
likely trading range for Friede Goldman's common stock following the
consummation of the merger, which may vary depending on numerous factors which
generally influence the prices of securities.
Both Friede Goldman and Halter Marine provided Jefferies with financial
information regarding their respective financial performance to develop
estimates for future performance.
Analyses by Jefferies
The following is a summary of the material financial analyses used by
Jefferies in connection with rendering the Jefferies opinion to the Friede
Goldman board of directors. The following summary of the analyses used by
Jefferies does not purport to be a complete description of the analyses
conducted by Jefferies in arriving at its opinion.
Exchange Ratio Analysis. Jefferies performed an analysis of the ratio of the
market price of Halter Marine common stock to the market price of Friede
Goldman common stock during the period from Friede Goldman's initial public
offering on July 22, 1997. Jefferies calculated the ratio of the Halter Marine
common stock closing price for each trading day during this period to the
Friede Goldman common stock closing price for such trading days. This analysis
implied an exchange ratio ranging from a high of 1.66 shares of Friede Goldman
common stock for each share of Halter Marine common stock to a low of 0.28
shares of Friede Goldman common stock for each share of Halter Marine common
stock, with an average during the period from July 22, 1997 through May 28,
1999 of 0.68 shares of Friede Goldman common stock per share of Halter Marine
common stock. Jefferies also calculated the ratio of the Halter Marine common
stock price on May 28, 1999 ($7 per share) to the Friede Goldman common stock
price on this day ($17 per share). This implied an exchange ratio of 0.43
shares of Friede Goldman common stock for each share of Halter Marine common
stock.
Implied Halter/Friede Exchange Ratio Summary
<TABLE>
<CAPTION>
Average
-------
<S> <C>
Since Friede Goldman IPO............................................. .68x
360 trading day...................................................... .55x
180 trading day...................................................... .46x
90 trading day....................................................... .37x
60 trading day....................................................... .35x
30 trading day....................................................... .37x
May 28, 1999......................................................... .43x
</TABLE>
Between June 1, 1999 and September 14, 1999, Halter Marine's common stock
price traded at a price to keep the Halter Marine/Friede Goldman exchange ratio
at approximately 0.46, the originally announced exchange ratio. Such a trading
characteristic is not unusual for the stock of any company that has been
subject to an acquisition announcement at a fixed exchange ratio. For the four
trading days subsequent to the announcement of the revised exchange ratio on
September 14, 1999, the average exchange ratio of Halter Marine/Friede Goldman
was 0.52. Therefore, Jefferies believes that an exchange ratio analysis for the
period beyond June 1, 1999 is not relevant to its analysis.
Valuation Multiple Analysis. Jefferies determined the implied consideration
to be received by the holders of Halter Marine common stock in the merger (the
"Implied Consideration") (obtained by multiplying the closing stock price for
Friede Goldman common stock of $12 13/16 on September 10, 1999 by the exchange
ratio for the merger of 0.57 shares of Friede Goldman common stock per share of
Halter Marine common stock). Jefferies calculated the multiple of "Total
Enterprise Value" (defined as the market value of all shares of
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<PAGE>
Halter Marine common stock, plus the book value of total debt, less cash and
cash equivalents) to its projected earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the projected fiscal year ending
March 31, 2001. Based on the Implied Consideration, the ratio of Total
Enterprise Value to projected 2001 EBITDA was 7.2x.
Jefferies also considered the ratio of Total Enterprise Value to projected
EBITDA for other oilfield services combination transactions since July 1994
which Jefferies believed comparable to the merger. Jefferies determined that
over this period there were 37 oilfield services transactions that it believed
comparable to the merger (the "Comparable Transactions"). The average valuation
multiple for the Comparable Transactions was 7.4x. Of the Comparable
Transactions, Jefferies determined that 23 had a Total Enterprise Value of
greater than $250 million. The average multiple for Comparable Transactions
with Total Enterprise Value of greater than $250 million was 8.0x.
Premium Analysis. As part of its original analysis for the transaction
announced on June 1, 1999, Jefferies calculated the premium to holders of
Halter Marine common stock of the implied consideration to the closing stock
price for Halter Marine common stock of $7 3/8 on May 28, 1999. Jefferies
calculated a premium to holders of Halter Marine common stock equal to 6.4% of
the closing stock price for Halter Marine common stock on May 28, 1999.
Jefferies also analyzed average acquisition premiums for acquisitions of public
oilfield services companies in the period January 1, 1997 through May 28, 1999,
focusing on transactions which were effected primarily through an exchange of
common stock.
<TABLE>
<CAPTION>
Premium prior to
Announcement Date
---------------------
1 Day 1 Week 4 Weeks
----- ------ -------
<S> <C> <C> <C>
Premium to Halter Marine Share Price................ 6.4% 25.5% 29.4%
Average Premium for Comparable Transactions......... 30.6% 34.3% 32.8%
</TABLE>
Jefferies believed that an updated premium analysis was not relevant in
analyzing the currently proposed transaction with a revised exchange ratio of
0.57 because since June 1, 1999, the publicly traded price of Halter Marine's
common stock has been fixed at approximately the originally announced exchange
ratio of 0.4614. If, however, the new exchange ratio of 0.57 were applied to
the relevant stock prices in the table above, the premiums for Halter Marine's
share price would be 31.4%, 55.0%, and 59.8% for the one day, one week and four
week time periods, respectively.
Relative Contribution Analysis. Jefferies analyzed the relative contribution
of Halter Marine and Friede Goldman to the combined EBITDA, net income and cash
flow of the two companies, assuming completion of the merger, based on
estimated results for the twelve-month periods ending December 31, 1999 and
2000 (without giving effect to any transaction adjustments). Jefferies
calculated contributions by Friede Goldman to the combined EBITDA, net income
and cash flow which ranged from a low of 46.4% to a high of 73.5%,
respectively. Jefferies also calculated the percentage of the combined
companies' equity that would be held by current Friede Goldman stockholders,
assuming completion of the merger, as 59.0% (using the exchange ratio to be
used in the merger) and compared the percentage with the foregoing contribution
percentages.
Implied Friede Goldman Contribution Analyses Summary
<TABLE>
<CAPTION>
Average
-------
<S> <C>
1999E................................................................ 55.7%
2000E................................................................ 58.3%
Total Average........................................................ 57.0%
Equity Ownership................................................... 59.0%
</TABLE>
The foregoing summary does not purport to be a complete description of the
analyses performed by Jefferies. The preparation of financial analyses and
fairness opinions is a complex process and is not necessarily susceptible to
partial analysis or summary description. Jefferies believes that its analyses
(and the summary set
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<PAGE>
forth above) must be considered as a whole, and that selecting portions of
these analyses and of the factors considered by Jefferies, without considering
all of these analyses and factors, could create an incomplete view of the
processes underlying the analyses conducted by Jefferies and its opinion.
Jefferies made no attempt to assign specific weights to particular analyses.
Any estimates contained in Jefferies' analyses are not necessarily indicative
of actual values, which may be significantly more or less favorable than as set
forth herein.
Jefferies is an investment banking firm with substantial experience in
transactions similar to the merger and is familiar with Friede Goldman and its
business. As part of its investment banking business, Jefferies is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
Friede Goldman has agreed to pay Jefferies a cash fee of $300,000 for the
Jefferies opinion to the board of directors. If the merger is consummated,
Jefferies will receive a cash success fee of $3,000,000 less the $300,000 in
fees to be paid by Friede Goldman for the Jefferies opinion. Friede Goldman
also has agreed to indemnify Jefferies against some liabilities and expenses,
including liabilities under U. S. federal securities laws, relating to or
arising out of its engagement as financial advisor.
Jefferies has previously rendered investment banking and financial advisory
services to Friede Goldman for which it has received customary compensation. In
the normal course of its business, Jefferies and its affiliates may actively
trade or hold the securities of Friede Goldman and Halter Marine for its own
account and the accounts of its customers and, accordingly, may at any time
hold a long or short position therein. Jefferies has not rendered any
investment banking or financial advisory services to Halter Marine.
Halter Marine's Financial Advisor
Halter Marine asked DLJ, in its role as financial advisor to Halter Marine,
to render an opinion to the Halter Marine board as to the fairness to the
stockholders of Halter Marine, from a financial point of view, of the exchange
ratio in the merger. On September 14, 1999, DLJ delivered to the Halter Marine
board its oral opinion to the effect that, as of that date, the exchange ratio
in the merger was fair to the stockholders of Halter Marine from a financial
point of view. This opinion was subsequently confirmed in the written DLJ
opinion to the effect that, as of September 14, 1999, and based on and subject
to the assumptions, limitations and qualifications set forth in the opinion,
the exchange ratio was fair from a financial point of view to the stockholders
of Halter Marine.
The full text of the DLJ opinion is attached as Annex H to this joint proxy
statement/prospectus. The summary of the DLJ opinion set forth in this joint
proxy statement/prospectus is qualified in its entirety by reference to the
full text of the DLJ opinion. Halter Marine stockholders are urged to read the
DLJ opinion carefully and in its entirety for the procedures followed,
assumptions made, other matters considered and limits of the review by DLJ in
connection with the opinion.
The DLJ opinion was prepared for the Halter Marine board and was directed
only to the fairness to Halter Marine stockholders from a financial point of
view, as of the date thereof, of the exchange ratio in the merger. DLJ
expressed no opinion in the DLJ opinion as to the prices at which Halter Marine
common stock or Friede Goldman common stock would actually trade at any time.
The DLJ opinion did not address the relative merits of the merger and any other
business strategies that may have been considered by the Halter Marine board
nor did it address the Halter Marine board's decision to proceed with the
merger. The DLJ opinion did not constitute a recommendation to any Halter
Marine stockholder as to how the stockholder should vote on the merger.
Halter Marine selected DLJ as its financial advisor because DLJ is an
internationally recognized investment banking firm that has substantial
experience in the energy industry and is familiar with Halter Marine and its
businesses. DLJ was not retained as an advisor or agent to the stockholders of
Halter Marine or
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<PAGE>
any other person. As part of its investment banking business, DLJ is regularly
engaged in the valuation of businesses and securities in connection with
mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Halter Marine did not impose any restrictions or limitations upon DLJ
with respect to the investigations made or the procedures followed by DLJ in
rendering the DLJ opinion.
In arriving at the DLJ opinion, DLJ reviewed the merger agreement and the
exhibits thereto, the voting and proxy agreement and the stockholder's
agreement, as well as financial and other information that was publicly
available or furnished to DLJ by Halter Marine and Friede Goldman, including
information provided during discussions with their respective managements.
Included in the information provided during these discussions were financial
projections of Halter Marine prepared by the management of Halter Marine and
financial projections of Friede Goldman prepared by the management of Friede
Goldman. In addition, DLJ reviewed the memorandum dated September 14, 1999 of
Ship Construction Strategies, Inc. related to estimated completion costs of
certain construction projects. DLJ also reviewed growth rate assumptions for
Halter Marine and Friede Goldman with the respective managements of the two
companies. In addition, DLJ compared financial and securities data of Halter
Marine and Friede Goldman with publicly available information concerning
various other companies whose securities are traded in public markets, reviewed
the relative financial contributions made by Halter Marine and Friede Goldman
and conducted other financial studies, analyses and investigations as DLJ
deemed appropriate for purposes of rendering the DLJ opinion. DLJ was not
requested to, and did not, solicit the interest of any other party in acquiring
Halter Marine.
In rendering the DLJ opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources, that was provided to it by Halter Marine, Friede
Goldman and their respective representatives, or that was otherwise reviewed by
DLJ. In particular, DLJ relied upon the estimates of the management of Halter
Marine of the operating synergies achievable as a result of the merger and upon
DLJ's discussion of the synergies with the management of Friede Goldman. With
respect to the financial projections supplied to DLJ, DLJ has relied (i) on
representations that they have been reasonably prepared on a basis reflecting
the best currently available estimates and judgements of the management of
Halter Marine and Friede Goldman as to the future operating and financial
performance of Halter Marine and Friede Goldman, respectively, and (ii) the
memorandum dated September 14, 1999 of Ship Construction Strategies, Inc.
related to estimated completion costs of certain construction projects. With
respect to growth assumptions applied to the financial projections supplied to
DLJ, DLJ relied on representations that the assumptions reflect the best
currently available estimates and judgements of the managements of Halter
Marine and Friede Goldman as to the growth rates of Halter Marine and Friede
Goldman, respectively, for the periods indicated. DLJ did not assume
responsibility for making an independent evaluation of any assets or
liabilities, or for making any independent verification of the information
reviewed by DLJ. DLJ has assumed the merger will qualify as a tax-free
reorganization under the Internal Revenue Code. DLJ relied as to legal matters
on advice of counsel of Halter Marine.
The DLJ opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of the DLJ opinion. The DLJ opinion states that, although
subsequent developments may affect the DLJ opinion, DLJ does not have any
obligation to update, revise or reaffirm its opinion. Additionally, in
rendering the DLJ opinion, DLJ considered that the merger agreement contains a
condition to closing that bank financing in an amount of at least $175 million
will have been arranged for the surviving corporation as of the effective time
on terms reasonably acceptable to Friede Goldman and Halter Marine.
Analyses by DLJ
The following is a summary of the presentation made by DLJ to the Halter
Marine board at its September 14, 1999 meeting in connection with rendering the
DLJ opinion. Unless otherwise specified, references to cost savings below
assume that Halter Marine and Friede Goldman will realize $15 million of annual
pre-tax cost savings in 1999, on a pro forma basis as if the merger occurred on
January 1, 1999, and $15 million of annual pre-tax cost savings in 2000. Unless
otherwise specified, actual historical financial data
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<PAGE>
was reviewed for the period ended June 30, 1999 for each of Halter Marine,
Friede Goldman and the comparable publicly traded companies. Unless otherwise
specified, projected results for Halter Marine's fiscal periods ended March 31,
2000 and March 31, 2001 (and also comparable companies with fiscal years ending
March 31) were compared to projected results for Friede Goldman's fiscal
periods ended December 31, 1999 and December 31, 2000 (and comparable companies
with fiscal years ending December 31).
Valuation Methodology and Qualitative Factors Affecting Halter Marine. As
part of its fairness analysis, DLJ considered that Halter Marine has generated
declining financial performance over the past fiscal year, with deteriorating
gross profit, operating profit and net income margins. In addition, DLJ
considered that Halter Marine's book leverage has become relatively high and
its working capital liquidity position has worsened in recent fiscal quarters.
Also, DLJ considered that Halter Marine's recent financial performance has been
below estimates published by the research community.
Discounted Cash Flow Analysis. DLJ performed a discounted cash flow ("DCF")
analysis of Halter Marine and Friede Goldman using projections and assumptions
provided by the management of Halter Marine and Friede Goldman, respectively
(excluding anticipated cost savings). In each case, in performing its analysis,
DLJ calculated the estimated unlevered cash flow (defined as unleveraged
operating income, less cash taxes, plus depreciation, plus amortization, less
capital expenditures) and discounted the projected stream of unlevered cash
flow from 1999 to 2002 at a range of discount rates. In each case, to estimate
the terminal value of Halter Marine and Friede Goldman on a stand-alone basis
at the end of the forecast period, DLJ applied terminal value multiples of
projected 2002 EBITDA and adjusted these implied enterprise values by
subtracting net debt to derive an unlevered terminal equity value; the
unlevered terminal equity value was then discounted at a range of discount
rates.
The DCF for Halter Marine's operations was estimated using discount rates
ranging from 13% to 15% and estimated terminal multiples in year 2002 (Halter's
fiscal 2003) of EBITDA (defined as earnings before interest expense, income
taxes, depreciation and amortization) ranging from 5.0x to 7.0x. Based on a pro
forma 28.9 million shares of Halter Marine common stock outstanding, calculated
using the treasury stock method, this analysis yielded estimated per share
equity values of $4.66 per share to $8.30 per share.
The DCF for Friede Goldman's operations was estimated using discount rates
ranging from 12% to 14% and estimated terminal multiples in year 2002 of EBITDA
ranging from 5.0x to 7.0x. Based on a pro forma 23.4 million shares of Friede
Goldman common stock outstanding, calculated using the treasury stock method,
this analysis yielded estimated per share equity values of $12.79 per share to
$17.71 per share.
This analysis yielded exchange ratios ranging from 0.364x to 0.468x
(obtained by comparing the estimated valuation of Halter Marine common stock to
the estimated valuation of Friede Goldman common stock at comparable terminal
multiples), compared to the proposed exchange ratio of 0.570x.
<TABLE>
<CAPTION>
Implied Exchange Ratio
----------------------------------
Discount Rate Terminal Value Multiples
-------------------- ----------------------------------
Halter Friede Merger
Marine Goldman 5.0x 6.0x 7.0x Exchange Ratio
------ ------- ----- ----- ----- --------------
<S> <C> <C> <C> <C> <C>
13.0% 12.0% 0.364x 0.423x 0.468x 0.570x
14.0 13.0 0.364 0.423 0.468 0.570
15.0 14.0 0.364 0.423 0.468 0.570
</TABLE>
Comparable Public Trading Analysis. DLJ compared selected historical and
projected operating information (excluding anticipated cost savings), stock
market data and financial ratios for each of Halter Marine and Friede Goldman
to the same data for selected publicly-traded companies in the offshore
construction and fabrication industries, which are focused in the energy
industry. The offshore construction and fabrication companies which DLJ
analyzed were:
. Gulf Island Fabrication;
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<PAGE>
. McDermott International;
. TransCoastal Marine Services; and
. UNIFAB International.
DLJ analyzed the enterprise value of each of the offshore construction and
fabrication companies measured as a multiple of selected financial data.
Enterprise value was calculated as equity value, plus total debt, plus the
liquidation value of preferred stock, if any, plus the book value of minority
interests, if any, minus cash and short-term investments. DLJ analyzed equity
values for each of the offshore construction and fabrication companies, which
utilized the stock prices for each company as of the close of trading on
September 9, 1999, measured as a multiple of selected financial data.
In examining the offshore construction and fabrication companies, DLJ
analyzed the enterprise value for the companies as a multiple of projected 1999
and 2000 EBITDA. DLJ also analyzed the equity value of the offshore
construction and fabrication companies as a multiple of projected 1999, and
2000 net income and after-tax cash flow (defined as net income plus
depreciation plus amortization plus deferred taxes, if any). All data relating
to the offshore construction and fabrication companies was derived from
publicly available sources and from the estimates of research analysts,
including DLJ research estimates and estimates compiled by I/B/E/S.
<TABLE>
<CAPTION>
Average Implied Per Implied Per Implied Merger
Multiple for Share to Share to Exchange Exchange
Comparables(1) Halter Marine Friede Goldman Ratio Ratio
-------------- ------------- -------------- -------- --------
<S> <C> <C> <C> <C> <C>
Enterprise Value to:
1999P EBITDA(2)....... 7.4x $ 3.18 $17.74 0.179x 0.570x
2000P EBITDA(3)....... 5.8 4.02 10.49 0.383 0.570
Equity Value to:
1999 Net Income(2).... 16.5x $ 2.86 $26.11 0.109x 0.570x
2000P Net Income(3)... 13.2 7.36 16.40 0.449 0.570
1999P After-Tax Cash
Flow(2).............. 9.0x $10.67 $18.92 0.564x 0.570x
2000P After-Tax Cash
Flow(3).............. 5.7 9.13 10.61 0.861 0.570
</TABLE>
- --------
(1) Comparables defined to include Gulf Island Fabrication, McDermott
International, TransCoastal Marine Services, and UNIFAB International.
(2) Based on Halter Marine's fiscal year ended March 31, 2000 and Friede
Goldman's fiscal year ended December 31, 1999.
(3) Based on Halter Marine's fiscal year ended March 31, 2000 and Friede
Goldman's fiscal year ended December 31, 2000.
DLJ believes EBITDA and net income trading multiples are more relevant than
after-tax cash flow multiples, because of the significant variances of
maintenance capital expenditures (hence free cash flow) among the selected
comparable companies.
Based on the foregoing data and on projections for Halter Marine provided by
the management of Halter Marine and for Friede Goldman provided by the
management of Friede Goldman (excluding anticipated cost savings) this analysis
yielded estimated per share equity values for Halter Marine ranging from
approximately $2.86 to $7.36, compared to a closing price per share of Halter
Marine common stock on May 25, 1999 of $6.06. This analysis also yielded
implied exchange ratios ranging from 0.109x to 0.449x (obtained by comparing
the estimated valuation of Halter Marine common stock to the estimated
valuation of Friede Goldman common stock based on each trading parameter),
compared to the proposed exchange ratio of 0.570x.
Relative Contribution Analysis. DLJ analyzed the relative contributions of
Halter Marine and Friede Goldman to the pro forma combined company based on
selected financial data (excluding anticipated cost
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<PAGE>
savings). DLJ compared the relative contribution of Halter Marine to financial
data for the pro forma combined company, including the following:
. EBITDA for the projected 1999 and 2000 periods;
. Net income for the projected 1999 and 2000 periods; and
. After-tax cash flow for the projected 1999 and 2000 periods.
In each case, the financial data for the pro forma combined company
(excluding anticipated cost savings) was determined by adding the financial
data for Halter Marine and Friede Goldman. This analysis yielded implied
exchange ratios ranging from 0.110x to 0.466x, compared to the proposed
exchange ratio of 0.570x.
Pro Forma Combined Accretion/Dilution Analysis--Merger. Using the projected
earnings of Halter Marine for the fiscal periods ended March 31, 2000 and March
31, 2001 and the projected earnings of Friede Goldman for the fiscal periods
ended December 31, 1999 and December 31, 2000, DLJ compared the projected
earnings per share ("EPS") and after-tax cash flow per share ("CFPS") of Friede
Goldman on a stand-alone basis to the projected pro forma EPS and CFPS of the
combined company after the merger. This analysis assumed $15 million of annual
pre-tax cost savings in 1999, on a pro forma basis as if the merger occurred on
January 1, 1999, and $15 million of annual pre-tax cost savings in 2000.
This analysis showed that the merger would be dilutive in 1999 and 2000 to
holders of Friede Goldman common stock on an EPS basis both with and without
anticipated cost savings. However, this analysis further showed that the merger
would be accretive in 1999 and 2000 on a CFPS basis with anticipated cost
savings and accretive in 2000 on a CFPS basis without anticipated cost savings
to the holders of Friede Goldman common stock.
The summary set forth above does not purport to be a complete description of
the analyses performed by DLJ but describes, in summary form, the material
elements of the presentation made by DLJ to the Halter Marine board on
September 14, 1999. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Each of the analyses conducted by DLJ was carried out in order to
provide a different perspective on the transaction and to add to the total mix
of information available. DLJ did not form a conclusion as to whether any
individual analysis considered in isolation supported or failed to support an
opinion as to fairness from a financial point of view. Rather, in reaching its
conclusion, DLJ considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of all analyses taken
as a whole. DLJ did not place any particular reliance or weight on any
individual analysis, but instead concluded that its analyses, taken as a whole,
supported its determination. Accordingly, notwithstanding the separate factors
summarized above, DLJ has indicated to Halter Marine that it believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion. The analyses performed by DLJ are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by these analyses.
Pursuant to the terms of an engagement agreement dated October 22, 1998,
Halter Marine (1) has paid DLJ (a) $500,000 in connection with the delivery by
DLJ of its opinion, and (2) will pay an additional fee equal to $2.5 million
upon completion of the merger. Halter Marine has also agreed that if the merger
is not completed and Halter Marine receives a termination fee, Halter Marine
will pay DLJ twenty percent (20%) of the termination fee upon Halter Marine's
receipt of the termination fee. Any fees previously paid to DLJ pursuant to the
engagement agreement will be deducted from any fee to which DLJ is entitled
pursuant to the preceding sentence. In addition, Halter Marine agreed to
reimburse DLJ, upon request by DLJ from time to time, for any out-of-pocket
expenses (including the reasonable fees and expenses of counsel) incurred by
DLJ in connection with its engagement thereunder (up to a maximum of $75,000)
and to indemnify DLJ and related
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persons against specific liabilities in connection with its engagement,
including liabilities under United States federal securities laws. DLJ and
Halter Marine negotiated the terms of the fee arrangement.
In the ordinary course of business, DLJ and its affiliates may own or
actively trade the securities of Halter Marine and Friede Goldman for their own
accounts and for the accounts of their customers and, accordingly, may at any
time hold a long or short position in Halter Marine or Friede Goldman
securities. DLJ, as part of its investment banking services, is regularly
engaged in the valuation of businesses and securities in connection with
mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. DLJ has performed investment banking and other services for
Halter Marine in the past, including (1) acting as lead manager in a $33
million offering of Halter Marine common stock in 1996 and (2) acting as lead
manager in a $185 million offering of Halter Marine convertible subordinated
notes in 1997. DLJ has received usual and customary compensation for its past
services for Halter Marine.
Accounting Treatment
Friede Goldman Halter intends to account for the merger as a purchase under
generally accepted accounting principles. Friede Goldman Halter will record the
assets and liabilities of Halter Marine on its books at their estimated fair
market value. See the "Notes to Unaudited Pro Forma Combined Financial
Statements."
Material U.S. Federal Income Tax Consequences
The following sets forth a summary of the material U.S. federal income tax
consequences that are expected to result from the merger. This summary does not
deal with all aspects of federal income taxation that may affect particular
Halter Marine stockholders in light of their individual circumstances and does
not consider the effect of any applicable state, local or foreign tax laws.
Further, this summary only applies to Halter Marine stockholders who hold
shares of Halter Marine common stock as capital assets and does not deal with
special classes of stockholders, such as:
. insurance companies;
. tax-exempt organizations;
. financial institutions;
. broker-dealers;
. foreign persons or entities;
. persons who hold Halter Marine common stock as part of a hedge, straddle
or conversion transaction; or
. persons who acquired shares of Halter Marine common stock upon the
exercise of employee options or otherwise as compensation.
Accordingly, Halter Marine stockholders are urged to seek tax advice from their
own tax advisors as to their particular circumstances.
This summary is based upon current law. Future legislative, judicial or
administrative changes or interpretations could alter or modify the following
statements and conclusions, and any of these changes or interpretations could
be retroactive and could affect the tax consequences to Friede Goldman, Halter
Marine or Halter Marine stockholders.
Tax Opinions Regarding the Merger. Completion of the merger is conditioned
upon the receipt by Friede Goldman of an opinion of Andrews & Kurth L.L.P. in
form and substance satisfactory to Friede Goldman, and the receipt by Halter
Marine of an opinion of Shearman & Sterling in form and substance satisfactory
to Halter Marine. These opinions, dated the effective time of the merger, will
be based on the facts, representations and
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assumptions set forth in the opinions, and will state that the merger will
qualify as a tax-free reorganization within the meaning of Section 368(a) of
the Internal Revenue Code and that Friede Goldman and Halter Marine will each
be a "party to a reorganization" as this phrase is described in Section 368(b)
of the Internal Revenue Code.
Both Friede Goldman and Halter Marine may waive the receipt of these
opinions of counsel. If either Friede Goldman or Halter Marine waives this
condition, we will circulate a new proxy advising the stockholders that the
condition to receive the required tax opinion prior to the merger has been
waived and we will give the stockholders of the company which waived the
condition an opportunity to reconsider their vote.
Neither Friede Goldman nor Halter Marine will seek a ruling from the
Internal Revenue Service concerning the federal income tax consequences of the
merger. The opinions of tax counsel are not binding on the IRS or the courts.
In rendering their opinions, Andrews & Kurth L.L.P. and Shearman & Sterling
will assume that the merger will be completed as contemplated by this document.
Each firm has received customary representations of facts from Friede Goldman
and Halter Marine upon which they are relying.
Treatment of Friede Goldman and Halter Marine. As a result of the merger
qualifying as a tax-free reorganization for federal income tax purposes,
neither Friede Goldman nor Halter Marine will recognize any gain or loss with
respect to the merger.
Treatment of Holders of Halter Marine Common Stock. Except for the federal
income tax consequences described below under "--Cash in Lieu of Fractional
Shares," a Halter Marine stockholder who, under the merger, exchanges Halter
Marine common stock for Friede Goldman common stock generally will not
recognize any gain or loss upon the exchange. A Halter Marine stockholder's
aggregate tax basis in Friede Goldman common stock received in the merger will
equal the holder's aggregate tax basis in Halter Marine common stock
surrendered in the exchange, reduced by any tax basis allocable to fractional
shares exchanged for cash. The holding period of the shares of Friede Goldman
common stock received by a Halter Marine stockholder in the merger will include
the holding period of the Halter Marine common stock surrendered in the
exchange.
Cash in Lieu of Fractional Shares. We will not issue any fractional shares
of Friede Goldman common stock in the merger. A Halter Marine stockholder who
receives cash instead of fractional shares of Friede Goldman common stock will
be treated as having received fractional shares in the merger and then as
having received cash for these fractional shares in a redemption by Friede
Goldman. Any gain or loss attributable to these fractional shares generally
will be capital gain or loss. The amount of this gain or loss will equal the
difference between the holder's tax basis of Halter Marine common stock
surrendered in the merger that is allocated to fractional shares and the cash
received instead of fractional shares. Any capital gain or loss will be treated
as long-term capital gain or loss if a Halter Marine stockholder has held the
Halter Marine common stock for more than one year at the effective time.
Capital gain on assets held for more than one year by an individual is
generally subject to federal income tax at a maximum 20% capital gains rate.
Backup Withholding. Unless an exemption applies under the applicable law and
regulations, the exchange agent may be required to withhold 31% of any cash
payments to a Halter Marine stockholder in the merger unless the stockholder
provides the appropriate form. Unless an applicable exemption exists and is
proved in a manner satisfactory to the exchange agent, a stockholder should
complete and sign the Substitute Form W-9 enclosed with the letter of
transmittal sent by the exchange agent. This completed form provides the
information, including the stockholder's taxpayer identification number, and
certification necessary to avoid backup withholding.
The foregoing summary does not address the particular facts and
circumstances of any particular holder of Halter Marine common stock. In
addition, the foregoing summary does not address any non-income tax or any
foreign, state or local tax consequences of the merger nor does it address the
tax
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consequences of any transactions other than the merger. Halter Marine
stockholders are urged to seek tax advice to determine their particular U.S.
federal, state, local or foreign income or other tax consequences.
Regulatory Matters; Legal Matters
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR Act") and the rules promulgated thereunder by the Federal Trade
Commission, the merger may not be completed until the following steps have been
taken:
. Premerger Notification and Report Forms have been submitted and
information has been furnished to the FTC and the Antitrust Division; and
. required waiting periods have expired or terminated.
Friede Goldman and Halter Marine have agreed, pursuant to the merger
agreement, to use reasonable efforts to file or cause to be filed with the FTC
and the Antitrust Division notifications that are required to be filed under
the HSR Act and the rules and regulations promulgated thereunder and to respond
to any requests for additional information made by either the FTC or the
Antitrust Division. Friede Goldman and Halter Marine each filed Premerger
Notification and Report Forms with the FTC and the Antitrust Division on
July 14, 1999. On August 13, 1999, early termination of the waiting period
under the HSR Act was granted, permitting the merger to proceed in accordance
with the HSR Act.
At any time before or after the completion of the merger and notwithstanding
the expiration or termination of the HSR Act waiting period, any federal or
state antitrust authorities could take action under the antitrust laws as they
deem necessary or desirable in the public interest. These actions could include
seeking to enjoin the completion of the merger or seeking divestiture of all or
part of the assets of Friede Goldman or Halter Marine. Private parties may also
seek to take legal action under the antitrust laws, if circumstances permit.
The effectiveness of the merger is conditioned upon, among other things, us not
receiving an order or consent decree from the Antitrust Division or any
governmental authority requiring us or our subsidiaries to sell or divest any
of our assets, unless both parties waive this condition. If this condition is
neither satisfied nor waived by March 31, 2000, either party may terminate the
merger agreement.
Appraisal Rights
Halter Marine
Under the laws of the state of Delaware, the state of incorporation of
Halter Marine, the common stockholders of Halter Marine are not entitled to
appraisal rights with respect to the merger.
Friede Goldman
Pursuant to Article 13 of the Mississippi Business Corporation Act, any
Friede Goldman stockholders who do not vote for this merger may dissent and
elect to have the fair value of their shares of Friede Goldman common stock
judicially determined and paid to them in cash, with accrued interest. The
following discussion is not a complete statement of the law pertaining to
appraisal rights under Mississippi law, and is qualified in its entirety by the
full text of Article 13, which is included as Annex I to this joint proxy
statement/prospectus.
Any Friede Goldman stockholder who wishes to exercise appraisal rights or
wishes to preserve the right to do so should review carefully Annex I to this
joint proxy statement/prospectus because failure to comply with the procedures
in a proper and timely manner will result in the loss of appraisal rights.
Because of the complexity of the procedures for exercising the right to seek
appraisal of the Friede Goldman common stock, Friede Goldman recommends that
Friede Goldman stockholders who consider exercising these rights seek the
advice of counsel.
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Notice of Intent and Duty to Demand Payment
A holder of Friede Goldman common stock may only exercise the right to
dissent from the merger and demand appraisal under Article 13 if he or she:
. delivers to Friede Goldman before the vote is taken, written notice of
his or her intent to demand payment for the shares if the merger is
completed. Friede Goldman stockholders should send demands for appraisal
to Friede Goldman International Inc., 7th Floor BancorpSouth Building,
525 East Capitol Street, Jackson, Mississippi 39201; Attention:
Secretary. Written demands for appraisal must be in addition to and
separate from any vote against the merger. Merely voting against,
abstaining from voting or failing to vote in favor of approval and
adoption of the merger will not constitute a demand for appraisal within
the meaning of Article 13; and
. does not vote his or her shares in favor of the merger. Therefore, a
stockholder who desires to exercise appraisal rights with respect to any
of his or her shares of Friede Goldman common stock must either refrain
from executing and returning the enclosed proxy card and from voting in
person in favor of the merger, or check either the "Against" or "Abstain"
box next to the merger proposal on the proxy card or vote in person
against the merger or register in person an abstention.
Dissenters' Notice
Within ten days after the corporate action is taken, Friede Goldman is
required under Mississippi law to deliver a written dissenters' notice to all
stockholders who satisfy the above two requirements. The dissenters' notice
must:
. state where the payment demand should be sent and where and when
certificates for certificated shares should be deposited;
. inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
. supply a form for demanding payment that includes the date of the first
announcement to news media or to stockholders of the terms of the merger
and requires that the stockholder asserting dissenters' rights certify
whether or not he or she acquired beneficial ownership of the shares
before that date;
. set a date by which Friede Goldman must have received the payment demand.
This date may not be less than 30 days nor more than 60 days after the
date the dissenters' notice is delivered; and
. be accompanied by a copy of Article 13.
Duty to Demand Payment
A stockholder who wishes to exercise his or her dissenters' rights must,
after the stockholder receives a written dissenters' notice from Friede
Goldman:
. demand payment;
. certify whether he or she acquired beneficial ownership of the shares
before the date set forth in the dissenter's notice from Friede Goldman;
and
. deposit his or her certificates in the manner described in the notice
from Friede Goldman.
Any stockholder who demands payment and deposits his or her shares retains
all other rights of a stockholder until these rights are canceled or modified
by the completion of the merger. A stockholder who does not demand payment or
deposits his or her share certificates where required, each by the date set in
the dissenters' notice, is not entitled to payment for his or her shares.
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Payment and the Failure to Take Action
Upon receipt of a payment demand from a stockholder, Friede Goldman will pay
each dissenter in compliance with Article 13 the amount Friede Goldman
estimates to be the fair value of his or her shares, plus accrued interest. In
compliance with Article 13, this payment will be accompanied by:
. Friede Goldman's balance sheet, income statement and statement of changes
in shareholders' equity as of the end of the most recent fiscal year;
. a statement of Friede Goldman's estimate of the fair value of the shares;
. an explanation of how the interest was calculated;
. a statement of the dissenters' right to demand payment if he or she is
dissatisfied with the payment or offer; and
. a copy of Article 13.
Procedure if Stockholder is Dissatisfied with Payment or Offer
A dissenter may notify Friede Goldman in writing of his or her own estimate
of the fair value of the shares and amount of interest due, and demand payment
of this estimate, or reject Friede Goldman's offer and demand payment of the
fair value of his or her shares and interest due, if:
. the dissenter believes that the amount paid or offered is less than the
fair value of his or her shares or that the interest due is incorrectly
calculated;
. Friede Goldman fails to make payment within 60 days after the date set
for demanding payment; or
. Friede Goldman, having failed to complete the merger, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for demanding
payment.
A dissenter waives his or her right to demand payment under this section unless
he or she notifies Friede Goldman of his or her demand in writing within 30
days after Friede Goldman made or offered payment for the shares.
If demand remains unsettled, Friede Goldman must begin a proceeding in the
chancery court of the First Judicial District Court of Hinds County,
Mississippi, within 60 days after receiving the payment demand and petition the
court to determine the fair value of the shares and accrued interest.
Each dissenter made a party to the proceeding is entitled to judgment:
. for the amount, if any, by which the court finds the fair value of the
shares, plus interest, exceeds the amount paid by Friede Goldman, or
. for the fair value, plus accrued interest, of his or her after-acquired
shares for which Friede Goldman elected to withhold payment.
Termination of Merger
If Friede Goldman does not take the proposed action within 60 days after the
date set for demanding payment and depositing share certificates, Friede
Goldman must return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares. If Friede Goldman then completes
the merger, it will send a new dissenters' notice and repeat the payment demand
procedure.
Dissent by Nominees and Beneficial Owners
A stockholder of record may assert dissenters' rights as to fewer than all
the shares registered in his or her name only if he or she dissents with
respect to all shares beneficially owned by any one person and notifies
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Friede Goldman in writing of the name and address of each person on whose
behalf he or she is asserting dissenters' rights. The rights of a partial
dissenter are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different stockholders.
A beneficial stockholder may assert dissenters' rights as to shares held on
his or her behalf only if:
. he or she submits to Friede Goldman the record stockholder's written
consent to the dissent not later than the time the beneficial stockholder
asserts dissenters' rights; and
. he or she does so for all shares of which he or she is the beneficial
stockholder or over which he or she has power to direct the vote.
Failure to comply strictly with the procedures set forth in Article 13 will
result in the loss of a Friede Goldman stockholder's statutory appraisal rights
with respect to shares of Friede Goldman common stock. Consequently, any Friede
Goldman stockholder wishing to exercise appraisal rights is urged to consult
legal counsel before attempting to exercise these rights.
Federal Securities Laws Consequences; Resale Restrictions
This document does not cover resales of the Friede Goldman common stock to
be received by the stockholders of Halter Marine upon completion of the merger,
and no person is authorized to make any use of this document in connection with
these resales.
All shares of Friede Goldman common stock received by Halter Marine
stockholders in the merger will be freely transferable, except that shares of
Friede Goldman common stock received by persons who are deemed to be
"affiliates" as defined under the Securities Act of 1933 of Halter Marine may
be resold by them only in transactions permitted by the resale provisions of
Rule 145 (or Rule 144 in the case of persons who become affiliates of Friede
Goldman) or as otherwise permitted under the Securities Act of 1933. Persons
who may be deemed to be affiliates of Halter Marine or Friede Goldman generally
include individuals or entities that control, are controlled by, or are under
common control with, these persons and may include officers and directors of
Halter Marine or Friede Goldman as well as significant stockholders. The merger
agreement requires Halter Marine to use its reasonable efforts to cause each of
its affiliates to execute a written agreement to the effect that the affiliate
will not offer or sell or otherwise dispose of any of the shares of Friede
Goldman common stock issued to them in the merger in violation of the
Securities Act of 1933 or the rules and regulations promulgated by the SEC.
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INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER
Friede Goldman and Halter Marine stockholders should note that some of the
directors and executive officers of Halter Marine have interests in the merger
as employees and directors that are different from, or in addition to, the
Friede Goldman and Halter Marine stockholders, as described below.
Composition of Friede Goldman Halter Management
In connection with the merger, Friede Goldman will use its best efforts to
increase the size of the board of directors to 11. Friede Goldman has
designated six individuals who were directors of Friede Goldman on the date of
the merger agreement to become directors of Friede Goldman Halter. These
individuals are J. L. Holloway, who will become chairman of the board of
directors, Jerome L. Goldman, Alan A. Baker, T. Jay Collins, Raymond E. Mabus
and Gary L. Kott. Additionally, Halter Marine has designated five individuals
who were directors of Halter Marine on the date of the merger agreement to
become directors of Friede Goldman Halter. These individuals are John Dane III,
who will become the vice chairman of the board of directors, Angus R. Cooper,
II, Barry J. Galt, Burt H. Keenan and Kenneth W. Lewis. The directors of Friede
Goldman Halter will be entitled to compensation for their services. Friede
Goldman will also cause the officers of Friede Goldman Halter to consist of (1)
J. L. Holloway as Chairman and Chief Executive Officer; (2) John Dane as Vice
Chairman, President and Chief Operating Officer; (3) Rick S. Rees as Chief
Financial Officer and Executive Vice President; and (4) John F. Alford as
Executive Vice President. These executive officers will be entitled to
compensation for their services as specified in the employment agreements for
each of these persons.
Employment Agreements
Messrs. J. L. Holloway, John Dane, John Alford, Rick Rees and Ronald Schnoor
have entered into employment agreements with Friede Goldman Halter that will
become effective on the effective date of the merger.
J. L. Holloway. On June 1, 1999, Friede Goldman entered into an employment
agreement with J. L. Holloway effective upon the completion of the merger for a
term of two years. The agreement provides for Mr. Holloway's appointment as
Chairman of the board of directors of Friede Goldman Halter and Chief Executive
Officer of Friede Goldman Halter during the term of his employment. The
agreement provides that during the term of Mr. Holloway's employment, the board
of directors of Friede Goldman Halter will nominate him for election as a
member of its board of directors.
The employment agreement provides for an annual base salary of at least
$500,000, subject to increases in the discretion of the board of directors of
Friede Goldman Halter; provided that Mr. Holloway's base salary will not be
less than the annual base salary of John Dane III. The employment agreement
also provides that Mr. Holloway will participate in Friede Goldman Halter's
annual bonus plan and will be eligible to earn an annual bonus in an amount up
to twice his annual base salary (as determined by the compensation committee of
the board of directors of Friede Goldman Halter); provided, however, that Mr.
Holloway's annual bonus will be at least equal to the highest annual bonus
granted to any other executive of Friede Goldman Halter for that year. The
agreement also provides that during the term of the employment agreement,
Friede Goldman Halter will contribute an amount equal to 10% of his base salary
and his annual bonus to a deferred compensation plan.
Mr. Holloway's employment agreement also provides that Mr. Holloway will be
granted an option to purchase 1,000,000 shares of Friede Goldman Halter common
stock at an exercise price equal to the closing price of the Friede Goldman
common stock at the effective time of the merger. Subject to specific events,
350,000 of the options will be immediately exercisable and the remaining
650,000 options to purchase common stock will vest in four equal annual
installments commencing on the first anniversary of the effective date of the
merger. In addition, subsequent incentive compensation awards may be made to
Mr. Holloway on a year-to-year basis; provided, however, that any award will be
at least be equal to the highest annual award made to any other officer or
employee of Friede Goldman Halter for that year with the exception of new
hires. The
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employment agreement further provides that Mr. Holloway's outstanding and
unvested stock options will immediately become fully vested and exercisable
upon his termination of employment for reasons other than for "cause" (as
described below), death or "disability" (as defined in the employment
agreement) or upon his resignation for "good reason" (as described below).
The stock options will be awarded pursuant to a stock option agreement. The
proposed stock option grant to Mr. Holloway is subject to the approval of the
compensation committee of the board of directors of Friede Goldman Halter. It
is anticipated that the compensation committee will unanimously approve the
grant of these stock options.
Mr. Holloway's employment agreement may be terminated at any time by Friede
Goldman Halter for "cause." Upon termination, Mr. Holloway will receive:
. his base salary that was earned but unpaid as of the date of termination;
. his target annual bonus for the year or, if greater, the average of the
three highest annual bonuses paid to him; and
. his accrued deferred compensation.
"Cause" is defined to include gross negligence or a willful failure by Mr.
Holloway in performing his material duties under the employment agreement or
his commission of an act of moral turpitude that constitutes a felony or the
commission of an act of dishonesty, either of which has an adverse effect on
Friede Goldman Halter. A determination of "cause" may be made only by a two-
thirds vote by the board of directors of Friede Goldman Halter.
If Mr. Holloway's employment is terminated by Friede Goldman Halter without
"cause" or Mr. Holloway's terminates his employment for "good reason" (as
described below), he will be entitled to the following severance benefits:
. a lump sum cash payment of $1,500,000 and up to an additional $1,500,000
in an amount equal to the excess of $5,000,000 over the fair market value
(determined at the date Mr. Holloway terminates employment) of the
options granted to Mr. Holloway at the effective date of the merger;
. a lump sum cash payment of his accrued annual base salary and bonus;
. a lump sum cash payment equal to his target annual bonus in the year his
employment is terminated or, if greater, the average of the three highest
annual bonuses paid to him within the five years preceding the year of
termination, pro rated to the date of termination;
. accelerated vesting or the lapse of all restrictions on any compensation
previously deferred on the behalf of Mr. Holloway and the payment of a
lump sum amount equal to the value of the deferred compensation;
. continued participation in Friede Goldman Halter's health and welfare
benefit plans for a period commencing on the date of his termination and
ending on the third anniversary of the date of his termination; provided
that any benefits received under the Friede Goldman Halter health and
welfare plans will be reduced to the extent comparable benefits are
received by him from other sources; and
. accelerated vesting of outstanding stock options granted under the
employment agreement which are not yet vested on the date of termination.
Mr. Holloway may resign for "good reason" which is defined in the
employment agreement to consist of:
. a material breach by Friede Goldman Halter of the employment agreement;
. a diminution of Mr. Holloway's responsibilities or title;
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. a reduction in Mr. Holloway's base salary, annual bonus opportunity,
incentive plan benefits, welfare plan benefits or fringe benefits;
. the failure to elect Mr. Holloway to the board of directors of Friede
Goldman Halter;
. the failure of Friede Goldman Halter to pay any compensation to Mr.
Holloway when due;
. a substantial increase in Mr. Holloway's travel obligations;
. relocation of Mr. Holloway's workplace without accommodation by Friede
Goldman Halter;
. failure by Friede Goldman Halter to obtain a satisfactory agreement from
a successor company to assume the obligations under Mr. Holloway's
employment agreement; and
. a termination of his employment without providing him with a notice of
non-renewal of the employment agreement.
The employment agreement also provides that in the event any payments
received by Mr. Holloway under the employment agreement or under any other plan
of Friede Goldman Halter should be subject to any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986 or any other similar tax or
assessment, Friede Goldman Halter will pay Mr. Holloway the amount necessary to
fully reimburse him for these excise taxes or assessments.
Following a "change in control" as defined in the employment agreement, any
of these acts or failures to act by Friede Goldman Halter will be presumed to
constitute "good reason" unless that determination is deemed to be unreasonable
by an arbitrator.
The employment agreement contains confidentiality obligations that survive
indefinitely and non-solicitation and non-competition obligations that end on
the first anniversary of the date of termination.
John Dane III. On June 1, 1999, Friede Goldman entered into an employment
agreement with Mr. John Dane III effective upon the completion of the merger.
The employment agreement with Mr. John Dane III is substantially similar to Mr.
Holloway's employment agreement except that Mr. Dane's employment agreement
provides for the following:
. An initial four-year term of employment, subject to automatic annual
renewal beginning on the third anniversary of the effective date of the
agreement; provided that either Friede Goldman Halter or Mr. Dane may
elect to terminate the agreement by providing the other party with at
least 90 days' written notice prior to any year, beginning with the third
anniversary of the effective date of the merger;
. During the first two years of the term of the agreement, Mr. Dane will be
appointed as Vice Chairman of the board of directors of Friede Goldman
Halter and as President and Chief Operating Officer of Friede Goldman
Halter. Beginning with the third anniversary of the effective date of the
merger and continuing for each subsequent year that the agreement remains
in effect, Mr. Dane will be nominated for Chairman of the board of
directors of Friede Goldman Halter and will serve as Chief Executive
Officer and President of Friede Goldman Halter;
. Mr. Dane's annual base salary of at least $500,000 will not be less than
the annual base salary of his predecessor as Chief Executive Officer;
. Mr. Dane may not sell or dispose of any shares of Friede Goldman Halter
common stock acquired through the exercise of any stock options acquired
at the effective time of the merger for a period of two years following
the effective date of the merger; provided, however, that Mr. Dane may
dispose of a pro rata amount of the shares in the event Mr. Holloway
disposes of any portion of the shares of Friede Goldman common stock that
he beneficially owns on the effective date;
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. Failure of Friede Goldman Halter to extend the term of the agreement will
result in a severance payment; and
. In addition to the definitions of "good reason" contained in Mr.
Holloway's employment agreement, Mr. Dane's employment agreement also
defines "good reason" to include (1) the failure to elect Mr. Dane as
Chairman of the board of directors and Chief Executive Officer of Friede
Goldman Halter by the second anniversary of the effective date of the
merger agreement; and (2) a failure by Friede Goldman Halter to allow Mr.
Dane to continue performing services with United States Marine, Inc. or
to serve on the board of directors of the Federal Reserve Bank of
Atlanta.
John F. Alford and Rick S. Rees. On June 1, 1999, Friede Goldman entered
into an employment agreements with each of Mr. John F. Alford and Mr. Rick S.
Rees effective upon the completion of the merger. The employment agreements
with Messrs. Alford and Rees are substantially similar to Messrs. Holloway's
and Dane's employment agreements except that Messrs. Alford's and Rees'
employment agreements provide for the following:
. An initial three-year term of employment subject to automatic annual
renewal beginning on the second anniversary of the effective date of the
agreement; provided that either Friede Goldman Halter or Mr. Alford or
Mr. Rees, as the case may be, may elect to terminate the agreement by
providing the other party with at least 90 days' written notice prior to
any year, beginning with the second anniversary of the effective date of
the merger;
. Mr. Alford will be appointed Executive Vice President of Friede Goldman
Halter, and Mr. Rees will be appointed Executive Vice President and Chief
Financial Officer of Friede Goldman Halter;
. Messrs. Alford and Rees will each receive an annual base salary of at
least $300,000 and will be eligible to participate in the annual bonus
plan and earn an annual bonus in an amount up to 150% of their annual
base salary (as determined by the compensation committee of the board of
directors of Friede Goldman Halter); provided, however, that Messrs.
Alford's and Rees' annual bonuses will be at least equal to the highest
annual bonus granted to any other executive of Friede Goldman Halter for
that year other than Messrs. Holloway and Dane;
. Messrs. Alford and Rees will each be granted an option to purchase
500,000 shares of Friede Goldman Halter common stock at an exercise price
equal to the closing price of the Friede Goldman common stock on the
effective date of the merger. Subject to specific events, 175,000 of the
options will be immediately exercisable and the remaining 325,000 options
will vest in three equal annual installments commencing on the first
anniversary of the effective date of the merger. Messrs. Alford and Rees
will not be subject to the same transfer restrictions that have been
imposed on Mr. Dane with respect to the shares of Friede Goldman Halter
common stock acquired through the exercise of his stock option. In
addition, subsequent incentive compensation awards may be made to each of
Messrs. Alford and Rees on a year-to-year basis; provided, however, that
those awards will at least be equal to the highest annual award made to
any other officer or employee of Friede Goldman Halter for that year
other than Messrs. Holloway and Dane or a new hire;
. The failure of Friede Goldman Halter to extend the term of either Mr.
Alford's or Mr. Rees' employment agreement will result in a severance
payment;
. If Mr. Alford's or Mr. Rees' employment is terminated by Friede Goldman
Halter without "cause" or Mr. Alford or Mr. Rees resigns for "good
reason," Messrs. Alford and Rees, respectively, will be entitled to the
same severance benefits as provided to Messrs. Holloway and Dane,
respectively; provided, however, that each of Mr. Alford and Mr. Rees
will be entitled to a lump sum cash payment of $750,000 and an additional
lump sum payment of up to $750,000 based on the fair market value of each
of their options at the date their employment terminates;
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. For purposes of determining "good reason" in Messrs. Alford's and Rees'
employment agreements, "good reason" generally consists of:
. a material breach by Friede Goldman Halter of the employment
agreement;
. a diminution of their responsibilities or title;
. a reduction in their base salary, annual bonus opportunity, welfare
plan benefits, fringe benefits or incentive plan benefits;
. the failure of Friede Goldman Halter to pay any compensation to them
when due;
. a substantial increase in their travel obligations;
. a relocation of their workplace without accommodation by Friede
Goldman Halter;
. failure by Friede Goldman Halter to obtain a satisfactory agreement
from a successor company to assume the obligations under each of
their employment agreements; and
. termination of their employment without providing a notice of non-
renewal of the employment agreement; and
. Mr. Alford's and Mr. Rees' non-solicitation and non-competition
obligations end on the second anniversary of the effective date of the
merger.
Ronald W. Schnoor. On June 1, 1999, Friede Goldman entered into an
employment agreement with Mr. Ronald W. Schnoor effective upon completion of
the merger. The term of the agreement is three years; provided that on the
second anniversary of the completion of the merger and on each anniversary of
this date, the term of the agreement will be automatically extended for one
year. Either Friede Goldman Halter or Mr. Schnoor may elect to terminate the
agreement by providing the other party with at least six months' written notice
prior to each anniversary of the completion of the merger. The agreement
provides for Mr. Schnoor's appointment as Executive Vice President--Shipyard
Operations.
The employment agreement provides for an annual base salary of $256,000,
subject to increases in the discretion of the compensation committee of the
board of directors of Friede Goldman Halter.
Mr. Schnoor's employment agreement may be terminated at any time by Friede
Goldman Halter for "cause" ten days after written notice is provided to Mr.
Schnoor. Upon termination, Mr. Schnoor will not be entitled to severance
compensation. "Cause" is defined to include a material and irreparable breach
of the agreement, gross negligence or a willful failure by Mr. Schnoor in
performing his material duties under the employment agreement, acts of
dishonesty or misconduct which have an adverse effect on Friede Goldman Halter,
a conviction of or plea of nolo contendere to a felony crime involving moral
turpitude, or chronic alcohol abuse or illegal drug abuse.
If Mr. Schnoor's employment is terminated by Friede Goldman Halter without
"cause" or he resigns for "good reason" (as defined below), he will be entitled
to receive a lump-sum payment equal to one year's base salary at the rate in
effect at that time. If Mr. Schnoor resigns his employment without "good
reason," he will receive no severance compensation. Upon termination for any
reason, Mr. Schnoor will be entitled to receive all compensation earned and all
vested benefits and reimbursements through the effective date of his
termination.
"Good Reason" is defined in Mr. Schnoor's employment agreement to consist of
a material breach by Friede Goldman Halter of the employment agreement
occurring during the 30-day period preceding the date written notice of
termination for good reason is provided to Friede Goldman Halter which is not
remedied by Friede Goldman Halter within 30 days after receipt of the notice.
Mr. Schnoor's employment agreement contains confidentiality obligations that
survive indefinitely and non-solicitation and non-competition obligations that
end on the first anniversary of the date his employment has terminated.
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Stock Options
Prior to the completion of the merger, Halter Marine will take all necessary
action to cause each unvested option to purchase Halter Marine common stock to
be fully vested and immediately exercisable. All unexercised options which are
not exercised on or prior to the effective time of the merger will be canceled
after the completion of the merger.
Halter Marine Affiliate Letters
Under the terms of the merger agreement, Halter Marine has agreed to use its
reasonable commercial efforts to cause each person who is an affiliate of
Halter Marine to execute and deliver to Friede Goldman and Halter Marine an
affiliate letter, whereby each affiliate of Halter Marine will, among other
things, agree that certificates representing the shares of Friede Goldman
Halter which he will receive in the merger will contain legends. The officers
and directors of Halter Marine will be deemed affiliates of Halter Marine.
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THE MERGER AGREEMENT
The following describes the material terms of the merger agreement, as
amended. The full text of the merger agreement is attached as Annex A to this
document, and the full text of amendment no. 1 to the merger agreement is
attached as Annex B to this joint proxy statement/prospectus. We encourage you
to read the merger agreement, as amended, in its entirety before you decide how
to vote.
Amendment No. 1
On September 14, 1999, Friede Goldman and Halter Marine entered into
amendment no. 1 to the merger agreement. Pursuant to amendment no. 1:
. the exchange ratio was revised to 0.57 shares of Friede Goldman common
stock for each share of Halter Marine common stock; and
. a condition to closing was added requiring that bank financing in an
amount of at least $175 million will have been arranged for the surviving
corporation as of the effective time on terms reasonably acceptable to
Friede Goldman and Halter Marine and that in the reasonable judgment of
both Friede Goldman and Halter Marine would not meet the needs of the
combined company.
Unless the context otherwise requires, references in this joint proxy
statement/prospectus to the merger agreement refer to the merger agreement as
amended by amendment no. 1.
Effective Time of the Merger
Effective Time. The merger will be effective upon the filing of a
certificate of merger with the Secretary of State of the State of Delaware and
the filing of articles of merger with the Secretary of State of the State of
Mississippi. These filings will be made simultaneously with, or within three
business days after, the closing of the transactions contemplated by the merger
agreement. See "--Conditions to the Merger" on page 61.
Share certificates should not be surrendered for exchange by stockholders of
Halter Marine prior to approval of the merger and the receipt of a transmittal
form.
At the effective time, each share of Halter Marine common stock will be
converted into the right to receive 0.57 shares of Friede Goldman common stock.
No fractional shares of Friede Goldman common stock will be issued to any
Halter Marine stockholder. In lieu of fractional shares, each holder of Halter
Marine common stock who would otherwise have been entitled to receive a
fraction of a share will receive cash without interest in an amount equal to
the stockholder's proportional entitlement to the proceeds of the sale on the
New York Stock Exchange of the excess of:
. the number of full shares of Friede Goldman common stock delivered to the
exchange agent, over
. the aggregate number of full shares of Friede Goldman common stock to be
distributed to holders of Halter Marine common stock.
Friede Goldman Halter may, however, elect instead to distribute to each holder
of Halter Marine common stock cash without interest in an amount equal to the
product of:
. the fractional part of a share multiplied by
. the closing price for a share of Friede Goldman common stock on the New
York Stock Exchange on the trading day on which the effective time
occurs.
No dividend or distribution with respect to Friede Goldman common stock will
be payable with respect to any fractional share and fractional share interests
will not entitle their owners to any rights of a stockholder of Friede Goldman
Halter.
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Promptly after the effective time, transmittal forms and exchange
instructions will be mailed to each holder of record of Halter Marine common
stock to be used to exchange certificates formerly evidencing shares of Halter
Marine common stock for certificates of Friede Goldman common stock. After
receipt and upon execution of the transmittal forms, each holder of
certificates formerly representing Halter Marine common stock will be able to
surrender the certificates to the exchange agent, and each holder will receive
certificates evidencing the number of whole shares of Friede Goldman common
stock to which the holder is entitled, any cash which may be payable in lieu of
a fractional share of Friede Goldman common stock and any dividends or other
distributions with respect to Friede Goldman common stock with a record date
after the effective time. Halter Marine stockholders should not send in their
certificates until they receive a transmittal form.
After the effective time, each certificate formerly representing shares of
Halter Marine common stock, until so exchanged, will be deemed, for all
purposes, to evidence only the right to receive the number of whole shares of
Friede Goldman common stock which the holder of the certificates is entitled to
receive in the merger, any cash payment in lieu of a fractional share of Friede
Goldman common stock and any dividend or other distribution with respect to
Friede Goldman common stock, as described above. The holders of these
unexchanged certificates will not be entitled to receive any dividends or other
distributions payable by Friede Goldman Halter until the certificates have been
exchanged. Subject to applicable laws, following surrender of the certificates,
the dividends and distributions, together with any cash payment in lieu of a
fractional share of Friede Goldman common stock, will be paid without interest.
Exchange and Cancellation of Halter Marine Stock Options
Prior to the effective time, Halter Marine will take all necessary action to
cause each unvested option to purchase Halter Marine common stock to be fully
vested and immediately exercisable. At least 30 days prior to the effective
time, Halter Marine will give notice to all holders of unexercised Halter
Marine stock options that all stock options that remain unexercised as of the
effective time of the merger will be canceled.
Halter Marine Employee Benefits
Friede Goldman Halter will continue to honor the employee benefit plans of
Friede Goldman and Halter Marine existing at the effective time until a joint
Friede Goldman Halter committee creates replacement plans for the employees of
the combined company that treat similarly situated employees of Friede Goldman
and Halter Marine on a substantially equivalent basis. Friede Goldman Halter
will provide all current and past employees of Friede Goldman, Halter Marine
and their respective subsidiaries with compensation and benefits on terms which
are, in the aggregate, substantially comparable to those provided under the
respective Friede Goldman or Halter Marine benefit plans prior to the effective
time until the replacement plans have been implemented or, if earlier, through
the first anniversary of the effective time.
Employees of Friede Goldman and Halter Marine will receive full credit for
purposes of eligibility, vesting, benefit accrual and eligibility to receive
benefits under any employee benefit plans or arrangements established or
maintained by Friede Goldman Halter for the employees' service with Friede
Goldman, Halter Marine or any subsidiaries of Friede Goldman or Halter Marine
prior to the effective time. However, this crediting of service will not
duplicate any benefits being provided to the employees.
Conditions to the Merger
Conditions to Each Party's Obligations to Complete the Merger. The
respective obligations of Halter Marine and Friede Goldman to effect the merger
are subject to the fulfillment, at or prior to the effective time, of the
following conditions, unless waived by the parties:
. Effective Registration Statement. The registration statement on Form S-4
filed by Friede Goldman will be effective, and no stop order or
proceeding issued by the SEC or any state regulatory authorities to
suspend effectiveness will be outstanding;
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. Stockholder Approval. The merger agreement and the transactions
contemplated, including, in the case of the Friede Goldman stockholders,
the increase in the size of the Friede Goldman board of directors to 11
and an amendment to the 1997 equity incentive plan of Friede Goldman,
will have been approved and adopted by the required vote of the
stockholders of Halter Marine and Friede Goldman;
. No Proceedings. No governmental order, writ, injunction or decree will be
in effect, and no governmental proceeding or action will have been
instituted before any governmental body that would make the merger
illegal or otherwise would prohibit the completion of the merger;
. Consents and Approvals. All required consents and approvals will have
been obtained unless failure to do so would not have a materially adverse
effect after the effective time;
. Stock Exchange Listing. The shares of Friede Goldman common stock
issuable in the merger will have been authorized for listing on the New
York Stock Exchange; and
. Bank Financing. Bank financing in an amount of at least $175 million will
have been arranged for the surviving corporation as of the effective time
on terms reasonably acceptable to Friede Goldman and Halter Marine and
that in the reasonable judgment of Friede Goldman and Halter Marine will
meet the needs of the surviving corporation.
Additional Conditions to the Obligations of Halter Marine. The obligation of
Halter Marine to effect the merger is further subject to the fulfillment, at or
prior to the effective time, of the following additional conditions, unless
waived by Halter Marine:
. Performance of Agreements, Representations and Warranties. Friede Goldman
will have performed and complied with all its agreements in the merger
agreement in all material respects, and its representations and
warranties will be true and correct in all material respects as of the
effective time as if made on the effective time;
. Tax Opinion. Halter Marine will have received a written opinion of
Shearman & Sterling that: (1) the merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and (2)
Halter Marine and Friede Goldman will each be a party to the
reorganization;
. Stockholder's Agreement. The stockholder's agreement will remain in full
force and effect and all covenants in the stockholder's agreement will be
complied with on or prior to the effective time; and
. Accountant Letters. Halter Marine will receive from Friede Goldman "cold
comfort" letters of Arthur Andersen, dated the date on which the
registration statement becomes effective and the effective time,
respectively, in form satisfactory to Halter Marine.
Additional Conditions to the Obligations of Friede Goldman. The obligation
of Friede Goldman to effect the merger is further subject to the fulfillment,
at or prior to the effective time, of the following additional conditions,
unless waived by Friede Goldman:
. Performance of Agreements, Representations and Warranties. Halter Marine
will have performed and complied with all its agreements in the merger
agreement in all material respects, and its representations and
warranties will be true and correct in all material respects as of the
effective time as if made on the effective time;
. Tax Opinion. Friede Goldman will have received a written opinion of
Andrews & Kurth that: (1) the merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and (2)
Halter Marine and Friede Goldman will each be a party to the
reorganization;
. Spin-Off Opinion. Friede Goldman will have received a written opinion of
Andrews & Kurth or other counsel reasonably satisfactory to Friede
Goldman that the merger will not adversely affect the federal income tax
consequences determined by the IRS in a private letter ruling issued to
Trinity Industries, Inc. on January 17, 1997 with respect to the
qualification of the distribution on March 31, 1997 of
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Halter Marine common stock by Trinity Industries, Inc. under Section 355
of the Internal Revenue Code; and
. Accountant Letters. Friede Goldman will receive from Halter Marine "cold
comfort" letters of Ernst & Young, dated the date on which the
registration statement becomes effective and the effective time,
respectively, in form satisfactory to Friede Goldman.
Representations and Warranties of Friede Goldman and Halter Marine
The merger agreement contains various customary representations and
warranties of Halter Marine and Friede Goldman relating to, among other things:
. proper organization and good standing of Halter Marine, Friede Goldman
and their respective subsidiaries;
. the capitalization of Halter Marine and Friede Goldman;
. the corporate authorization and enforceability of the merger agreement;
. the absence of conflicts and consents;
. possession of and compliance with permits;
. the filing of SEC reports and the preparation of financial statements;
. the absence of material adverse changes or events;
. employee benefit matters;
. labor controversies;
. material contracts;
. the absence of any undisclosed liabilities;
. litigation;
. environmental matters;
. intellectual property matters;
. taxes;
. the opinion of a financial advisor;
. the required stockholder vote for the approval of the merger;
. brokers and finders; and
. insurance.
Conduct of the Business of Friede Goldman and Halter Marine Prior to the Merger
Pursuant to the merger agreement, Halter Marine and Friede Goldman have
agreed that, prior to the effective time or earlier termination of the merger
agreement, they will and will cause each of their subsidiaries to:
. conduct their respective businesses in the ordinary course of business
and consistent with past practice;
. use all reasonable efforts to preserve intact their respective business
organizations and goodwill, keep available the service of their
respective present officers, significant employees and consultants,
preserve the goodwill and business relationships with customers and
others having business relationships with them;
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. not amend or propose to amend their respective organizational documents;
. not issue, deliver, sell, pledge, dispose of or encumber any shares of
any class of capital stock, any options, other rights of any kind to
acquire any shares of capital stock, or any other ownership interest,
except in the ordinary course of business and consistent with past
practice;
. not deliver, sell, pledge, dispose of or encumber any assets of Halter
Marine or any of its subsidiaries, except for sales of products pursuant
to existing contracts in the ordinary course of business and consistent
with past practice;
. not declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise;
. not split, combine or reclassify, repurchase or redeem their outstanding
capital stock;
. not make an acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of business and
consistent with past practice and other acquisitions that are not in
excess of $1,000,000;
. not incur any indebtedness or issue any debt securities except in the
ordinary course of business and consistent with past practice or with a
value greater than $5,000,000 in one year;
. not amend or change any material contract or agreement, except in the
ordinary course of business and consistent with past practice;
. not authorize any single capital expenditure which is in excess of
$1,000,000 or $5,000,000 in the case of Friede Goldman;
. enter into or amend any agreement or arrangement which would not be
permitted by the above restrictions;
. not increase the compensation of directors or employees, except in the
ordinary course of business and consistent with past practice or as
required by an existing agreement, or otherwise increase employee
benefits;
. not make changes in accounting methods, except as required by GAAP or
except in the ordinary course of business and consistent with past
practice;
. not settle or compromise any material pending suit, action or claim,
except in the ordinary course of business and consistent with past
practice;
. not make any tax election or settle any material tax liability;
. not take any action that would cause the merger not to qualify as a
reorganization under Section 368(a) of the Internal Revenue Code;
. not take any action that is reasonably likely to result in any of the
representations and warranties being untrue in any material respect or
any of the conditions not being satisfied; or
. enter into any agreement or arrangement to take any of the above actions.
No Solicitation of Acquisition Transactions
The merger agreement provides that prior to the effective time or earlier
termination of the merger agreement, Halter Marine and Friede Goldman will not,
and will not permit any of their subsidiaries, directors, officers, employees,
financial advisors, attorneys or accountants to:
. initiate, solicit, negotiate, encourage, facilitate or provide
confidential information to facilitate any acquisition proposals with
respect to themselves consisting of:
. a merger, reorganization, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving it or any of its subsidiaries, or
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. a purchase or acquisition of their business that constitutes 15% or
more of net revenues, net income or assets or 15% or more of their
capital stock (pursuant to a tender offer or otherwise).
However, if the board of directors of Halter Marine or Friede Goldman
determines in good faith, after consultation with outside counsel, that it is
necessary to perform the actions described above to comply with its fiduciary
duties, it may, in response to a superior acquisition proposal (described
below) (1) furnish information about the company to any person making a
superior acquisition proposal, and (2) participate in discussions or
negotiations regarding the superior acquisition proposal.
The board of directors of Halter Marine and Friede Goldman may not:
. modify or withdraw, in a manner adverse to the other party, its
recommendation of the merger agreement or the merger;
. approve or recommend an acquisition proposal described above; or
. enter into any letter of intent or agreement relating to any proposal.
However, Halter Marine or Friede Goldman, as the case may be, may terminate
the merger agreement after five business days' prior written notice to the
other and enter into an acquisition agreement with a third party upon receipt
of a superior acquisition proposal consisting of a proposal:
. to acquire, by tender offer, merger, business combination, exchange
offer, recapitalization, liquidation or dissolution, more than 50% of the
combined voting power of their outstanding common stock or all or
substantially all of their assets;
. that is on terms which the board of directors determines in its good
faith judgement to be more favorable to its stockholders than the merger;
. for which financing is, upon the good faith judgement of the board,
reasonably obtainable; and
. for which, in the good faith judgment of the board, no regulatory
approvals are required that would not be reasonably obtainable.
If Halter Marine or Friede Goldman terminates the merger agreement to accept
a superior acquisition proposal, it must pay the other a termination fee. See
"--Termination Fee" on page 67.
The merger agreement requires that the companies notify each other within 24
hours after receipt of any acquisition proposal, including the material terms
of the proposal and the identity of the person making the proposal, and they
must update each other as necessary. Nothing described above prevents Friede
Goldman or Halter Marine from disclosing to its stockholders any information
that the board of directors determines in good faith, after consultation with
outside counsel, to be necessary to disclose in order to avoid violating their
fiduciary obligations.
Conduct of the Business of the Combined Companies Following the Merger
At the effective time of the merger, Halter Marine will be merged with and
into Friede Goldman. Pursuant to the merger agreement, the charter of Friede
Goldman, as in effect immediately prior to the effective time, will be the
charter of Friede Goldman Halter. Pursuant to the merger agreement, the charter
of Friede Goldman will be amended to provide that the name of the surviving
corporation will be "Friede Goldman Halter, Inc." and to conform its
indemnification obligations to provide protections to the officers, directors,
employees and agents of Friede Goldman Halter at least as favorable as the
protections and rights contained in Halter Marine's organizational documents.
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Board, Committees and Officers of Friede Goldman
At the effective time, Friede Goldman will use its best efforts to:
. establish the number of directors on the Friede Goldman board of
directors at 11;
. cause the board of directors to be comprised of (1) J. L. Holloway and
five other persons who are members of the board of Friede Goldman at the
effective time, as designated by Friede Goldman, and (2) John Dane and
four other persons who are members of the board of Halter Marine at the
effective time, as designated by Halter Marine;
. cause the compensation committee of Friede Goldman to be comprised of two
persons who are members of the board of Halter Marine at the effective
time and one person who is a member of the board of directors of Friede
Goldman at the effective time;
. cause the audit committee of Friede Goldman to be comprised of three
persons who are members of the board of Friede Goldman at that time and
two persons who are members of the board of directors of Halter Marine at
the effective time;
. cause the nominating committee of Friede Goldman to be comprised of J. L.
Holloway, John Dane, two persons who are members of the board of Friede
Goldman at the effective time and two persons who are members of the
board of directors of Halter Marine at the effective time; and
. cause the officers of Friede Goldman to consist of (1) J. L. Holloway as
Chairman and Chief Executive Officer; (2) John Dane as Vice Chairman,
President and Chief Operating Officer; (3) Rick S. Rees as Chief
Financial Officer and Executive Vice President; and (4) John F. Alford as
Executive Vice President.
Termination, Amendment or Waiver
Termination. The merger agreement may be terminated at any time prior to the
effective time, whether before or after the approval by the stockholders of
Halter Marine or Friede Goldman:
. by the mutual written consent of Halter Marine and Friede Goldman;
. by either Halter Marine or Friede Goldman if;
. the merger is not completed by March 31, 2000, so long as the delay
or default was not on the part of the terminating party;
. any required approval by the stockholders of Halter Marine or Friede
Goldman is not obtained;
. the merger is restrained, enjoined or otherwise prohibited by a
final, unappealable court order;
. the non-terminating party fails to perform or comply with any
material representations, warranties, covenants or agreements in the
merger agreement and does not cure the default in all material
respects within 30 days or the default is incurable; or
. if the opinion of the financial advisor to the terminating party is
withdrawn or modified in a manner materially adverse to it at any
time prior to the mailing of this joint proxy statement/prospectus;
or
. by Halter Marine or Friede Goldman, as the case may be, if, as a result
of a superior acquisition proposal, its board of directors makes the
determinations described in "--No Solicitation of Acquisition
Transactions" on page 64, provided that the termination will not be
effective until the other party has received the termination fee and out-
of-pocket expenses required to be paid pursuant to the merger agreement.
Amendment. The merger agreement may not be amended except by action taken by
the parties' respective boards of directors and then only by an instrument in
writing signed on behalf of each party and in compliance with applicable law.
The amendment may take place at any time prior to the effective time, and,
subject to
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applicable law, whether before or after approval by the stockholders of Halter
Marine, provided that if it occurs after Halter Marine stockholder approval,
the amendment may not change the amount or type of consideration to be received
by the Halter Marine stockholders.
Waiver. At any time prior to the effective time, either party to the merger
agreement may, to the extent legally allowed:
. extend the time for the performance of any of the obligations or other
acts of the other party pursuant to the merger agreement;
. waive any inaccuracies in the representations and warranties of the other
party contained in the merger agreement or in any document delivered
pursuant to the merger agreement; and
. waive compliance by the other party with any of the agreements or
conditions contained in the merger agreement.
Notwithstanding the foregoing, no waiver may take place after the Halter
Marine stockholder approval that changes the amount or type of consideration
unless further approval of the stockholders is obtained.
Termination Fee
Friede Goldman has agreed that, in the event of a termination of the merger
agreement, Friede Goldman will pay Halter Marine a termination fee equal to
$6.5 million, plus out-of-pocket expenses of Halter Marine (not to exceed $2.0
million), if:
. an acquisition proposal has been publicly announced or received by Friede
Goldman and the merger agreement is terminated by either party based on
the failure to complete the merger by March 31, 2000, without any fault
of the terminating party (provided that Friede Goldman enters into an
acquisition agreement or completes the acquisition proposal within 18
months of termination);
. an acquisition proposal has been publicly announced or received by Friede
Goldman and the merger agreement is terminated by either party based on
the failure of the stockholders of Friede Goldman to approve the merger
(provided that Friede Goldman enters into an acquisition agreement or
completes the acquisition proposal within 18 months of termination); or
. Friede Goldman terminates the merger agreement because its board of
directors has received a superior acquisition proposal and has made the
determinations described in "--No Solicitation of Acquisition
Transactions" on page 64.
Halter Marine has agreed that, in the event of a termination of the merger
agreement, Halter Marine will pay Friede Goldman a termination fee equal to
$6.5 million, plus out-of-pocket expenses of Halter Marine (not to exceed $2.0
million), if:
. an acquisition proposal has been publicly announced or received by Halter
Marine and the merger agreement is terminated by either party based on
the failure to complete the merger by March 31, 2000, without any fault
of the terminating party (provided that Halter Marine enters into an
acquisition agreement or completes the acquisition proposal within 18
months of termination);
. an acquisition proposal has been publicly announced or received by Halter
Marine and the merger agreement is terminated by either party based on
the failure of the stockholders of Halter Marine to approve the merger
(provided that Halter Marine enters into an acquisition agreement or
completes the acquisition proposal within 18 months of termination); or
. Halter Marine terminates the merger agreement because the board has
received a superior acquisition proposal and has made the determinations
described in "--No Solicitation of Acquisition Transactions" on page 64.
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Expenses
The merger agreement generally provides that all costs and expenses incurred
in connection with the merger agreement and the transactions contemplated
thereby will be paid by the party incurring the expenses, except that those
expenses incurred in connection with printing and filing this joint proxy
statement/prospectus and all HSR filings will be shared equally by Friede
Goldman and Halter Marine. Friede Goldman will pay taxes, if any, payable on
the transfer of Halter Marine's real property.
Indemnification and Insurance
The merger agreement provides that following the merger, Friede Goldman as
the surviving corporation will compensate for the losses of and hold harmless,
all past and present directors, officers and employees of Halter Marine and
their subsidiaries to the same extent these persons are compensated for loss
pursuant to Halter Marine's charter, by-laws or other indemnification
agreements.
Following the merger, Friede Goldman Halter will maintain for a period of
five years after the effective time, insurance protection to the current
directors and officers of Halter Marine with an aggregate limitation on
liability of no less than $50 million and having customary terms, provisions,
conditions and exclusions.
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OTHER ACQUISITION RELATED AGREEMENTS
On June 1, 1999, simultaneously with entering into the merger agreement,
Friede Goldman entered into a Stockholder's Agreement with J. L. Holloway and
Halter Marine entered into a Voting and Proxy Agreement with J. L. Holloway.
This section of the joint proxy statement/prospectus describes the material
provisions of the stockholder's agreement and the voting and proxy agreement.
The descriptions of these agreements in this joint proxy statement/prospectus
are summaries and therefore they do not contain all the information that may be
important to you. You should read the entire copy of the stockholder's
agreement and voting and proxy agreement attached respectively as Annexes C and
D to this joint proxy statement/prospectus before you decide how to vote. The
stockholder's agreement and voting and proxy agreement are incorporated by
reference into this joint proxy statement/prospectus.
Stockholder's Agreement
Restrictions. J. L. Holloway agrees that, during the term of the
stockholder's agreement, neither he nor any of his affiliates will perform any
of the actions listed below without the prior written consent of Friede Goldman
Halter approved by two-thirds of the members of the board :
. acquire (1) any voting securities of Friede Goldman Halter or options or
warrants convertible into voting securities (except as described in
"Stockholder's Agreement--Additional Purchases" below) or (2) all or any
substantial part of the assets of Friede Goldman Halter or any of its
affiliates;
. solicit proxies of any Friede Goldman Halter voting securities in
opposition to any matter that has received the Required Board Approval.
"Required Board Approval" means the approval of the board of directors of
Friede Goldman Halter by majority vote, including the affirmative vote of
at least one director originally nominated by Halter Marine;
. solicit the support of any stockholder proposals or written consent of
stockholders, attempt to call a special meeting or attempt to nominate
any person for election as a director of Friede Goldman Halter;
. enter into an agreement with respect to the voting of any voting
securities of Friede Goldman Halter or participate in any partnership or
group with respect to these securities;
. try to amend, modify or waive any provision of the stockholder's
agreement except in a confidential manner; or
. solicit, assist or induce any person to perform the actions described
above.
Additional Purchases. Notwithstanding the restrictions described above and
provided he is not in breach of the stockholder's agreement, J. L. Holloway may
acquire voting securities of Friede Goldman Halter in the following ways:
. Ten days after the commencement of a tender offer by an independent
person or group, J. L. Holloway and his affiliates may acquire voting
securities, provided that the tender offer seeks to acquire a majority or
more of the total voting power of the voting securities of Friede Goldman
Halter then outstanding, is not supported by the Required Board Approval
and satisfies other requirements;
. Subject to various restrictions, J. L. Holloway and/or his affiliates may
make a tender for a majority or more of the voting securities of Friede
Goldman Halter in the event:
. Friede Goldman Halter has received a tender offer from an independent
person or group to acquire a majority or more of the total voting
power of the voting securities then outstanding which is supported by
the Required Board Approval; or
. of acceptance by the Required Board Approval of (1) a proposal to
acquire a majority or more of the total voting power of the voting
securities then outstanding or (2) all or substantially all of the
assets of Friede Goldman Halter and its subsidiaries;
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. If more than 30% of the total voting power of Friede Goldman Halter's
voting securities are acquired by a person or group other than by J. L.
Holloway, his affiliates or an employee benefit plan of Friede Goldman
Halter, J. L. Holloway and his affiliates may increase their ownership of
voting securities to equal the amount owned by the other person or group;
or
. J. L. Holloway and his affiliates may increase their ownership of Friede
Goldman Halter's voting securities up to 30% of the total voting power of
the voting securities then outstanding.
Sales and Other Dispositions. J. L. Holloway agrees that during the term of
the stockholder's agreement, neither he nor any of his affiliates will sell,
transfer or otherwise dispose of any voting securities except:
. to Friede Goldman Halter;
. to a person or group, not disapproved by the Required Board Approval, who
after the acquisition would not own more than 10% of the total voting
power of the voting securities;
. in a underwritten registered public offering or in the market in
accordance with the securities laws;
. in private sales or distributions to any person or group in amounts which
would result in that person or group owning not more than 5% of the total
voting power of the voting securities;
. in private sales or distributions to any person or group in amounts of 5%
or less of the total voting power of the voting securities which would
result in that person or group owning less than 10% of the total voting
power of the voting securities;
. in private sales or distributions to a financial institution such as a
bank that is not affiliated to J. L. Holloway or an investment company or
business development company registered under the Investment Company Act
of 1940 in amounts of 5% or less of the total voting power of the voting
securities which would result in the financial institution owning less
than 15% of the total voting power of the voting securities;
. in private sales or distributions during a single twelve-month period to
a financial institution described above in amounts not to exceed 2% of
the total voting power of the voting securities;
. in a pledge or grant of a security interest in J. L. Holloway's voting
securities to an institutional lender for money borrowed or pursuant to a
foreclosure, provided that either (1) the pledge relates to no more than
an aggregate of 25,000 shares of voting securities or (2) the lender
agrees to restrictions on the sale of the voting securities, as set out
in Annex A to the stockholder's agreement;
. in a tender in response to a tender offer as described in "Stockholder's
Agreement--Additional Purchases" above;
. to an affiliate of J. L. Holloway, provided that the affiliate agrees to
be bound by the stockholder's agreement; or
. in a merger or consolidation in which Friede Goldman Halter is acquired,
or in a plan of liquidation of the combined company.
Voting of Shares; Management Succession. J. L. Holloway agrees to resign as
Chairman and Chief Executive Officer of Friede Goldman Halter by the second
anniversary of the effective time of the merger and agrees to support the
appointment of John Dane III to succeed him as Chairman of the board of
directors and Chief Executive Officer at the time of his resignation. In
addition, J. L. Holloway agrees to vote all voting securities over which he has
voting power in favor of this succession plan and in favor of Friede Goldman
Halter's nominees for election as directors. J. L. Holloway has agreed that all
voting securities held by him and his affiliates will be present at all
meetings of stockholders of Friede Goldman Halter.
Registration Rights. J. L. Holloway may request Friede Goldman Halter to
file up to three registration statements in order to permit the sale or other
disposition of voting securities owned by him. In addition, if
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Friede Goldman Halter files a registration statement for other shares of its
voting securities, J. L. Holloway will be allowed to participate in the
registration, subject to limitations.
Term and Termination. The stockholder's agreement will be in full force and
effect for a term of five years following the effective time of the merger. The
stockholder's agreement will terminate prior to that time if (1) the merger
agreement is terminated or (2) the aggregate amount of voting securities owned
by J. L. Holloway is less than 15% of the voting power of the total voting
securities outstanding, J. L. Holloway has not been an officer or director of
Friede Goldman Halter during the previous six months and the Stockholder Rights
Agreement of Friede Goldman Halter is in full force and effect.
Voting and Proxy Agreement
Under the voting and proxy agreement, J. L. Holloway irrevocably agrees to
vote at any meeting of stockholders of Friede Goldman Halter as follows:
. in favor of the merger and in favor of the actions outlined in the merger
agreement; and
. against an alternative merger or combination between Friede Goldman and
any entity other than Halter Marine.
In addition, J. L. Holloway has revoked all proxies granted to him with
respect to the matters described above and has appointed Halter Marine as his
attorney and proxy, with power to vote all voting securities owned by him, on
the above matters.
As of the Friede Goldman record date, J. L. Holloway beneficially owned
approximately 9,919,977 shares of Friede Goldman common stock (including
650,000 shares of common stock owned by a voting trust of which Mr. Holloway is
the sole trustee), which constitutes approximately 42% of the outstanding
shares of common stock of Friede Goldman.
The voting and proxy agreement will terminate with respect to the
obligations of J. L. Holloway relating to the merger upon the earlier to occur
of:
. the completion of the merger;
. the termination of the merger agreement, if Halter Marine is not entitled
to a termination fee; or
. three months after termination of the merger agreement, if Halter Marine
is entitled to a termination fee.
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FRIEDE GOLDMAN SPECIAL MEETING
This document is furnished in connection with the solicitation of proxies
from the holders of Friede Goldman common stock by the Friede Goldman board for
use at the Friede Goldman special meeting. This document and accompanying form
of proxy are first being mailed to the stockholders of Friede Goldman on or
about September 28, 1999.
Time and Place; Purpose
The Friede Goldman special meeting will be held at 10:00 a.m. local time, on
Thursday, October 28, 1999 at The Crowne Plaza, 200 East Amite Street, Jackson,
Mississippi 39201. At the Friede Goldman special meeting (and any adjournment
or postponement of the Friede Goldman special meeting), the stockholders of
Friede Goldman will be asked to consider and vote upon:
. the approval and adoption of the merger agreement and the merger;
. the approval of a proposal to increase the number of authorized directors
to 11;
. the approval of an amendment to the Friede Goldman charter to amend the
provision relating to the indemnification of officers and directors of
Friede Goldman to make it as favorable as the indemnification provided to
the current officers and directors of Halter Marine under the Halter
Marine charter;
. the approval of an amendment to the Friede Goldman incentive plan (a) to
increase the number of shares available for grant from 10% to 15% of the
total number of shares of common stock outstanding and (b) to increase
the number of options which may be granted to some executive officers of
Friede Goldman and Halter Marine pursuant to the transactions
contemplated by the merger agreement; and
. other matters as may properly come before the Friede Goldman special
meeting.
Friede Goldman stockholder approval and adoption of the merger agreement is
required by the Mississippi Business Corporation Act and the rules of the NYSE.
The Friede Goldman board of directors has unanimously approved the terms of
the merger agreement, the completion of the merger contemplated by the merger
agreement, unanimously believes that the terms of the merger agreement are fair
to, and in the best interests of, Friede Goldman and its stockholders, and
unanimously recommends that holders of Friede Goldman common stock vote "for":
. approval and adoption of the merger agreement;
. the increase in the number of authorized directors of the Friede Goldman
board of directors to 11;
. the amendment to the Friede Goldman charter providing the officers and
directors of Friede Goldman with indemnification as favorable as the
indemnification provided to the current officers and directors of Halter
Marine under the Halter Marine charter; and
. the amendment to the Friede Goldman 1997 equity incentive plan to (a)
increase of the number of shares available for grant under the plan from
10% to 15% of the total number of shares of common stock outstanding and
(b) increase in the number of options which may be granted to some
executive officers of Friede Goldman and Halter Marine pursuant to the
transactions contemplated by the merger agreement.
One or more representatives of Jefferies are expected to be present at the
special meeting to answer appropriate questions of stockholders of Friede
Goldman and to make a statement if so desired.
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Increase in the number of authorized directors
The board of directors of Friede Goldman has unanimously recommended for
approval by the stockholders the proposed increase in the authorized number of
directors. Friede Goldman currently has eight directors, each of whom was
elected at the 1999 annual meeting of stockholders. However, upon consummation
of the merger, the merger agreement calls for an 11-member board of directors
to be comprised of:
. J. L. Holloway;
. John Dane III;
. five persons who were members of the Friede Goldman board of directors on
the date of the merger agreement, as designated by Friede Goldman, which
include Jerome L. Goldman, Alan A. Baker, T. Jay Collins, Raymond E.
Mabus and Gary L. Kott; and
. four persons who were members of the Halter Marine board of directors on
the date of the merger agreement, as designated by Halter Marine, which
include Angus R. Cooper, II, Barry J. Galt, Burt H. Keenan and Kenneth W.
Lewis.
Stockholder approval of the proposed increase in the number of authorized
directors is sought pursuant to Section 8.03 of the Mississippi Business
Corporation Act, which states that only the stockholders of a corporation may
increase the number of directors by more than 30% of the number of directors
last approved by stockholders.
Amendment of the charter provision relating to the indemnification of officers
and directors
The board of directors of Friede Goldman has unanimously recommended for
approval by the stockholders the proposal to amend the charter provision
relating to the indemnification of the officers and directors of Friede Goldman
to make it as favorable as the indemnification provided to the current officers
and directors of Halter Marine under the Halter Marine charter. The merger
agreement provides that Friede Goldman will amend its charter in this manner.
Under the proposal, the Friede Goldman charter would be amended to restate
Article Ninth, so that it would be substantially identical to Article IX of the
Halter Marine charter and would read as follows:
A. Limited Liability of Directors. A director of the Corporation shall
not be personally liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director, except, if
required by the MBCA, as amended from time to time, for liability (i) for
any breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
79-4-8.33 of the MBCA, or (iv) for any transaction from which the director
derived an improper personal benefit. Neither the amendment nor repeal of
Paragraph A of this Article NINTH shall eliminate or reduce the effect of
Paragraph A of this Article NINTH in respect of any matter occurring, or
any cause of action, suit or claim that, but for Paragraph A of this
Article NINTH would accrue or arise, prior to such amendment or repeal.
B. Indemnification and Insurance.
(1) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was or has
agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving or having
agreed to serve as a director, officer, employee or agent, shall be
indemnified and
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held harmless by the Corporation to the fullest extent authorized by the
MBCA, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement and excise taxes or penalties
arising under the Employee Retirement Income Security Act of 1974, as in
effect from time to time) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of such person's heirs, executors and administrators;
provided, however, that, except as provided in Paragraph B(2) hereof, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this Paragraph shall
be a contract right and shall include the right to have the Corporation
pay, subject to the provisions of Sections 8.51 and 8.53 of MBCA, the
expenses incurred in defending any such proceeding in advance of its final
disposition. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification, and rights
to have the Corporation pay the expenses incurred in defending any
proceeding in advance of its final disposition, to any employee or agent of
the Corporation to the fullest extent of the provisions of this Article
NINTH with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.
(2) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Paragraph B shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise. No repeal or
modification of this Article NINTH shall in any way diminish or adversely
affect the rights of any director, officer, employee or agent of the
Corporation hereunder in respect of any occurrence or matter arising prior
to any such repeal or modification.
(3) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the MBCA.
(4) Severability. If any provision or provisions of this Article NINTH
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (1) the validity, legality and enforceability of the remaining
provisions of this Article NINTH (including, without limitation, each
portion of any paragraph of this Article NINTH containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
held to be invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Article NINTH (including, without limitation, each such
portion of any paragraph of this Article NINTH containing any such
provision held to be invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
Friede Goldman's charter currently provides for the indemnification of
directors, and its bylaws provide for the indemnification of its officers,
employees and agents. The proposed amendment to Friede Goldman's charter
sets forth various specific provisions relating to indemnification not
present in Friede Goldman's current charter but that are contained in
Friede Goldman's bylaws. Accordingly, the charter amendment will have
little practical effect on the level of indemnification provided to
directors, officers, employees or agents of Friede Goldman. However,
placing these indemnification provisions in the charter, which can only be
changed by a stockholder vote, as opposed to the bylaws, which may be
amended by the board of directors, would offer the officers, employees and
agents the added assurance that their right to indemnification cannot be
changed or terminated without the affirmative vote of 80% of the
outstanding shares of Friede Goldman Halter.
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Amendment to the Friede Goldman 1997 Equity Incentive Plan
The board of directors of Friede Goldman has adopted and recommended for
approval by the stockholders an amendment to the 1997 equity incentive plan:
. to increase the number of shares of common stock available under the 1997
equity incentive plan; and
. to increase the number of options that may be granted to some executive
officers of Friede Goldman and Halter Marine pursuant to the transactions
contemplated by the merger agreement.
The amendment will increase the number of shares of common stock that may be
issued pursuant to the 1997 equity incentive plan from 10% to 15% of the total
number of shares of common stock outstanding to accommodate stock option grants
of the combined company. Options to purchase an aggregate of 1,308,393 shares
of common stock, representing 5.6% of the total number of shares of common
stock outstanding, have been granted as of the date of this joint proxy
statement/prospectus. In order to have available shares of common stock for
future grants of options and other awards under the 1997 equity incentive plan,
the board of directors believes it is in the best interests of Friede Goldman
to increase the number of shares available under the 1997 equity incentive
plan.
The amendment to the 1997 equity incentive plan will also increase the
number of options which may be granted to some executive officers of Friede
Goldman Halter pursuant to the transactions contemplated by the merger
agreement. The plan currently limits the number of shares underlying an option
that may be granted to any employee of the company during any calendar year to
250,000. However, in connection with the merger agreement, Friede Goldman
entered into employment agreements with each of Messrs. Holloway, Dane, Alford
and Rees which provide for grants of options to purchase 1,000,000 shares of
Friede Goldman Halter common stock, in the case of Messrs. Holloway and Dane,
and 500,000 shares of Friede Goldman Halter common stock, in the case of
Messrs. Alford and Rees. Each of these options would become effective as of the
effective date of the merger and would have an exercise price equal to the
closing price of the Friede Goldman common stock on the effective date of the
merger. The board of directors believes that it is important to secure the
employment of each of these individuals in order to ensure continuity of
management with respect to the combined company. Accordingly, the board of
directors believes it is in the best interests of Friede Goldman to provide for
a one-time exception to the annual maximum of 250,000 shares underlying the
options under the 1997 equity incentive plan so that each of Messrs. Holloway,
Dane, Alford and Rees may receive the option grant stipulated in their
employment agreements.
A copy of the amended and restated Friede Goldman 1997 equity incentive plan
is set forth as Annex E to this joint proxy statement/prospectus. A copy of the
proposed Amendment No. 1 to the amended and restated Friede Goldman 1997 equity
incentive plan is set forth as Annex F to this joint proxy
statement/prospectus. The following summary of the 1997 equity incentive plan
is qualified in its entirety by the more detailed provisions of the 1997 equity
incentive plan.
General Information
The 1997 equity incentive plan was adopted by the board of directors of
Friede Goldman and approved by Friede Goldman's stockholders. The plan
encourages employees and consultants of Friede Goldman and its subsidiaries and
directors of Friede Goldman to acquire or increase their equity interest in
Friede Goldman, thereby giving them a sense of proprietorship and personal
involvement in the development and financial success of Friede Goldman. It also
encourages them to remain with and devote their best efforts to the business of
Friede Goldman, thereby advancing the interests of Friede Goldman and its
stockholders. The plan is also contemplated to enhance the ability of Friede
Goldman and its subsidiaries to attract and retain the services of individuals
who are essential for the growth and profitability of Friede Goldman.
The 1997 equity incentive plan provides for the granting of awards to
employees and consultants of Friede Goldman and to directors of Friede Goldman.
Awards may be in the form of options, director options, stock
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appreciation rights (SARs), phantom shares, restricted stock, performance
awards, bonus stock and cash awards, as defined under the plan and described in
this document. Only "non-employee directors" and employees of Friede Goldman
and its subsidiaries may be granted incentive stock options under the plan. The
plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974 and is not a qualified plan under Section 401(a) of the
Internal Revenue Code, which relates to pension, retirement, profit-sharing,
thrift and similar plans.
Shares Available
The aggregate number of shares of Friede Goldman's common stock as to which
awards may be granted under the plan is 10% of the aggregate number of shares
of common stock of Friede Goldman outstanding at the time of grant but, upon
approval of the amendment to the 1997 equity incentive plan by the stockholders
of Friede Goldman as discussed above, the aggregate number of Friede Goldman's
common stock as to which awards may be granted will be increased to 15% of the
aggregate number of shares of common stock of Friede Goldman outstanding at the
time of grant. The number of shares of common stock that may be delivered upon
exercise of an incentive stock option will not exceed 1,150,000. This number of
shares is subject to adjustment. If any award expires, lapses, or is terminated
or forfeited for any reason, the shares reserved under the award will continue
to be available for the grant of awards under the plan. Common stock subject to
grants of awards under the plan may be authorized but unissued shares and
treasury shares.
Administration
The plan is administered by the compensation committee of Friede Goldman's
board of directors selected by the board of directors to serve at the pleasure
of the board of directors.
The compensation committee has the full and exclusive right to grant all
awards under the plan and to determine the terms and provisions of the awards.
The members of the compensation committee will not incur any liability for any
action taken in connection with the plan.
Eligibility
All employees and consultants of Friede Goldman and its subsidiaries are
eligible to receive awards under the plan. Directors may only receive director
options. Each individual granted an award will be a "participant" under the
plan. Subject to the express provisions of the plan, the compensation committee
has authority, in its discretion, to determine, among other things, those
employees of Friede Goldman and its subsidiaries who are to be granted awards
under the plan and the number of shares of common stock or other amount to be
covered by each award; except that no employee or consultant may receive
options, stock appreciation rights, phantom shares, or restricted stock awards
with respect to more than 250,000 shares for each award during any calendar
year. However, upon approval of the amendment discussed above, a one-time
exception will allow for:
. the grant of options to purchase 1,000,000 shares of Friede Goldman
Halter common stock, in the case of Messrs. Holloway and Dane; and
. the grant of options to purchase 500,000 shares of Friede Goldman Halter
common stock, in the case of Messrs. Alford and Rees,
in each case, pursuant to the employment agreement entered into by each of
those individuals in connection with the merger.
The maximum amount of performance units that may be granted to any
participant with respect to any calendar year will not exceed $1.0 million,
determined as of the date of grant of the award. In making these
determinations, the compensation committee will take into consideration any
factors which the compensation committee in its discretion deems relevant.
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Awards
. Options. The compensation committee has the authority to determine, among
other matters, the employees and consultants to whom options will be
granted, the number of shares to be covered by each option, the purchase
price of each option and the conditions and limitations applicable to the
exercise of the option. The options may be non-qualified stock options or
incentive stock options under Section 422 of the Internal Revenue Code.
The purchase price per share purchasable under an option right will be
determined by the compensation committee at the time each option is
granted, but will not be less than the fair market value per share on the
date of grant, except in the event of substitute awards granted in
conjunction with an acquisition.
. Director Options. Each individual will receive upon becoming a director
of Friede Goldman an automatic grant of options to purchase 1,000 shares
of common stock, and each continuing director will receive annual options
to purchase an additional 2,000 shares of common stock. Each option
granted to individuals upon becoming a director of Friede Goldman will be
exercisable in full six calendar months following the date of grant. Each
director option granted annually to each continuing director will be
exercisable on a cumulative basis 50% one year following the date of
grant and 50% two years following the date of grant.
. Stock Appreciation Rights. The term SAR will mean the right to receive
from Friede Goldman an amount equal to (1) the fair market value per
share for shares on the exercise date over (2) the fair market value per
share for shares on the date of grant (i.e., the "spread"), multiplied by
the total number of shares for which the SAR is exercised. Under the
plan, the compensation committee will have the authority to determine the
employees and consultants to whom SARs will be granted, the number of
shares to be covered by each SAR award, the grant price of the SAR and
the conditions and limitations applicable to the exercise of the SAR.
. Restricted Stock Awards. The compensation committee may award shares of
restricted stock to eligible employees and consultants. The compensation
committee may determine the terms and conditions of these awards,
including terms of any payment and the time within which, and the
conditions (including performance criteria, if any) under which, any
award may be forfeited to Friede Goldman. When issued, shares of
restricted stock will constitute issued and outstanding shares of common
stock. Upon termination of a participant's employment (as determined
under criteria established by the compensation committee) for any reason
during the applicable restricted period, all restricted stock will be
forfeited by the participant and reacquired by Friede Goldman.
. Bonus Stock Awards. The compensation committee may award shares of bonus
stock to eligible employees and consultants. Awards of bonus stock are
not subject to any forfeiture or restricted period. Accordingly, a holder
of bonus stock has the same rights and privileges as any other holder of
shares of common stock, including the right to sell, pledge, assign or
otherwise transfer ownership of bonus stock. When issued, shares of bonus
stock will constitute issued and outstanding shares of common stock.
Performance Units
The compensation committee will have the authority to determine the
employees and consultants who receive a performance unit, which will be
denominated as a cash amount at the time of grant and confer on the participant
the right to receive payment of an award, in whole or in part, upon the
achievement of specified performance goals during performance periods
established by the compensation committee with respect to the award. Subject to
the terms of the plan and any applicable award agreement, the compensation
committee will determine the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
performance unit and the amount of any payment or transfer to be made pursuant
to any performance award.
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Phantom Shares
The compensation committee may grant awards of phantom shares to eligible
employees and consultants upon terms and conditions as the compensation
committee may determine. Each phantom share award will constitute an agreement
by Friede Goldman to issue or transfer a specified number of shares, or pay an
amount of cash equal to a specified number of shares or a combination thereof,
to the participant in the future, subject to the fulfillment during the
restricted period of conditions, including performance objectives, if any,
specified by the compensation committee at the date of grant. During the
restricted period, the participant will not have any right to transfer any
rights under the subject award, will not have any rights of ownership in the
phantom shares and will not have any right to vote these shares.
Cash Awards
Subject to the provisions of the plan, the compensation committee will have
the authority to determine the employees and consultants to whom cash awards
will be granted, the amount and the terms or conditions, if any, as additional
compensation for the employee's services to Friede Goldman or its affiliates. A
cash award may be granted (simultaneously or subsequently) in tandem with
another award and may entitle a participant to receive a specified amount of
cash from Friede Goldman upon the other award becoming taxable to the
participant, which cash amount may be based on a formula relating to the
anticipated taxable income associated with the other award and the payment of
the cash award.
Performance Based Compensation: Performance Criteria and Payment Limits
The compensation committee will establish performance goals applicable to
those awards (other than options and SARs) the payment of which is intended by
the compensation committee to qualify as "performance-based compensation" as
described in Section 162(m)(4)(C) of the Internal Revenue Code. Which factor or
factors to be used with respect to any grant, and the weight to be accorded to
the factors if more than one factor is used, will be determined by the
compensation committee at the time of grant. With respect to any restricted
stock award, phantom stock award, or cash award granted in tandem with, and
expressed as a percentage of, a share-denominated award, which is intended to
qualify as "performance-based compensation," the maximum payment to any
participant with respect to the award in any calendar year will be an amount
(in cash and/or in shares) equal to the fair market value of the number of
shares subject to the award.
Limits on Transfer of Awards
Under the plan, each award, and each right under any award, will be
exercisable only by the participant during the participant's lifetime, or, if
permissible under applicable law, by the participant's guardian or legal
representative as determined by the compensation committee.
No award and no right under any award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a participant
otherwise than by will or by the laws of descent and distribution (or, in the
case of restricted stock, to Friede Goldman) and any purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance will be void and
unenforceable against Friede Goldman or any affiliate.
Notwithstanding anything in the plan to the contrary, to the extent
specifically provided by the compensation committee with respect to a grant, an
award may be transferred to immediate family members or related family trusts,
limited partnerships or similar entities (permitted transferees) or on terms
and conditions as the compensation committee may establish.
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Change in Control
In the event of any Change in Control (as defined below), then
notwithstanding any other provision of the plan to the contrary, all
outstanding awards will automatically become fully vested on the Change in
Control, all restrictions, if any, will lapse and all performance criteria, if
any, with respect to these awards will be deemed to have been met in full.
Under the plan, a "Change in Control" is deemed to occur if:
. any person or persons or entity or entities (as the term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) other than Friede
Goldman or its subsidiaries or an employee benefit plan of Friede Goldman
or its subsidiaries is or becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of
Friede Goldman representing 50% or more of the combined voting power of
Friede Goldman's then outstanding securities;
. upon the first purchase of Friede Goldman's common stock pursuant to a
tender or exchange offer (other than a tender or exchange offer made by
Friede Goldman);
. upon the approval by Friede Goldman's stockholders of a plan of
liquidation or dissolution of Friede Goldman or a consolidation or sale
of substantially all of the assets of Friede Goldman or a merger;
provided, however, that a "Change of Control" will not be deemed to occur
if (1) securities representing at least 50% of the total voting power
immediately after the transaction are owned by at least 50% of the
holders of outstanding voting securities immediately prior to the
transaction and (2) the voting power of each continuing holder relative
to other continuing holders has not been substantially altered; or
. if the individuals who constitute the board of directors cease for any
reason to constitute at least a majority thereof, unless the election or
nomination for the election by Friede Goldman's stockholders of each new
director was approved by a vote of at least a majority of the directors
then still in office who were directors at the beginning of the period.
Parachute Tax Gross-Up
To the extent an award results in a participant being subject to the
"parachute" excise tax under Section 280G of the Internal Revenue Code, Friede
Goldman will pay the participant an additional amount in cash to make the
person "whole" for the excise tax and other taxes thereon.
Amendment or Termination of the Plan
Except to the extent prohibited by applicable law or stock exchange rules
and unless otherwise expressly provided in an award agreement or in the plan,
the board of directors may amend or terminate the plan without the consent of
any stockholder, participant, other holder or beneficiary of an award, or any
other person. However, no amendment to the plan may be made without the
approval of the stockholders of Friede Goldman which would increase the total
number of shares which may be issued under the plan.
No award will be granted under the plan after December 31, 2006. However,
unless otherwise provided in the plan or in an applicable award agreement, any
award granted before this date may, and the authority of the compensation
committee to amend or terminate the award or to waive any conditions or rights
under the award will, extend beyond this date.
Amendments and Adjustments to Awards
The compensation committee may waive any conditions or rights under, or
amend any terms of, any award which has been granted (other than restricted
stock), if the change, other than adjustments of awards permitted by the plan,
in any award does not reduce the benefit to a participant without the consent
of the
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participant. However, with respect to any award intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code, no adjustment will be authorized to the extent the adjustment would cause
the award to fail to so qualify.
Term of Awards
The compensation committee will determine the term of each award (other than
options granted to non-employee directors), which may not exceed a period of 10
years from the date of granting the award.
Consideration for Grants
Awards may be granted for no cash consideration or for the consideration
determined by the compensation committee. No shares or other securities will be
delivered pursuant to any award until payment in full of any amount, including
withholding taxes, required to be paid pursuant to the plan or the applicable
award agreement is received by Friede Goldman. Payment may be made by any
method and in any form determined by the compensation committee; provided that
the combined value, as determined by the compensation committee, of all cash
and cash equivalents and the fair market value of any shares or other property
so tendered to Friede Goldman, as of the date of tender, is at least equal to
the full amount required to be paid pursuant to the plan or the applicable
award agreement to Friede Goldman.
Record Date; Voting Rights and Proxies
Only holders of record of Friede Goldman common stock at the close of
business on Thursday, September 23, 1999 are entitled to notice of and to vote
at the Friede Goldman special meeting. As of the Friede Goldman record date,
there were 23,430,556 shares of Friede Goldman common stock outstanding, each
of which entitled its holder to one vote. There were approximately 190 holders
of record on the record date.
All shares of Friede Goldman common stock represented by properly executed
proxies will, unless these proxies have been previously revoked, be voted in
accordance with the instructions indicated in these proxies. If no instructions
are indicated, the shares of Friede Goldman common stock will be voted "for"
approval and adoption of the merger agreement, the proposal to increase the
number of authorized directors of the Friede Goldman board of directors, the
amendment to the provision in the Friede Goldman charter relating to the
indemnification of the officers and directors of Friede Goldman to make it as
favorable as the indemnification provided to current officers and directors of
Halter Marine under the Halter Marine charter, and the proposed amendment to
the 1997 equity incentive plan to increase the number of shares available for
grant under the plan and to increase the number of options which may be granted
to some executive officers of Friede Goldman and Halter Marine pursuant to the
transactions contemplated by the merger agreement. Friede Goldman does not know
of any matters other than the approval of the merger agreement, the proposal to
increase the number of authorized directors, and the proposed amendments to
each of the Friede Goldman charter and the 1997 equity incentive plan that are
to come before the Friede Goldman special meeting. If any other matter or
matters are properly presented for action at the Friede Goldman special
meeting, the persons named in the enclosed form of proxy and acting under the
proxy will have the discretion to vote on those matters in accordance with
their best judgment.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of revocation to Friede Goldman by signing
and returning a later dated proxy, or by voting in person at the Friede Goldman
special meeting. Votes cast by proxy or in person at the Friede Goldman special
meeting will be tabulated by the inspector of election appointed for the
meeting.
Solicitation of Proxies
Proxies are being solicited by and on behalf of the Friede Goldman board. In
addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of Friede Goldman in person or
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by telephone, telegram or other means of communication. Those directors,
officers and employees will not be additionally compensated, but may be
reimbursed for out-of-pocket expenses incurred in connection with the
solicitation. Arrangements have also been made with brokerage firms, banks,
custodians, nominees and fiduciaries for the forwarding of proxy solicitation
materials to owners of Friede Goldman common stock held of record by those
persons and in connection therewith the firms will be reimbursed for reasonable
expenses incurred in forwarding those materials. Friede Goldman has retained
Corporate Investor Communications, Inc. to assist in the solicitation of
proxies from its stockholders. The total fees of Corporate Investor
Communications, Inc. are estimated to aggregate $6,500 and will be paid by
Friede Goldman.
Quorum
The presence in person or by properly executed proxy of a majority of the
issued and outstanding shares of Friede Goldman common stock entitled to vote
at the special meeting is necessary to constitute a quorum at the Friede
Goldman special meeting. If there are not sufficient shares represented in
person or by proxy at the special meeting to constitute a quorum, the special
meeting may be postponed or adjourned in order to permit further solicitation
of proxies by Friede Goldman.
Required Vote; Failure to Vote and Broker Non-Votes
Approval and adoption of the merger agreement requires the affirmative vote
of a majority of the outstanding shares of Friede Goldman common stock. The
approval of the proposal to increase the number of authorized directors and the
proposed amendment to the 1997 equity incentive plan requires the affirmative
vote of holders of a majority of the shares present or represented by duly
executed proxy at the special meeting and entitled to vote on the proposal. The
approval of the proposed amendment to Friede Goldman's charter requires the
affirmative vote of at least 80% of the outstanding shares of Friede Goldman
common stock.
On June 1, 1999, Mr. J. L. Holloway, Chairman, President and Chief Executive
Officer of Friede Goldman, owned and was entitled to vote 9,919,977 shares of
Friede Goldman common stock, or approximately 42% of the shares of Friede
Goldman common stock issued and outstanding on that date. Mr. Holloway has
agreed to vote his common stock "for" approval of the merger agreement and each
of the actions contemplated by Halter Marine in connection with the merger or
pursuant to the merger agreement.
Any failure to vote, or a vote to abstain, will have the effect of a vote
against the merger agreement and the proposed amendment to Friede Goldman's
charter. A failure to vote, or a vote to abstain, will have no effect on a vote
on the proposal to increase the number of authorized directors, or on the
amendment to Friede Goldman's 1997 equity incentive plan.
Under NYSE rules, brokers who hold shares in street name for customers have
the authority to vote on some "routine" proposals when they have not received
instructions from beneficial owners. However, these brokers are precluded from
exercising their voting discretion with respect to the approval and adoption of
non-routine matters such as the merger agreement and the proposed amendment to
Friede Goldman's charter and, thus, absent specific instructions from the
beneficial owner of the shares, brokers are not empowered to vote the shares
with respect to the merger agreement and the proposed amendment to Friede
Goldman's charter. These "broker non-votes" will therefore have the effect of a
vote "against" the merger agreement and the proposed amendment to Friede
Goldman's charter.
However, with respect to the other proposals, "broker non-votes" will not
effect the results on a proposal because shares held by brokers who withhold
authority to vote will be considered absent in the voting tallies on those
proposals.
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HALTER MARINE SPECIAL MEETING
This document is furnished in connection with the solicitation of proxies
from the holders of Halter Marine common stock by the Halter Marine board for
use at the Halter Marine special meeting. This document and accompanying form
of proxy are first being mailed to the stockholders of Halter Marine on or
about September 28, 1999.
Time and Place; Purpose
The Halter Marine special meeting will be held at 10:00 a.m. local time, on
Thursday, October 28, 1999 at the Great Southern Club, One Hancock Plaza,
Harbor View Room, Gulfport, Mississippi 39501. At the Halter Marine special
meeting (and any adjournment or postponement of the Halter Marine special
meeting), the stockholders of Halter Marine will be asked to consider and vote
upon the approval and adoption of the merger agreement and other matters as may
properly come before the Halter Marine special meeting.
Halter Marine stockholder approval and adoption of the merger agreement is
required by the Delaware General Corporation Law.
The Halter Marine board of directors has approved the terms of the merger
agreement and the completion of the merger contemplated by the merger
agreement, believes that the terms of the merger agreement are fair to, and in
the best interests of, Halter Marine and its stockholders, and recommends that
holders of Halter Marine common stock vote "for" the approval and adoption of
the merger agreement.
Record Date; Voting Rights and Proxies
Only holders of record of Halter Marine common stock at the close of
business on Thursday, September 23, 1999 are entitled to notice of and to vote
at the Halter Marine special meeting. As of the record date, there were
28,856,661 shares of Halter Marine common stock outstanding, each of which
entitles its holder to one vote. There were approximately 2,361 registered
holders of record on the record date.
All shares of Halter Marine common stock represented by properly executed
proxies will, unless these proxies have been previously revoked, be voted in
accordance with the instructions indicated in these proxies. If no instructions
are indicated, these shares of Halter Marine common stock will be voted "for"
approval and adoption of the merger agreement. Halter Marine does not know of
any matters other than the approval of the merger agreement that are to come
before the Halter Marine special meeting. If any other matter or matters are
properly presented for action at the Halter Marine special meeting, the persons
named in the enclosed form of proxy and acting under the proxy will have the
discretion to vote on those matters in accordance with their best judgment.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of revocation to Halter Marine by signing and
returning a later dated proxy, or by voting in person at the Halter Marine
special meeting. Votes cast by proxy or in person at the Halter Marine special
meeting will be tabulated by the inspector of election appointed for the
meeting.
Solicitation of Proxies
Proxies are being solicited by and on behalf of the Halter Marine board. In
addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of Halter Marine in person or by telephone,
telegram or other means of communication. Those directors, officers and
employees will not be additionally compensated but may be reimbursed for out-
of-pocket expenses incurred in connection with the solicitation. Arrangements
have also been made with brokerage firms, banks, custodians, nominees and
fiduciaries for the forwarding of proxy solicitation materials to owners of
Halter Marine common stock held of
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record by these persons and in connection therewith these firms will be
reimbursed for reasonable expenses incurred in forwarding those materials.
Halter Marine has retained Corporate Investor Communications, Inc. to assist in
the solicitation of proxies from its stockholders. The total fees and expenses
of Corporate Investor Communications, Inc. are estimated to aggregate $6,500
and will be paid by Halter Marine.
Halter Marine stockholders should not send any certificates representing
Halter Marine common stock with their proxy cards. Following the effective
time, Halter Marine stockholders will receive instructions for the surrender
and exchange of their stock certificates.
Quorum
The presence in person or by properly executed proxy of a majority of the
issued and outstanding shares of Halter Marine common stock entitled to vote at
the special meeting is necessary to constitute a quorum at the Halter Marine
special meeting. If there are not sufficient shares represented in person or by
proxy at the special meeting to constitute a quorum, the special meeting may be
postponed or adjourned in order to permit further solicitation of proxies by
Friede Goldman. Abstentions and "broker non-votes" are counted for purposes of
determining whether a quorum is present.
Required Vote, Failure to Vote and Broker Non-Votes
Approval and adoption of the merger agreement requires the affirmative vote
of a majority of the outstanding shares of Halter Marine common stock. Any
failure to vote, or a vote to abstain, will have the effect of a vote against
the merger and the merger agreement.
Under the American Stock Exchange rules, brokers who hold shares in street
name for customers have the authority to vote on "routine" proposals when they
have not received instructions from beneficial owners. However, these brokers
are precluded from exercising their voting discretion with respect to the
approval and adoption of non-routine matters such as the merger and the merger
agreement and, thus, absent specific instructions from the beneficial owner of
the shares, brokers are not empowered to vote the shares with respect to the
merger agreement. These "broker non-votes" will therefore have the effect of a
vote "against" the merger agreement.
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DIRECTORS AND OFFICERS OF FRIEDE GOLDMAN HALTER FOLLOWING THE MERGER
It is anticipated that the board of directors and the executive officers of
Friede Goldman will change as a result of the merger. Friede Goldman and Halter
Marine have designated six and five directors, respectively, to become
directors of Friede Goldman Halter, which directors were directors of one of
the companies on the date of the merger agreement. The names of the persons who
will be the directors and officers of Friede Goldman Halter following the
merger are set forth below:
Directors
<TABLE>
<CAPTION>
Current Board
Name Age Membership
---- --- --------------
<S> <C> <C>
J. L. Holloway......................................... 55 Friede Goldman
Alan A. Baker.......................................... 67 Friede Goldman
T. Jay Collins......................................... 52 Friede Goldman
Jerome L. Goldman...................................... 74 Friede Goldman
Gary L. Kott........................................... 57 Friede Goldman
Raymond E. Mabus....................................... 50 Friede Goldman
John Dane III.......................................... 48 Halter Marine
Angus R. Cooper, II.................................... 57 Halter Marine
Barry J. Galt.......................................... 65 Halter Marine
Burt H. Keenan......................................... 60 Halter Marine
Kenneth W. Lewis....................................... 60 Halter Marine
</TABLE>
J. L. Holloway has served as the Chairman of the board of directors, Chief
Executive Officer and President of Friede Goldman since April 1997. In
addition, Mr. Holloway has served as the Chairman of the board of directors,
Chief Executive Officer and President of Friede Goldman Offshore, Inc.
(formerly HAM Marine, Inc.) from its formation in 1982 until April 1997, and
from April 1997 Mr. Holloway has been the Chairman of the board of directors of
Friede Goldman Offshore. Mr. Holloway also serves as a director of Delta Health
Group, a company that operates and manages health care facilities in the South
and as President of State Street Properties, Inc., a commercial real estate
development firm headquartered in Mississippi.
John Dane III has been a director of Halter Marine since 1987 and is
Chairman of the board of directors, President and Chief Executive Officer of
Halter Marine. Mr. Dane has over 24 years of marine management experience. He
founded Moss Point Marine, Inc. in 1980, which was acquired in 1987 by Trinity
Industries, Inc., at which time he became President of Trinity Marine Group,
the predecessor of Halter Marine. During his tenure, Trinity Marine Group grew
to 22 shipyards with revenues exceeding $400 million. Mr. Dane holds a B.S. and
a Ph.D. in civil engineering from Tulane University. He is a member of the
Board of Advisors for the Tulane School of Engineering, the Navy League, the
U.S. Coast Guard Foundation, and the Society of Naval Architects. He is a
registered engineer and a member of the American Bureau of Shipping.
Alan A. Baker has been a director of Friede Goldman since 1997. He is the
retired Chairman of Halliburton Energy Services Group, a position he held from
1992 to 1995. He also served as the Chief Executive Officer of Halliburton
Energy Services Group from 1992 to 1993. Mr. Baker currently serves as a
consultant to Halliburton Company and is a director of Noble Affiliates, Inc.,
a worldwide oil and gas exploration and production company, Crestar Energy, an
oil and gas exploration and production company and Nova Technology, a deepwater
oil and gas service company. Mr. Baker is a member of the board of directors of
Mid-Continent Oil and Gas Association.
T. Jay Collins has been a director of Friede Goldman since 1997. He is
currently the President of Oceaneering International, Inc., a position he has
held since November 1998. From May 1995 to November 1998, he served as
Executive Vice President of Oilfield Marine Services at Oceaneering
International, Inc. From 1993 to 1996, Mr. Collins served as Senior Vice
President and Chief Financial Officer of Oceaneering
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International Inc. Prior to joining Oceaneering International, Inc., Mr.
Collins spent six years at Teleco Oilfield Services, Inc., most recently as
Executive Vice President, Finance and Administration. Mr. Collins received a BA
and ME from Rice University and an MBA from Harvard University.
Angus R. Cooper, II has been a director of Halter Marine since April 1,
1997. Mr. Cooper is Chairman of the Board and Chief Executive Officer of
Cooper/T. Smith Corporation, a shipping service company headquartered in
Mobile, Alabama which operates in 30 ports on the East, Gulf and West Coasts of
the United States, plus operations in Brazil, Colombia, Mexico and Venezuela.
He currently serves on the board of directors of the Whitney National Bank,
Coast Guard Foundation, World Business Council and the Executive Hall of Fame.
Barry J. Galt has been a director of Halter Marine since November 8, 1997.
Mr. Galt is a director, and prior to his retirement on March 30, 1999, served
since 1983 as Chairman and Chief Executive Officer of Ocean Energy, Inc.,
formerly named Seagull Energy Corporation, a diversified energy company engaged
in oil and gas exploration and development. He is also a director of Trinity
Industries, Inc., a director of StanCorp Financial Corp., Inc., an insurance
company, and a Houston area advisory director of Chase Bank of Texas, National
Association, a national bank.
Jerome L. Goldman has been a director of Friede Goldman since 1997. He is
currently the Chairman and sole owner of J. L. Goldman Associates, Inc., naval
architects and marine engineers. Mr. Goldman previously served as Chairman of
Friede & Goldman, Ltd. since co-founding the company in 1949.
Burt H. Keenan has been a director of Halter Marine since April 1, 1997. Mr.
Keenan is Chairman of the Board and Chief Executive Officer of Independent
Energy Holdings, a London listed United Kingdom corporation, that develops and
markets electricity in the United Kingdom's deregulated electricity industry.
He is a director of Telescan, a NASDAQ-listed company which conducts an
interactive online information business. From 1969 to 1986, Mr. Keenan was the
Chairman and Chief Executive Officer of Offshore Logistics, Inc., a NASDAQ-
listed marine and aviation oil and gas service company. Since 1987, he has been
associated with Chaffe and Associates, Inc., an investment banking firm in New
Orleans, Louisiana. Under the Carter and Reagan Administrations, Mr. Keenan was
a member of the National Advisory Council on Oceans and Atmosphere, a United
States Presidential Commission.
Gary L. Kott has been a director of Friede Goldman since March 1999. He has
served as a consultant in the private sector since July 1998. From April 1997
through June 1998, Mr. Kott served as Senior Vice President and Chief Financial
Officer of Global Marine, Inc. From October 1979 through April 1997, Mr. Kott
served as President and Chief Operating Officer of Global Marine Drilling
Company, the principal operating subsidiary of Global Marine, Inc.
Kenneth W. Lewis has been a director of Halter Marine since 1996. Mr. Lewis
was Senior Vice President and Chief Financial Officer of Trinity Industries,
Inc. at the time of his retirement in January 1996 after 32 years of service.
He was a director of McConway & Torley Corporation, a privately held
manufacturer of products for the railcar industry until its acquisition in
1999, and is a director of Lambert Fenchurch US Holdings, Inc., which is owned
principally by Lambert Fenchurch Group Holdings PLC, an international broker
conducting all classes of insurance and reinsurance brokering and risk
management headquartered in London, England and having offices worldwide.
Raymond E. Mabus has been a director of Friede Goldman since 1997. He has
served as President of International Management & Development Group Ltd. since
October 1998 and as Of Counsel to the law firm of Baker, Donelson, Bearman &
Caldwell since October 1996. From July 1994 through May 1996, Mr. Mabus served
as Ambassador to the Kingdom of Saudi Arabia. From February 1992 through June
1994, Mr. Mabus served as Chairman of the Committee on the Future of the South
and as a consultant in the private sector. From January 1988 through January
1992, Mr. Mabus served as Governor of the State of Mississippi. Mr. Mabus also
serves as a director of the Kroll-O'Gara Company, a publicly-traded risk
mitigation company.
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Executive Officers
Executive officers of Friede Goldman Halter will be elected annually by the
Friede Goldman Halter board of directors to serve in their respective
capacities until their successors are duly elected and qualified or until their
earlier resignation or removal. The following will initially serve as executive
officers of Friede Goldman Halter:
<TABLE>
<CAPTION>
Current
Company
Name Age Position in Friede Goldman Halter Affiliation
---- --- ---------------------------------------------------- --------------
<S> <C> <C> <C>
J. L. Holloway.......... 55 Chief Executive Officer Friede Goldman
John Dane III........... 48 President and Chief Operating Officer Halter Marine
John F. Alford.......... 39 Executive Vice President Friede Goldman
Rick S. Rees............ 46 Chief Financial Officer and Executive Vice President Halter Marine
</TABLE>
John F. Alford has served as Executive Vice President of Friede Goldman
since December 1997. He served as Senior Vice President and Chief Financial
Officer of Friede Goldman from May 1997 to December 1997. Mr. Alford joined
Friede Goldman Offshore in 1996. Mr. Alford began his career in banking and
previously served as a member of the board of directors and as Chief Operating
Officer of Baton Rouge Bank and Trust Company, and a related financial firm,
for more than the past five years.
Rick S. Rees joined Halter Marine in April 1997 and is an Executive Vice
President and the Chief Financial Officer. Mr. Rees has been a director of
Halter Marine since 1996. Mr. Rees has been involved in the marine industry
since obtaining his MBA from A.B. Freeman School of Business, Tulane University
in 1975. Prior to joining Halter Marine, Mr. Rees was President of Maritime
Holdings, Inc., the parent company of Texas Drydock, Inc., a company with
operations in the offshore rig construction, conversion and repair business
which was acquired by Halter Marine in fiscal 1997. From 1989 to 1996, he was
President of Maritime Capital Corporation, a marine finance company. From 1975
to 1983, he was with Halter Marine, Inc., an antecedent of Halter Marine Group,
Inc., and served in several capacities, including Chief Financial Officer and a
director of the company. Mr. Rees is a certified public accountant.
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COMPARISON OF STOCKHOLDER RIGHTS
General
As a result of the merger, the holders of common stock of Halter Marine will
become holders of common stock of Friede Goldman Halter. As a result, their
rights as stockholders of Friede Goldman Halter will be governed by the
Mississippi Business Corporation Act and Mississippi law generally. The
following is a summary comparison of the material differences between the
current rights of the stockholders of Halter Marine under Delaware law and
their rights as stockholders of Friede Goldman Halter under Mississippi law,
including material differences between certain provisions of the Delaware
General Corporation Law and the Mississippi Business Corporation Act, Halter
Marine's charter and Friede Goldman Halter's charter and Halter Marine's bylaws
and Friede Goldman Halter's bylaws. This summary is qualified in its entirety
by reference to the full text of these laws and documents and is not a complete
description of the differences between the corporate laws of Mississippi and
Delaware, Halter Marine's charter and Friede Goldman Halter's charter and
Halter Marine's bylaws and Friede Goldman Halter's bylaws.
Mergers and Other Fundamental Transactions
Both Mississippi and Delaware law generally require that a merger,
consolidation, sale of all or substantially all of the assets or dissolution of
a corporation be approved by the holders of at least a majority of the
outstanding shares entitled to vote, unless a corporation's charter provides
otherwise. Halter Marine's charter does not, and Friede Goldman Halter's
charter will not, provide otherwise.
Statutory Anti-takeover Provisions
The Mississippi Shareholder Protection Act requires that a business
combination with an interested stockholder be approved by the affirmative vote
of at least:
. 80% of the votes entitled to be cast by outstanding shares of voting
stock of the corporation, and
. two-thirds (2/3) of the votes entitled to be cast by holders of voting
stock not held by an interested stockholder who is a party to the
business combination.
The provisions of the Mississippi Shareholder Protection Act do not apply if
the business combination is approved by at least 80% of the Company's directors
or if the aggregate amount of any offer meets fair price criteria. "Business
combination" is defined in the Mississippi Shareholder Protection Act generally
as:
. any merger, consolidation, share exchange or similar transaction with any
interested stockholder or other corporation which is an affiliate of an
interested stockholder;
. any sale, lease, transfer or other disposition in a transaction with any
interested stockholder of assets having an aggregate market value of 20%
or more of the total market value of the outstanding stock of the
corporation or of its assets;
. the issuance or transfer by the corporation, or any subsidiary, of any
securities of the corporation or any subsidiary which have an aggregate
market value of 5% or more of the total market value of the outstanding
stock of the corporation to any interested stockholder or any affiliate
of any interested stockholder;
. the adoption of any plan or proposal for the liquidation, dissolution of
or similar transaction involving the corporation in which anything other
than cash will be received by an interested stockholder; or
. any reclassification or recapitalization of securities or any merger,
consolidation or share exchange of the corporation with any of its
subsidiaries which increases by 5% or more the proportionate share of the
total number of outstanding shares or class of equity securities held by
any interested stockholder or affiliate of any interested stockholder.
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"Interested stockholder" is defined in the Mississippi Shareholder
Protection Act generally as any person or associated group of persons acting in
concert (other than the corporation and/or subsidiaries) that:
. is the beneficial owner of 20% or more of the voting power of the
outstanding voting stock of the corporation; or
. is an affiliate of the corporation and at any time within the two-year
period immediately prior to the date in question was the beneficial owner
of 20% or more of the voting power of the then outstanding voting stock
of the corporation.
The Mississippi Control Share Act, subject to exceptions, eliminates the
voting power of "Control Shares" held by a stockholder who has acquired 20% or
more of the outstanding shares of a company unless the other stockholders pass
a resolution restoring the share's voting power. "Control Shares" are defined
as issued and outstanding shares over which an acquiring person may exercise
direct or indirect voting power, and which would, in the absence of the
Mississippi Control Act, represent 20% or more of the voting power of the
capital stock. The Mississippi Control Act would not apply to shares of a
company acquired before the company became subject to the Act.
Section 203 of the Delaware General Corporation Law generally prohibits a
publicly-held Delaware corporation from engaging in a business combination with
an interested stockholder for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless:
. prior to the date of the business combination, the board of directors of
the corporation approved the transaction or business combination which
resulted in the stockholder becoming an interested stockholder;
. upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock of the corporation outstanding
at the time the transaction commenced; or
. on or after the date the business combination is approved by the board of
directors and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
stockholder.
A "business combination" is defined in Section 203 of the Delaware General
Corporation Law Act to include mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
if the stockholder is an affiliate or associate, within three years, did own)
15% or more of a corporation's voting stock.
Mergers Without Stockholder Approval
Under Section 11.03 of the Mississippi Business Corporation Act, unless a
corporation's charter provides otherwise (the Friede Goldman Halter charter
will not), action by the stockholders of a corporation on a merger will not be
required if:
. the charter of the surviving corporation does not differ from the
articles before the merger;
. each stockholder of the corporation prior to the merger will hold the
same number of shares, with identical designations, preferences,
limitations and relative rights, immediately after the merger as the
stockholder held prior to the merger;
. the voting power of the voting shares outstanding immediately after the
merger, plus the voting power of the voting shares issuable as a result
of the merger, will not exceed by more than 20% of the voting power of
the voting shares outstanding immediately prior to the merger; and
. the number of participating shares outstanding immediately after the
merger will not exceed by more than 20% the total number of participating
shares outstanding immediately prior to the merger.
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Additionally, no vote of stockholders is required for a merger of a Mississippi
corporation with a corporation in which it holds at least 90% of the
outstanding shares of each class and series of capital stock of the
corporation.
Under Delaware law, unless a corporation's charter provides otherwise
(Halter Marine's charter does not), a corporation may enter into a merger in
which the corporation is the surviving entity without stockholder approval (and
stockholders do not have the right to dissent from the merger and exercise
appraisal rights) if:
. the merger does not result in an amendment to the corporation's charter;
. each share of stock of the corporation outstanding immediately prior to
the merger is to be an identical outstanding or treasury share of the
corporation after the merger; and
. the shares of common stock of the surviving corporation to be issued or
delivered under the merger plus those initially issuable upon conversion
of any other shares, securities or obligations to be issued under the
merger do not exceed 20% of the shares of common stock of the corporation
outstanding immediately prior to the merger.
Additionally, when specific conditions are met, no vote of stockholders is
required for the merger of a Delaware corporation with a corporation in which
it holds at least 90% of the outstanding shares of each class of the
corporation.
Appraisal Rights
Section 13.02 of the Mississippi Business Corporation Act provides appraisal
rights to stockholders in any of the following corporate actions:
. a merger if stockholder approval is required or if the corporation is a
subsidiary that merges with its parent;
. a plan of share exchange if the corporation is being acquired and the
stockholder is entitled to vote;
. a sale or exchange of all or substantially all of the property of the
corporation that is not in the usual and regular course of business, but
not including a court ordered sale or sale pursuant to a plan where the
stockholders will receive the proceeds within one year after the date of
sale;
. some amendments to the charter that materially and adversely affects
dissenting stockholder's rights in some ways; or
. any corporate action taken pursuant to a stockholder vote to the extent
the charter, bylaws or a board resolution provides that voting or
nonvoting stockholders are entitled to dissent and obtain payment for
their shares.
Section 262 of the Delaware General Corporation Law provides for appraisal
rights only in the case of a statutory merger or consolidation of the
corporation where the petitioning stockholder does not consent to the
transaction. No appraisal rights are available where the corporation is to be
the surviving corporation and a vote of its stockholders is not required under
Section 251(g) of the Delaware General Corporation Law. There are also no
appraisal rights for shares of stock listed on a national exchange or held of
record by more than 2,000 holders, unless these stockholders would be required
to accept anything other than:
. shares of stock of the surviving corporation;
. shares of another corporation listed on a national exchange or held of
record by more than 2,000 holders;
. cash in lieu of fractional shares; or
. any combination thereof.
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Under Delaware law, unless otherwise provided by a corporation's charter
(Halter Marine's charter does not contain this provision), stockholders are not
entitled to appraisal rights upon a sale of all or substantially all of the
assets of a corporation or upon an adverse charter amendment as they are under
the Mississippi Business Corporation Act.
Amendments to Charters
Subject to some exceptions, Sections 10.02 and 10.03 of the Mississippi
Business Corporation Act provide that an amendment to a corporation's charter
must be approved by the board of directors and by the affirmative vote of
holders of at least a majority of the outstanding shares entitled to vote,
unless the corporation's charter provides otherwise. Friede Goldman Halter's
charter will require the affirmative vote of at least 80% of the voting stock
of the company to amend, alter or repeal provisions of the charter with respect
to:
. the classification, filling of vacancies and removal of the board of
directors;
. amendments to the bylaws;
. rights that entitle holders to purchase from the company shares of
capital stock or other securities in some circumstances; and
. limitation of liability of directors.
Section 242 of the Delaware General Corporation Law provides that an
amendment to a corporation's charter must be approved by the board of directors
and by the affirmative vote of the holders of at least a majority of the
outstanding stock entitled to vote. Halter Marine's charter requires the
affirmative vote of at least 80% of the voting stock of the company to amend,
alter or repeal provisions of the charter relating to:
. requirements in connection with annual and special meetings;
. the classification, filling of vacancies and removal of the board of
directors; and
. amendments to the bylaws.
Preferred Stock Purchase Rights
Friede Goldman Rights Plan
Friede Goldman has entered into a rights agreement with American Stock
Transfer & Trust Company as rights agent. Rights attach to each share of Friede
Goldman common stock outstanding and entitle the registered holder to purchase
from Friede Goldman one one-thousandth of a share of preferred stock, par value
$.01 per share, at a price of $75, subject to adjustment.
The rights will separate from the common stock upon the earlier of:
. 10 days following the date of public announcement that a person or group
of persons has become the beneficial owner of 15% or more of the
outstanding common stock of Friede Goldman; or
. 10 business days (or some later date as determined by the board of
directors) following the commencement of, or the announcement of an
intention to make, a tender offer or exchange offer that would result in
a person or group becoming the beneficial owner of 15% or more of the
outstanding common stock of Friede Goldman.
The earlier of these two events is referred to as the "distribution date."
In the event that Friede Goldman is acquired in a merger or other business
combination or more than 50% of its consolidated assets or earning power are
sold, each holder of a right will have the right to receive, upon the exercise
of the right at the then current exercise price, that number of shares of
common stock of the acquiring company which at the time of the transaction will
have a market value of two times the exercise price
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of the right. In the event that any person becomes the beneficial owner of 15%
or more of the outstanding common stock of Friede Goldman, each holder of a
right will have the right to receive upon exercise that number of shares of
common stock having a market value equal to two times the purchase price of the
rights.
The rights are not exercisable until the distribution date. The rights will
expire on December 21, 2008. With some exceptions, the terms of the rights may
be amended by the board of directors without the consent of the holders of the
rights at any time. Until the right is exercised, the holder will have no
rights as a stockholder of the company, including the right to vote or to
receive dividends.
Pursuant to the merger agreement, Friede Goldman will amend its rights
agreement to render the rights inapplicable to the merger and the other
transactions contemplated by the merger agreement.
The above summary of the Friede Goldman rights agreement does not purport to
be complete and is qualified in its entirety by reference to the terms and
conditions of the rights agreement.
Halter Marine Rights Plan
Halter Marine has entered into a rights agreement with The Bank of New York
as rights agent. Rights attach to each share of Halter Marine common stock
outstanding and entitle the registered holder to purchase from Friede Goldman
one one-hundredth of a share of Series A preferred stock, par value $.01 per
share, at a price of $47, subject to adjustment and specified events.
The rights will separate from the common stock upon the earlier of:
. 10 days following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
common stock of Halter Marine; or
. 10 days following the commencement of a tender offer or exchange offer
that would result in a person acquiring or obtaining the right to acquire
beneficial ownership of 15% or more of the outstanding shares of common
stock of Halter Marine.
The earlier of these two events is referred to as the "distribution date."
In the event that Halter Marine is acquired in a merger or other business
combination or more than 50% of its consolidated assets or earning power are
sold or transferred, each holder of a right will have the right to receive,
upon the exercise of the right, a number of shares of common stock of the
acquiring company having a current market price of two times the purchase price
of the right. In the event that any person becomes the beneficial owner of 15%
or more of the outstanding common stock of Halter Marine, each holder of a
right will have the right to receive upon exercise a number of shares of common
stock having a current market price equal to two times the purchase price of
the right.
The rights are not exercisable until the distribution date. The rights will
expire ten years from the date they are first issued, unless earlier redeemed
or exchanged by Halter Marine. With some exceptions, the terms of the rights
may be amended by the board of directors without the consent of the holders of
the rights at any time. Until the right is exercised, the holder will have no
rights as a stockholder of the company, including the right to vote or to
receive dividends.
Pursuant to the merger agreement, Halter Marine will take all action
necessary to render the rights issued pursuant to the rights agreement
inapplicable to, or not exercisable as a result of, the merger.
The above summary of the Halter Marine rights agreement does not purport to
be complete and is qualified in its entirety by reference to the terms and
conditions of the rights agreement.
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Cumulative Voting
Halter Marine's charter does not provide for, and neither will Friede
Goldman Halter's charter provide for, cumulative voting in the election of
directors.
Preemptive Rights
Neither the Delaware General Corporation Law nor the Mississippi Business
Corporation Act affirmatively grants stockholders preemptive rights, and Halter
Marine's charter does not, and Friede Goldman Halter's charter will not, grant
stockholders preemptive rights.
Special Meetings of Stockholders
The Friede Goldman Halter bylaws will provide that special meetings of the
stockholders may be called by the Chief Executive Officer or a majority of the
board of directors. Stockholders of the corporation may not call a special
meeting. The Halter Marine bylaws provide that special meetings of stockholders
may be called by a majority of the board of directors or by the Chairman of the
Board. Stockholders of the corporation may not call a special meeting.
Stockholder Action by Written Consent
Section 7.04 of the Mississippi Business Corporation Act provides that
stockholders may act without a meeting only by the unanimous consent of all
stockholders. Section 228 of the Delaware General Corporation Law provides that
stockholders may act without a meeting by consent of the holders of the
outstanding stock representing the number of shares necessary to take the
action at a meeting at which all shares entitled to vote were present and
voted, unless the corporation's charter provides otherwise. Halter Marine's
charter provides that stockholders may not act by written consent.
Stockholder Proposals
The bylaws of Friede Goldman Halter will require that proposals from
stockholders submitted for consideration at an annual meeting of stockholders
must be received not less than 120 nor more than 150 days prior to the
anniversary of the annual meeting for the prior year was mailed to
stockholders, unless the date of the upcoming annual meeting has been changed
by more than 30 days from the date of the prior year's meeting, in which case
proposals must be received at least 60 days prior to the distribution by the
company of proxies relating to the upcoming annual meeting.
The bylaws of Halter Marine require that proposals from stockholders
submitted for consideration at an annual meeting of stockholders must be
received no later than 90 nor earlier than 120 days prior to the anniversary of
the annual meeting for the prior year. If the date of the upcoming annual
meeting has been changed by more than 30 calendar days before or more than 60
calendar days after the date of the prior year's meeting, proposals must be
received no earlier than 120 calendar days prior to the annual meeting and not
later than 90 calendar days prior to the annual meeting or the 10th calendar
day following the calendar day on which public announcement of the date of the
meeting is first made by the company.
Vacancies; Newly Created Directorships
Section 8.10 of the Mississippi Corporation Act provides that vacancies on
the board of directors, including a vacancy resulting from an increase in the
number of directors, may be filled by either the stockholders or the board of
directors. Friede Goldman Halter's charter will provide that vacancies and
newly created directorships resulting from any increase in the number of
directors may be filled by a majority vote of the remaining directors then in
office. Any director elected or appointed to fill a vacancy will hold office
for the remaining term to which the director was elected or appointed.
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Section 223 of the Delaware General Corporation Law and Halter Marine's
charter also provide that vacancies and newly created directorships resulting
from any increase in the number of directors may be filled by a majority vote
of the remaining directors then in office. Any director elected or appointed to
fill a vacancy will hold office for the remaining term of the class to which
the director was elected or appointed.
Number and Classification of Board of Directors
Friede Goldman Halter's charter and bylaws will provide that the number of
directors on the board of directors of Friede Goldman Halter will not be less
than three nor more than 15 as fixed by resolution of the board of directors
from time to time. As required under Section 8.03(b) of the Mississippi
Business Corporation Act, Friede Goldman Halter's charter will limit the number
of directors by which its board of directors may increase or decrease the size
of the board to 30% of the number of directors last approved by stockholders.
The board of directors of Friede Goldman Halter will not be divided into
classes, and the entire board will be elected each year.
Halter Marine's charter also provides that the number of directors on the
board of directors of Halter Marine will not be less than three as fixed by
resolution of the board of directors from time to time. Halter Marine's charter
and the Delaware General Corporation Law do not limit the number of directors
by which the directors may increase or decrease the size of the board of
directors. Halter Marine's directors are divided into three classes of
directors as nearly equal in number as possible serving staggered three-year
terms such that approximately one-third of the board of directors of Halter
Marine is elected each year.
Removal of Directors
Under Section 8.08 of the Mississippi Business Corporation Act, one or more
directors may be removed, with or without cause, at any meeting of stockholders
expressly called for that purpose by the vote of not less than a majority of
the shares entitled to vote in the election of the directors, unless the
corporation's charter provides otherwise. Friede Goldman Halter's charter and
bylaws will provide that a director may only be removed for cause by an
affirmative vote of a majority of the holders of outstanding capital stock of
the company entitled to vote in the election of directors.
Under Section 141 of the Delaware General Corporation Law, any director or
the entire board of directors may be removed, with or without cause, by the
holders of a majority of the shares entitled to vote at an election of
directors, unless the corporation's charter provides otherwise. Halter Marine's
charter provides that a director may only be removed for cause by an
affirmative vote of a majority of the holders of at least a majority of the
voting power of all shares of outstanding capital stock of the company entitled
to vote in the election of directors.
Amendment of Bylaws
Friede Goldman Halter's charter will provide that the bylaws may be altered,
amended or repealed:
. by the board of directors; or
. by the affirmative vote of 80% of the total voting power of all shares of
capital stock of the company issued and entitled to vote in an election
of directors, provided that notice of the alteration, amendment or repeal
is contained in the notice of the meeting.
Halter Marine's charter also provides that the bylaws may be altered,
amended or repealed
. by an affirmative vote of a majority of the whole board of directors; or
. by the affirmative vote of the holders of a majority of the voting power
of the stock issued and outstanding and entitled to vote, provided,
however, that some amendments or proposed alterations require the
affirmative vote of 80% of the total voting power of all shares of
capital stock of Halter Marine issued and entitled to vote in an election
of directors, provided that notice of the alteration, amendment or repeal
is contained in the notice of the meeting.
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DESCRIPTION OF FRIEDE GOLDMAN HALTER CAPITAL STOCK
The following is a summary of the material terms of the charter and bylaws
concerning the capital stock of Friede Goldman. Copies of the Friede Goldman
charter and Friede Goldman bylaws will be sent to holders of shares of Friede
Goldman common stock and Halter Marine common stock upon request. See "Where
You Can Find More Information" on page 96. For a comparison of provisions of
the Friede Goldman charter and the Halter Marine Charter, see "Comparison of
Stockholder Rights" on page 87.
Authorized Capital Stock
Under the Friede Goldman charter, Friede Goldman's authorized capital stock
consists of 125,000,000 shares of Friede Goldman common stock, par value $.01
per share, and 5,000,000 shares of Friede Goldman preferred stock, par value
$.01 per share.
Common Stock
The holders of Friede Goldman common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders.
Subject to preferences that may be applicable to any outstanding Friede Goldman
preferred stock, holders of Friede Goldman common stock are entitled to receive
ratably dividends as they may be declared by the Friede Goldman board out of
funds legally available for dividends. In the event of a liquidation or
dissolution of Friede Goldman, holders of Friede Goldman common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any outstanding Friede Goldman preferred
stock.
Holders of Friede Goldman common stock have no cumulative voting rights, no
preemptive rights and have no rights to convert their Friede Goldman common
stock into any other securities. All of the outstanding shares of Friede
Goldman common stock are, and the shares of Friede Goldman common stock issued
pursuant to the merger will be, duly authorized, validly issued, fully paid and
nonassessable.
Preferred Stock
The Friede Goldman board is authorized to designate any series of Friede
Goldman preferred stock and the powers, preferences and rights of the shares of
the series and the qualifications, limitations or restrictions of the series of
preferred stock without further action by the holders of the Friede Goldman
common stock. There are 5,000,000 shares designated as Series A Junior
Participating Preferred Stock. As of the date of this document, there were no
shares of Series A Junior Participating Preferred Stock outstanding.
Friede Goldman has entered into a rights plan. For a description of the
Friede Goldman rights plan, see "Preferred Stock Purchase Rights--Friede
Goldman Rights Plan" on page 90.
Transfer Agent and Registrar
American Stock Transfer & Trust Company is the transfer agent and registrar
for the Friede Goldman common stock.
Stock Exchange Listing; Delisting and Deregistration of Halter Marine Common
Stock
It is a condition of the merger that the shares of Friede Goldman common
stock issuable in the merger be approved for listing on the NYSE on or prior to
the effective time, subject to official notice of issuance. If the merger is
completed, Halter Marine common stock will cease to be listed on the American
Stock Exchange.
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LEGAL MATTERS
The validity of the Friede Goldman common stock to be issued to Halter
Marine stockholders pursuant to the merger will be passed upon by Phelps &
Dunbar, special Mississippi counsel to Friede Goldman. Certain tax matters
relating to the merger will be passed upon by Andrews & Kurth, L.L.P. for
Friede Goldman and by Shearman & Sterling for Halter Marine. See "The Merger--
Material U.S. Federal Income Tax Consequences" and "The Merger Agreement--
Conditions to the Merger" on pages 48 and 61, respectively.
EXPERTS
The audited consolidated financial statements of Friede Goldman for the year
ended December 31, 1998, incorporated by reference in this document have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated in this joint proxy
statement/prospectus in reliance upon their authority of said firm as experts
in accounting and auditing in giving such reports.
The consolidated financial statements of Halter Marine appearing in Halter
Marine's Annual Report (Form 10-K) for the year ended March 31, 1999, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included in the Annual Report and incorporated in this document
by reference. The consolidated financial statements are incorporated in this
document by reference in reliance upon the report given on the authority of the
firm as experts in accounting and auditing.
The consolidated financial statements of Newfoundland Ocean Enterprises
Limited for the year ended March 29, 1997, incorporated by reference in this
document, have been audited by Grant Thorton (formerly Doane Raymond),
chartered accountants, as indicated in their report, and are incorporated in
this document in reliance on their report given upon their authority as experts
in accounting and auditing in giving such reports.
FUTURE STOCKHOLDER PROPOSALS
Friede Goldman. Pursuant to the applicable securities laws, for a
stockholder proposal to be considered for possible inclusion in the proxy
statement for the 2000 annual meeting, the proposal must be submitted to the
Secretary of Friede Goldman no later than December 1, 1999. A proposal that
does not supply adequate information about the proposal will be disregarded.
Pursuant to Friede Goldman's bylaws, stockholder proposals submitted for
consideration at Friede Goldman's 2000 annual meeting of stockholders have to
be submitted to the Secretary of Friede Goldman between December 2, 1999 and
January 1, 2000. If timely notice of a stockholder proposal is not given, the
proposal may not be brought before the annual meeting. If timely notice is
given but is not accompanied by a written statement to the extent required by
applicable securities laws, Friede Goldman may exclude the proposal or exercise
discretionary voting authority over proxies with respect to the proposal if
presented at Friede Goldman's 2000 annual meeting of stockholders.
Halter Marine. Pursuant to the applicable securities laws, for a stockholder
proposal to be considered for possible inclusion in the proxy statement for the
2000 annual meeting (if one should occur), the proposal must be submitted to
the Secretary of Halter Marine no later than February 26, 2000. A proposal that
does not supply adequate information about the proposal will be disregarded.
Pursuant to Halter Marine's bylaws, stockholder proposals submitted for
consideration at Halter Marine's 2000 annual meeting of stockholders (if one
should occur) have to be submitted to the Secretary of Halter Marine between
March 27, 2000 and April 26, 2000. If timely notice of a stockholder proposal
is not given, the proposal may not be brought before the annual meeting. If
timely notice is given but is not accompanied by a written statement to the
extent required by applicable securities laws, Halter Marine may exclude the
proposal or exercise discretionary voting authority over proxies with respect
to the proposal if presented at Halter Marine's 2000 annual meeting of
stockholders.
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WHERE YOU CAN FIND MORE INFORMATION
Friede Goldman and Halter Marine file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by Friede Goldman and Halter
Marine at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the SEC's public reference rooms in New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The filings of Friede Goldman and
Halter Marine with the SEC are also available to the public from commercial
document retrieval services and at the web site maintained by the SEC at
http://www.sec.gov. Friede Goldman invites you to visit its web site at
http://www.fgii.com, and Halter Marine invites you to visit its web site at
http://www.haltermarine.com.
Friede Goldman filed a registration statement on Form S-4 to register with
the SEC Friede Goldman common stock to be issued to Halter Marine stockholders
in the merger. This document is a part of that registration statement and
constitutes a prospectus of Friede Goldman in addition to being a proxy
statement of each of Halter Marine and Friede Goldman. As allowed by SEC rules,
this document does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC allows Friede Goldman and Halter Marine to "incorporate by
reference" information into this document, which means that they can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of this document, except for any information superseded by information
in this document. This document incorporates by reference the documents set
forth below that Friede Goldman and Halter Marine have previously filed with
the SEC. These documents contain important information about Friede Goldman and
Halter Marine and their finances.
<TABLE>
<CAPTION>
Friede Goldman
Securities and Exchange
Commission Filings (File
No. 001-14627) Period
- ------------------------ ------
<S> <C>
Annual Report on Form
10-K Year Ended December 31, 1998.
Quarterly Reports on
Form 10-Q Quarters Ended March 31, 1999 and June 30, 1999.
Proxy Statement on
Schedule 14-A Filed on Marcy 30, 1999.
Current Reports on Form
8-K Filed on June 2, 1999, June 3, 1999 and September 15, 1999.
<CAPTION>
Halter Marine Securities
and Exchange
Commission Filings (File
No. 001-12159) Period
- ------------------------ ------
<S> <C>
Annual Report on Form
10-K Year Ended March 31, 1999.
Quarterly Report on Form
10-Q Quarter Ended June 30, 1999.
Proxy Statement on
Schedule 14-A Filed on June 29, 1999.
Current Reports on Form
8-K Filed on August 10, 1999 and September 15, 1999.
</TABLE>
Friede Goldman and Halter Marine are also incorporating by reference
additional documents that they file with the SEC between the date of this
document and the date of the special meeting.
96
<PAGE>
Friede Goldman has supplied all information contained or incorporated by
reference in this document relating to Friede Goldman, and Halter Marine has
supplied all information relating to Halter Marine.
If you are a stockholder, Friede Goldman and Halter Marine may have sent
you some of the documents incorporated by reference, but you can obtain any of
them through Friede Goldman, Halter Marine or the SEC. Documents incorporated
by reference are available from Friede Goldman and Halter Marine without
charge. Exhibits to the documents will not be sent, however, unless those
exhibits have specifically been incorporated by reference as exhibits in this
document. Stockholders may obtain documents incorporated by reference in this
document by requesting them in writing or by telephone from the appropriate
party at the following addresses:
Friede Goldman International Inc. Halter Marine Group, Inc.
525 East Capitol Street, 7th Floor 13085 Industrial Seaway Road
Jackson, Mississippi 39201 Gulfport, Mississippi 39503
Attention: James A. Lowe, III, Attention: Maureen O'Connor Sullivan,
Secretary Secretary
If you would like to request documents from Friede Goldman or Halter
Marine, please do so by October 14, 1999 to receive them before the special
meeting.
You should rely only on the information contained or incorporated by
reference in this document to vote on the merger. We have not authorized
anyone to give any information other than what is in this document, and, if
given or made, you must not rely on information as having been authorized by
either Friede Goldman or Halter Marine. Neither the delivery of this document
nor any distribution of securities made hereunder will create an implication
that there has been no change in the affairs of Friede Goldman or Halter
Marine since the date of this document or that the information in this
document is correct as of any time subsequent to the date of this document.
All information contained in this document with respect to Friede Goldman has
been furnished by Friede Goldman, and all information in this joint proxy
statement/ prospectus with respect to Halter Marine has been furnished by
Halter Marine.
97
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Pro Forma Combined Financial Statements Basis of Presentation... F-2
Unaudited Pro Forma Condensed Combined Balance Sheet...................... F-3
Unaudited Pro Forma Condensed Combined Statements of Operations........... F-4
Notes to Unaudited Pro Forma Combined Financial Statements................ F-6
</TABLE>
F-1
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma balance sheet of Friede Goldman
International Inc. ("Friede Goldman") as of June 30, 1999 and statements of
operations of Friede Goldman for the six-month period ended June 30, 1999 and
year ended December 31, 1998, give effect to the pending business combination
with Halter Marine Group, Inc. ("Halter Marine"). The statements assume that
the business combination is accounted for as a purchase. The pro forma combined
balance sheet treats the business combination as if it occurred on June 30,
1999; the pro forma combined income statements treat the business combination
as if it had occurred on January 1, 1998.
The information at June 30, 1999 and for the six-month period ended June 30,
1999 for Friede Goldman is summarized from the unaudited consolidated financial
statements contained in Friede Goldman's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999.
The information for the year ended December 31, 1998 for Friede Goldman is
summarized from the consolidated financial statements contained in Friede
Goldman's Annual Report on Form 10-K for the year ended December 31, 1998.
The information for Halter Marine is summarized from the consolidated
financial statements contained in Halter Marine's Annual Report on Form 10-K
for the year ended March 31, 1999 and from the unaudited consolidated financial
statements contained in Halter Marine's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999.
The Pro Forma Financial Statements are presented for information purposes
only. The results shown in the statements are not necessarily indicative of the
actual results that might have occurred if the business combination had been
completed on January 1, 1998. Also, they are not necessarily indicative of
results that might be achieved in the future if the business combination is
completed.
F-2
<PAGE>
Pro Forma Balance Sheet (Unaudited)
The following unaudited pro forma balance sheet presents the balance sheets
of Friede Goldman and Halter Marine as if the business combination had been
effective on June 30, 1999. This balance sheet should be read in conjunction
with the consolidated financial statements and related notes of Friede Goldman
contained in Friede Goldman's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999 and Annual Report on Form 10-K for the year ended December
31, 1998, which are incorporated by reference into this joint proxy
statement/prospectus, and the consolidated financial statements and related
notes of Halter Marine contained in Halter Marine's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999 and Annual Report on Form 10-K for the
year ended March 31, 1999 and incorporated herein by reference in this joint
proxy statement/prospectus.
FRIEDE GOLDMAN INTERNATIONAL INC.
UNAUDITED PRO FORMA BALANCE SHEET
June 30, 1999
(in thousands of dollars)
<TABLE>
<CAPTION>
Friede Halter Pro Forma Pro
Goldman Marine Combined Adjustments Forma
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents ... $ 8,128 $ 1,552 $ 9,680 $ -- $ 9,680
Accounts receivable ......... 62,219 151,372 213,591 -- 213,591
Inventory and stockpiled
materials .................. 32,682 138,520 171,202 -- 171,202
Costs and estimated earnings
in excessof billings on
uncompleted contracts ...... 30,051 26,299 56,350 -- 56,350
Other current assets ........ 8,669 11,315 19,984 -- 19,984
-------- -------- -------- --------- --------
Total current assets....... 141,749 329,058 470,807 -- 470,807
======== ======== ======== ========= ========
Investment in unconsolidated
subsidiary.................. 12,825 -- 12,825 -- 12,825
Property, plant and
equipment, net.............. 136,861 168,509 305,370 91,625 B 396,995
Goodwill and other assets,
net......................... 15,505 98,619 114,124 (54,206)A 59,918
Other assets................. -- 8,078 8,078 -- 8,078
-------- -------- -------- --------- --------
Total assets............... $306,940 $604,264 $911,204 $ 37,419 $948,623
======== ======== ======== ========= ========
Short-term debt, including
current portion of long-term
debt........................ $ 25,948 $ 1,818 $ 27,766 $ -- $ 27,766
Accounts payable and accrued
liabilities................. 68,897 83,374 152,271 8,000 A 160,271
Billings in excess of costs
and estimated earnings on
uncompleted contracts....... 25,673 80,412 106,085 15,000 C 121,085
-------- -------- -------- --------- --------
Total current liabilities.. 120,518 165,604 286,122 23,000 309,122
Deferred income tax
liability................... 7,387 11,482 18,869 50,927 A 69,796
Long-term debt, less current
maturities.................. 42,588 260,258 302,846 (62,900)D 239,946
Other noncurrent
liabilities................. -- 48 48 -- 48
Deferred government subsidy,
net of accumulated
amortization................ 33,598 -- 33,598 -- 33,598
Stockholders' equity......... 102,849 166,872 269,721 26,392 A 296,113
-------- -------- -------- --------- --------
Total liabilities and
stockholders' equity...... $306,940 $604,264 $911,204 $ 37,419 $948,623
======== ======== ======== ========= ========
</TABLE>
F-3
<PAGE>
Pro Forma Statements of Operations (Unaudited)
The following unaudited pro forma statements of operations for the six-month
period ended June 30, 1999 and the year ended December 31, 1998 combine the
income statements of Friede Goldman and Halter Marine as if the business
combination had occurred on January 1, 1998. The pro forma statement of
operations for the year ended December 31, 1998 combines the statement of
operations for the year ended December 31, 1998 for Friede Goldman and the
statement of operations for the fiscal year ended March 31, 1999 for Halter
Marine. The pro forma statement of operations for the six months ended June 30,
1999 combine the statements of operation for the six months ended June 30, 1999
for Friede Goldman and for the same period for Halter Marine. The unaudited pro
forma statements of operations should be read in conjunction with Friede
Goldman's consolidated financial statements and notes contained in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and Annual
Report on Form 10-K for the year ended December 31, 1998, which are
incorporated by reference into this joint proxy statement/prospectus, and
Halter Marine's consolidated financial statements and notes contained in its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and Annual
Report on Form 10-K for the year ended March 31, 1999, which are incorporated
by reference into this joint proxy statement/prospectus.
Friede Goldman expects to achieve savings through reductions in selling,
general and administrative expenses as well as other operating costs in
connection with the proposed business combination. The extent to which the
savings will be achieved depends, among other things, on the economic
conditions and may be affected by unanticipated changes in business activities,
inflation and other external factors. Therefore, there can be no assurance that
these savings will be realized. No adjustment has been included in the
unaudited pro forma financial statements for the anticipated savings.
FRIEDE GOLDMAN INTERNATIONAL INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Friede Halter Pro Forma
Goldman Marine Combined Adjustments Pro Forma
-------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenue ................ $382,913 $998,149 $1,381,062 $ -- $1,381,062
Cost of revenue......... 293,712 912,131 1,205,843 4,308 E 1,210,151
-------- -------- ---------- ------- ----------
Gross profit.......... 89,201 86,018 175,219 (4,308) 170,911
Selling, general and
administrative
expenses............... 32,365 60,442 92,807 -- 92,807
Amortization expense.... 334 5,846 6,180 (4,069)F 2,111
-------- -------- ---------- ------- ----------
Operating income........ 56,502 19,730 76,232 (239) 75,993
Other income (expense)
Accretion of debt
discount............. -- -- -- (7,761)G (7,761)
Interest expense,
net.................. (202) (8,135) (8,337) -- (8,337)
Other, net............ (336) 719 383 -- 383
-------- -------- ---------- ------- ----------
Total other income
(expense)............ (538) (7,416) (7,954) (7,761) (15,715)
Income before income
taxes.................. 55,964 12,314 68,278 (8,000) 60,278
Income tax provision.. 20,678 (1,017) 19,661 (4,405)H 15,256
-------- -------- ---------- ------- ----------
Net income.............. $ 35,286 $ 13,331 $ 48,617 $(3,595) $ 45,022
======== ======== ========== ======= ==========
Earnings per share
Basic................. $ 1.46 $ 0.46 I $ 1.11
======== ======== ==========
Diluted............... $ 1.43 $ 0.46 I $ 1.10
======== ======== ==========
Weighted average shares
Basic................. 24,211 28,846 40,659
======== ======== ==========
Diluted............... 24,599 28,990 41,047
======== ======== ==========
</TABLE>
F-4
<PAGE>
FRIEDE GOLDMAN INTERNATIONAL INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Friede Halter Pro Forma Pro
Goldman Marine Combined Adjustments Forma
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenue .................. $278,645 $430,473 $709,118 $ -- $709,118
Cost of revenue........... 232,630 391,461 624,091 2,154 E 626,245
-------- -------- -------- ------- --------
Gross profit............ 46,015 39,012 85,027 (2,154) 82,873
Selling, general and
administrative expenses.. 17,579 28,333 45,912 -- 45,912
Amortization expense...... 175 2,604 2,779 (1,716)F 1,063
-------- -------- -------- ------- --------
Operating income........ 28,261 8,075 36,336 (438) 35,898
Other income (expense)
Accretion of debt
discount............... -- -- -- (4,001)G (4,001)
Interest expense, net... (1,705) (4,329) (6,034) -- (6,034)
Other, net.............. (46) 908 862 -- 862
-------- -------- -------- ------- --------
Total other income
(expense).............. (1,751) (3,421) (5,172) (4,001) (9,173)
Income before income
taxes.................... 26,510 4,654 31,164 (4,439) 26,725
Income tax provision.... 8,475 1,240 9,715 (2,247)H 7,468
-------- -------- -------- ------- --------
Net income................ $ 18,035 $ 3,414 $ 21,449 $(2,192) $ 19,257
======== ======== ======== ======= ========
Earnings per share
Basic................... $ 0.77 $ 0.12 I $ 0.48
======== ======== ========
Diluted................. $ 0.76 $ 0.12 I $ 0.48
======== ======== ========
Weighted average shares
Basic................... 23,369 28,857 39,817
======== ======== ========
Diluted................. 23,670 28,860 40,118
======== ======== ========
</TABLE>
F-5
<PAGE>
FRIEDE GOLDMAN INTERNATIONAL INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The adjustments to the accompanying pro forma balance sheet are described
below:
A. Friede Goldman plans to issue approximately 16,448,000 shares of Friede
Goldman common stock, with an aggregate market value at the date of the
merger of approximately $193.3 million based on an average trading price the
day of and following the public announcement of the merger, as amended, of
$11.75 per share, to effect the business combination with Halter Marine.
In addition to the stock to be exchanged in the business combination, the
total purchase price will include other direct acquisition costs such as
investment banking, legal, accounting and other professional fees, printing
and mailing costs, and other miscellaneous expenses. These costs are
estimated to be $8 million and are included as a cost of the acquisition.
In accordance with the purchase method of accounting, the assets and
liabilities of Halter Marine are adjusted to their estimated fair value.
Applicable income tax effects of these adjustments are included as a
component of Friede Goldman's net deferred tax liability with a
corresponding offset to goodwill. For purposes of these pro forma combined
financial statements, estimates have been made of the fair value of Halter
Marine's assets and liabilities as of June 30, 1999. These fair value
adjustments are based on the best information currently available to Friede
Goldman and will be updated to the actual date of closing and as additional
information becomes available. The valuation reflects excess purchase price
of $44.4 million over the fair value of net assets. This amount has been
recorded as goodwill and is being amortized over 25 years.
B. To adjust the property, plant and equipment of Halter Marine acquired to
estimated fair value. The actual fair value may differ materially from the
estimated fair value used in this pro forma presentation.
C. To adjust the margins on approximately $150 million of some of Halter
Marine's contracts in progress to normal margins for these types of
contracts.
D. To adjust the 4 1/2% convertible subordinated notes to fair value using the
market price of the notes following public announcement of the merger. The
market price of the notes on the date of closing of the merger will be used
in the final allocation of the purchase price. The closing date market price
may differ materially from the market price used in this pro forma
presentation.
The adjustments to the accompanying pro forma statements of operations are
described below. In accordance with the purchase method of accounting, the
assets and liabilities of Halter Marine were adjusted to fair value with the
applicable income tax effects of the adjustments included as a component of
Friede Goldman's net deferred tax liability. The related effect on net income
resulting from the amortization of the purchase accounting adjustments is
reflected in the column "adjustments."
E. To record the incremental depreciation related to the fair value adjustment
to property, plant and equipment over an estimated average life of 15 years
excluding the fair value adjustment to land of approximately $27 million.
F. To reverse historical amortization of the goodwill and record the
amortization of goodwill associated with this business combination over 25
years.
G. To record the accretion of the discount on the convertible subordinated
notes which mature on September 15, 2004.
H. To adjust the provision for income taxes to give effect to the purchase
accounting adjustments, exclusive of the goodwill amortization adjustment.
I. Pro forma earnings per share is computed using Friede Goldman's weighted
average shares outstanding during the period and the approximate 16.4
million shares to be exchanged in the business combination.
F-6
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FRIEDE GOLDMAN INTERNATIONAL INC.
and
HALTER MARINE GROUP, INC.
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
THE MERGER
<S> <C>
SECTION 1.01. The Merger................................................... 2
SECTION 1.02. Effective Time............................................... 2
SECTION 1.03. Effect of the Merger......................................... 2
SECTION 1.04. Certificate of Incorporation; By-laws........................ 3
SECTION 1.05. Boards, Committees and Officers of Friede Goldman............ 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities..................................... 4
SECTION 2.02. Exchange of Certificates..................................... 5
SECTION 2.03. Stock Transfer Books......................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HALTER MARINE
SECTION 3.01. Organization and Qualification; Subsidiaries................. 10
SECTION 3.02. Capitalization............................................... 10
SECTION 3.03. Authority Relative to This Agreement......................... 12
SECTION 3.04. No Conflict; Required Filings and Consents................... 12
SECTION 3.05. Permits; Compliance.......................................... 14
SECTION 3.06. SEC Filings; Financial Statements............................ 14
SECTION 3.07. Absence of Certain Changes or Events......................... 15
SECTION 3.08. Employee Benefit Plans; Labor Matters........................ 15
SECTION 3.09. Contracts; Debt Instruments.................................. 18
SECTION 3.10. Litigation................................................... 19
SECTION 3.11. Environmental Matters........................................ 19
SECTION 3.12. Trademarks, Patents and Copyrights........................... 20
SECTION 3.13. Taxes........................................................ 21
SECTION 3.14. Opinion of Financial Advisor................................. 23
SECTION 3.15. Vote Required................................................ 23
SECTION 3.16. Brokers...................................................... 23
SECTION 3.17. Insurance.................................................... 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FRIEDE GOLDMAN
SECTION 4.01. Organization and Qualification; Subsidiaries................. 24
SECTION 4.02. Capitalization............................................... 25
SECTION 4.03. Authority Relative to This Agreement......................... 26
SECTION 4.04. No Conflict; Required Filings and Consents................... 27
SECTION 4.05. Permits; Compliance.......................................... 28
SECTION 4.06. SEC Filings; Financial Statements............................ 28
SECTION 4.07. Absence of Certain Changes or Events......................... 29
SECTION 4.08. Employee Benefit Plans; Labor Matters........................ 29
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.09. Contracts; Debt Instruments................................ 31
SECTION 4.10. Litigation................................................. 32
SECTION 4.11. Environmental Matters...................................... 33
SECTION 4.12. Trademarks, Patents and Copyrights......................... 33
SECTION 4.13. Taxes...................................................... 34
SECTION 4.14. Opinion of Financial Advisor............................... 35
SECTION 4.15. Vote Required.............................................. 35
SECTION 4.16. Brokers.................................................... 35
SECTION 4.17. Insurance.................................................. 36
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business by Halter Marine Pending the Closing... 36
SECTION 5.02. Conduct of Business by Friede Goldman Pending the Closing.. 39
SECTION 5.03. Cooperation................................................ 42
SECTION 5.04. Notices of Certain Events.................................. 42
SECTION 5.05. Contractual Consents....................................... 42
SECTION 5.06. Rights Agreements.......................................... 43
SECTION 5.07. Affiliate Letters.......................................... 43
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement.................... 43
SECTION 6.02. Stockholders' Meetings..................................... 45
SECTION 6.03. Access to Information; Confidentiality..................... 45
SECTION 6.04. No Solicitation by Halter Marine........................... 46
SECTION 6.05. No Solicitation by Friede Goldman.......................... 48
SECTION 6.06. Reasonable Efforts......................................... 49
SECTION 6.07. Stock Options and Other Stock Awards; Employee Benefit
Plans..................................................... 51
SECTION 6.08. Letters of Accountants..................................... 53
SECTION 6.09. Update Disclosure; Breaches................................ 53
SECTION 6.10. Public Announcements....................................... 54
SECTION 6.11. NYSE Listing............................................... 54
SECTION 6.12. Indemnification of Directors and Officers.................. 54
SECTION 6.13. Plan of Reorganization..................................... 56
SECTION 6.14. Headquarters; Name......................................... 56
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Agreement................................................. 56
SECTION 7.02. Additional Conditions to Obligations of Friede Goldman..... 58
SECTION 7.03. Additional Conditions to Obligations of Halter Marine...... 59
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
<S> <C>
SECTION 8.01. Termination.................................................. 60
SECTION 8.02. Effect of Termination........................................ 62
SECTION 8.03. Amendment.................................................... 62
SECTION 8.04. Waiver....................................................... 62
SECTION 8.05. Fees......................................................... 63
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties............... 65
SECTION 9.02. Notices...................................................... 65
SECTION 9.03. Certain Definitions.......................................... 66
SECTION 9.04. Headings..................................................... 67
SECTION 9.05. Severability................................................. 67
SECTION 9.06. Entire Agreement............................................. 67
SECTION 9.07. Assignment................................................... 68
SECTION 9.08. Parties in Interest.......................................... 68
SECTION 9.09. Mutual Drafting.............................................. 68
SECTION 9.10. Governing Law................................................ 68
SECTION 9.11. Counterparts................................................. 68
</TABLE>
EXHIBIT 1 FORM OF HALTER MARINE CEO EMPLOYMENT AGREEMENT
EXHIBIT 2 FORM OF HALTER MARINE CFO EMPLOYMENT AGREEMENT
EXHIBIT 3 FORM OF FRIEDE GOLDMAN CEO EMPLOYMENT AGREEMENT
EXHIBIT 4 FORM OF FRIEDE GOLDMAN EVP EMPLOYMENT AGREEMENT
EXHIBIT 5 FORM OF VOTING AND PROXY AGREEMENT
EXHIBIT 6 FORM OF STOCKHOLDER'S AGREEMENT (JLH)
EXHIBIT 7 BOARD, COMMITTEES AND OFFICERS OF FRIEDE GOLDMAN
EXHIBIT 8 FORM OF AFFILIATE LETTER
EXHIBIT 9 FORM OF FRIEDE GOLDMAN EVP--SHIPYARD OPERATIONS EMPLOYMENT AGREEMENT
EXHIBIT 10 FORM OF FRIEDE GOLDMAN OFFSHORE, INC. PRESIDENT EMPLOYMENT AGREEMENT
EXHIBIT 11 FORM OF K. COLLEDGE EMPLOYMENT AGREEMENT
EXHIBIT 12 FORM OF W. TRIMBLE EMPLOYMENT AGREEMENT
EXHIBIT 13 FORM OF T. RIGOLO EMPLOYMENT AGREEMENT
EXHIBIT 14 FORM OF W. BINGLE EMPLOYMENT AGREEMENT
EXHIBIT 15 FORM OF D. ROBASCIOTTI EMPLOYMENT AGREEMENT
EXHIBIT 16 FORM OF G. GENTRY EMPLOYMENT AGREEMENT
EXHIBIT 17 FORM OF R. ANDREWS EMPLOYMENT AGREEMENT
EXHIBIT 18 FORM OF G. CAGNOLATTI EMPLOYMENT AGREEMENT
EXHIBIT 19 FORM OF STOCKHOLDER'S AGREEMENT (RWS)
EXHIBIT 20 FORM OF FRIEDE GOLDMAN OPTION AGREEMENT FOR MESSRS DANE AND REES
A-iii
<PAGE>
Index of Defined Terms
<TABLE>
<CAPTION>
Section
-------------------
<S> <C>
affiliate Section 9.03(a)
Agreement Preamble
Amex Section 3.04(b)
Articles of Merger Section 1.02
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.04(b)
Board Size Increase Section 4.03
Business Day Section 9.03(c)
CERCLA Section 3.11
Certificate of Merger Section 1.02
Certificates Section 2.02(b)
Code Preamble
Confidentiality Agreement Section 6.03(b)
contract Section 3.09
control Section 9.03(d)
Convertible Notes Section 3.02
DGCL Preamble
DLJ Section 3.14
Effective Time Section 1.02
Environmental Laws Section 3.11
Environmental Permits Section 3.11
ERISA Section 3.08(a)
Excess Shares Section 2.02(e)(ii)
Exchange Act Section 3.04(b)
Exchange Agent Section 2.02(a)
Exchange Fund Section 2.02(a)
Exchange Ratio Section 2.01(a)
Friede Goldman Preamble
Friede Goldman Acquisition Agreement Section 6.05(b)
Friede Goldman Benefit Plans Section 4.08(a)
Friede Goldman Common Stock Section 2.01(a)
Friede Goldman Disclosure Schedule Article IV Preamble
Friede Goldman Indemnified Parties Section 6.12(d)
Friede Goldman Material Adverse Effect Section 4.01
Friede Goldman Material Contract Section 4.09
Friede Goldman Meeting Section 6.02
Friede Goldman Notice Section 6.05(a)
Friede Goldman Out-of-Pocket Expenses Section 8.05(b)
Friede Goldman Permits Section 4.05
Friede Goldman Preferred Stock Section 4.02
Friede Goldman Preferred Stock Rights Section 4.02
Friede Goldman Rights Agreement Section 4.02
Friede Goldman SEC Filings Section 4.06(a)
Friede Goldman Stock Options Plans Section 4.02
Friede Goldman Stockholder Approval Section 4.03
Friede Goldman Subsidiaries Section 4.01
Friede Goldman Superior Proposal Section 6.05(b)
Friede Goldman Takeover Proposal Section 6.05(a)
GAAP Section 3.06(b)
</TABLE>
A-iv
<PAGE>
<TABLE>
<CAPTION>
Section
--------------------
<S> <C>
Governmental Entity Section 3.04(b)
Halter Marine Preamble
Halter Marine Acquisition Agreement Section 6.04(b)
Halter Marine Benefit Plans Section 3.08(a)
Halter Marine By-laws Section 3.04(a)
Halter Marine Certificate Section 3.04(a)
Halter Marine Change in Control Arrangements Section 3.08(e)
Halter Marine Common Stock Section 2.01(a)
Halter Marine Disclosure Schedule Article III Preamble
Halter Marine Indemnified Parties Section 6.12(b)
Halter Marine Indenture Section 3.04(a)
Halter Marine Material Adverse Effect Section 3.01
Halter Marine Material Contract Section 3.09
Halter Marine Meeting Section 6.02
Halter Marine Notice Section 6.04(a)
Halter Marine Option Section 6.07(a)
Halter Marine Out-of-Pocket Expenses Section 8.05(c)
Halter Marine Permits Section 3.05
Halter Marine Preferred Stock Section 3.02
Halter Marine Preferred Stock Rights Section 3.02
Halter Marine Rights Agreement Section 3.02
Halter Marine SEC Filings Section 3.06(a)
Halter Marine Stockholder Approval Section 3.03
Halter Marine Superior Proposal Section 6.04(b)
Halter Marine Takeover Proposal Section 6.04(a)
Halter Marine Subsidiaries Section 3.01
Halter Marine 1996 Plan Section 6.07(a)
Hazardous Materials Section 3.11
HSR Act Section 3.04(b)
IRS Section 3.08(a)
Jefferies Section 4.14
knowledge Section 9.03(e)
Law Section 3.04(a)
MBCA Preamble
Merger Preamble
Name Change Preamble
NYSE Section 2.02(e)(ii)
Order Section 6.06(a)(ii)
person Section 9.03(f)
plan of reorganization Section 6.13
Proprietary Rights Section 3.12
Proxy Statement Section 6.01(a)
Real Estate Transfer Taxes Section 8.05(a)
Registration Statement Section 6.01(a)
Replacement Plans Section 6.07(b)
Representatives Section 6.03(a)
Securities Act Section 3.04(b)
Stock Option Plan Amendment Section 4.03
Stockholder's Agreement Preamble
Stockholders' Meetings Section 6.02
subsidiary or subsidiaries Section 9.03(g)
Surviving Corporation Section 1.01
Taxes Section 3.13(a)
Termination Fee Section 8.05(b)
5% Stockholder Section 3.13(j)
</TABLE>
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AGREEMENT AND PLAN OF MERGER, dated as of June 1, 1999 (this "Agreement"),
between FRIEDE GOLDMAN INTERNATIONAL INC., a Mississippi corporation ("Friede
Goldman"), and HALTER MARINE GROUP, INC., a Delaware corporation ("Halter
Marine").
WHEREAS, the Boards of Directors of Friede Goldman and Halter Marine have
determined that it is consistent with and in furtherance of their respective
long-term business strategies and fair to and in the best interests of their
respective companies and stockholders to combine their respective businesses in
a "merger of equals" transaction to be effected as set forth in this Agreement;
WHEREAS, to effect such merger of equals transaction, upon the terms and
subject to the conditions of this Agreement and in accordance with the general
Corporation Law of the State of Delaware (the "DGCL") and the Mississippi
Business Corporation Act (the "MBCA"), Halter Marine will merge with and into
Friede Goldman (the "Merger");
WHEREAS, the Board of Directors of Friede Goldman (i) has determined that
the Merger is in the best interests of Friede Goldman and its stockholders and
approved and adopted this Agreement and the transactions contemplated hereby
and (ii) has recommended that the stockholders of Friede Goldman approve the
Merger;
WHEREAS, the Board of Directors of Halter Marine (i) has determined that the
Merger is in the best interests of Halter Marine and its stockholders and has
approved, adopted and declared the advisability of this Agreement and the
transactions contemplated hereby and (ii) has recommended adoption of this
Agreement and approval of the Merger by the stockholders of Halter Marine;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization under the provisions of section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, concurrently with the execution and delivery of this Agreement,
Friede Goldman is entering into Employment Agreements with Halter Marine's
Chief Executive Officer, Chief Financial Officer and Friede Goldman's Chief
Executive Officer and Executive Vice President, in the forms attached hereto as
Exhibits 1, 2, 3 and 4 respectively, which Employment Agreements shall become
effective upon consummation of the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement,
J.L. Holloway and Halter Marine are entering into a Voting and Proxy Agreement
in the form attached hereto as Exhibit 5 (the "Voting Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
Friede Goldman and J.L. Holloway are entering into a Stockholder's Agreement
(the "Stockholder's Agreement") in the form attached hereto as Exhibit 6, which
Stockholder's Agreement shall become effective upon consummation of the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Friede Goldman Offshore, Inc. is entering into Employment Agreements with
certain key employees of Friede Goldman, in the forms attached hereto as
Exhibits 9 through 17, respectively, which Employment Agreements shall become
effective upon consummation of the Merger; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
Friede Goldman Offshore, Inc. is entering into a Stockholders Agreement with
Ronald W. Schnoor, in the form attached hereto as Exhibit 18, which agreement
shall become effective upon consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL and the MBCA, at the
Effective Time (as defined below), Halter Marine shall be merged with and into
Friede Goldman. As a result of the Merger, the separate corporate existence of
Halter Marine shall cease and Friede Goldman shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time. No later than three business days after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated by (i) filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL and (ii) filing articles
of merger (the "Articles of Merger") with the Secretary of State of the State
of Mississippi, in such form as required by, and executed in accordance with
the relevant provisions of, the MBCA (the date and time of such filings, or if
another date and time is specified in such filings, such specified date and
time, being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL and the
MBCA. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Halter Marine and Friede Goldman
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Halter Marine and Friede Goldman shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-laws. At the Effective Time,
the Articles of Incorporation and the By-laws of Friede Goldman, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the By-laws of the Surviving Corporation except that,
effective as of the Effective Time, the Articles of Incorporation of Friede
Goldman shall be amended, (i) without any action to be taken by any of Friede
Goldman or Halter Marine, to provide that the name of the Surviving Corporation
set forth therein shall be "Friede Goldman Halter, Inc." and (ii) as provided
in Section 6.12(a) hereof.
SECTION 1.05. Boards, Committees and Officers of Friede Goldman. (a) Friede
Goldman shall use its best efforts to (i) establish the size of the Board of
Directors as of the Effective Time at eleven (11) directors, (ii) cause the
Board of Directors of Friede Goldman as of the Effective Time to be comprised
of J.L. Holloway, five (5) other persons who are members of the Board of
Directors of Friede Goldman as of the date of this Agreement as designated by
Friede Goldman prior to the date of the mailing of the proxy statement related
to the Merger, John Dane and four (4) other persons who are members of the
Board of Directors of Halter Marine as of the date of this Agreement as
designated by Halter Marine prior to the date of the mailing of the proxy
statement related to the Merger, (iii) cause the Compensation Committee of
Friede Goldman as of the Effective Time to be comprised of two (2) persons who
are members of the Board of Directors of Halter Marine as of the date of this
Agreement as designated by Halter Marine prior to the date of the mailing of
the proxy statement related to the Merger and one (1) person who is a member of
the Board of Directors of Friede Goldman as of the date of this Agreement as
designated by Friede Goldman prior to the date of the mailing of the proxy
statement related to the Merger, (iv) cause the Audit Committee of Friede
Goldman as of the Effective Time to be comprised of three (3) persons who are
members of the Board of Directors of Friede Goldman as of the date of this
Agreement as designated by Friede Goldman prior to the date of the mailing of
the proxy statement related to the Merger and two (2) persons who are members
of the Board of Directors of Halter Marine as of the date of this Agreement as
designated by Halter Marine prior to the date of the mailing of the proxy
statement related to the Merger, (v) cause the Nominating Committee of Friede
Goldman as of the Effective Time to be comprised of J.L. Holloway, John Dane
III, two (2) persons who are members of the Board of Directors of Friede
Goldman as of the date of this Agreement as designated by Friede Goldman prior
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to the date of the mailing of the proxy statement related to the Merger and two
(2) persons who are members of the Board of Directors of Halter Marine as of
the date of this Agreement as designated by Halter Marine prior to the date of
the mailing of the proxy statement related to the Merger and (vi) cause the
officers of Friede Goldman to be as set forth on Exhibit 7 hereto, in each case
until the earlier of the resignation or removal of any such individual or until
their respective successors are duly elected and qualified, as the case may be,
it being agreed that if any director shall be unable to serve as a director
(including as a member or chairperson of any committee) at the Effective Time
the party which designated such individual as set forth above shall designate
another individual to serve in such individual's place and the Company shall
use its best efforts and cause such person to be elected or appointed to such
position. If any officer set forth on Exhibit 7 ceases to be a full-time
employee of either Halter Marine or Friede Goldman at or before the Effective
Time, the parties will agree upon another person to serve in such person's
stead.
(b) It is the intention of the parties that promptly following the Effective
Time, the Board of Directors of Friede Goldman will establish itself as a
classified board as contemplated by the Articles of Incorporation of Friede
Goldman.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Friede Goldman, Halter Marine
or the holders of any of the following securities:
(a) Each share of common stock, par value $0.01 per share, of Halter
Marine (the "Halter Marine Common Stock") issued and outstanding
immediately prior to the Effective Time (other than any shares of Halter
Marine Common Stock to be cancelled pursuant to Section 2.01(b)) shall be
converted, subject to Section 2.02(e), into the right to receive 0.4614
shares of common stock, par value $0.01 per share ("Friede Goldman Common
Stock"), of Friede Goldman (the "Exchange Ratio") including the
corresponding percentage of a right to purchase shares of Friede Goldman
Preferred Stock pursuant to the Friede Goldman Rights Agreement (as such
terms are hereinafter defined); provided, however, that in any event, if
between the date of this Agreement and the Effective Time the outstanding
shares of Friede Goldman Common Stock or Halter Marine Common Stock shall
have been changed into a different number of shares or a different class by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange
Ratio shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares. All such shares of Halter Marine Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent the right to receive a certificate
representing the shares of Friede Goldman Common Stock into which such
Halter Marine Common Stock was converted in the Merger. Certificates
previously representing shares of Halter Marine Common Stock shall be
exchanged for certificates representing whole shares of Friede Goldman
Common Stock issued in consideration therefor upon the surrender of such
certificates, in accordance with the provisions of Section 2.02, without
interest. No fractional share of Friede Goldman Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.02(e) hereof.
(b) Each share of Halter Marine Common Stock held in the treasury of
Halter Marine and each share of Halter Marine Common Stock owned by Friede
Goldman or any direct or indirect wholly owned subsidiary of Friede Goldman
or of Halter Marine immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
(c) Each share of Friede Goldman Common Stock outstanding immediately
prior to the Effective Time shall remain outstanding.
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SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Prior to the
Effective Time, Friede Goldman shall deposit or shall cause to be deposited
with a bank or trust company designated by Friede Goldman and reasonably
satisfactory to Halter Marine (the "Exchange Agent"), for the benefit of the
holders of shares of Halter Marine Common Stock for exchange in accordance with
this Article II through the Exchange Agent, certificates representing the
shares of Friede Goldman Common Stock (such certificates for shares of Friede
Goldman Common Stock, together with cash in lieu of fractional shares and any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Halter Marine Common Stock. The Exchange Agent shall
pursuant to irrevocable instructions deliver the Friede Goldman Common Stock
contemplated to be issued pursuant to Section 2.01 out of the Exchange Fund.
Except as contemplated by Section 2.02(e) hereof, the Exchange Fund shall not
be used for any other purpose.
(b) Exchange Procedures. Promptly after the Effective Time, Friede Goldman
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Halter Marine Common Stock (the
"Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
be in customary form) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Friede
Goldman Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Friede Goldman Common
Stock that such holder has the right to receive in respect of the shares of
Halter Marine Common Stock formerly represented by such Certificate (after
taking into account all shares of Halter Marine Common Stock then held by such
holder), cash in lieu of fractional shares of Friede Goldman Common Stock to
which such holder is entitled pursuant to Section 2.02(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section
2.02(c), and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any cash in lieu of fractional shares or on
any unpaid dividends and distributions payable to holders of Certificates. In
the event of a transfer of ownership of shares of Halter Marine Common Stock
that is not registered in the transfer records of Halter Marine, a certificate
representing the proper number of shares of Friede Goldman Common Stock may be
issued to a transferee only if the Certificate representing such shares of
Halter Marine Common Stock is properly endorsed and is presented to the
Exchange Agent accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Friede Goldman Common Stock, cash in lieu of any fractional shares of
Friede Goldman Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder
is entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Friede Goldman
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Friede Goldman Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Friede Goldman Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.02(e), until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of escheat,
tax or other applicable Laws (as defined below), following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Friede Goldman Common Stock issued in exchange
therefor, without interest, (i) promptly, the amount of any cash payable with
respect to a fractional share of Friede Goldman Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of Friede Goldman Common Stock 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 occurring
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after surrender, payable with respect to such whole shares of Friede Goldman
Common Stock; provided, however, that any amounts remaining unclaimed by
holders of shares of Halter Marine Stock two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any governmental entity) shall, to
the extent permitted by applicable law, become the property of Friede Goldman,
free and clear of any claims or interest of any person previously entitled
thereto.
(d) No Further Rights in Halter Marine Common Stock. All shares of Friede
Goldman Common Stock issued upon conversion of the shares of Halter Marine
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(c) or (e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Halter Marine Common
Stock.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Friede Goldman Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with
respect to Friede Goldman Common Stock shall be payable on or with respect to
any fractional share and such fractional share interests will not entitle the
owner thereof to any rights of a stockholder of Friede Goldman.
(ii) As promptly as practicable following the Effective Time, the Exchange
Agent shall determine the excess of (x) the number of full shares of Friede
Goldman Common Stock delivered to the Exchange Agent by Friede Goldman pursuant
to Section 2.02(a) over (y) the aggregate number of full shares of Friede
Goldman Common Stock to be distributed to holders of Halter Marine Common Stock
pursuant to Section 2.02(b) (such excess being herein called the "Excess
Shares"). As soon after the Effective Time as practicable, the Exchange Agent,
as agent for such holders of Friede Goldman Common Stock, shall sell the Excess
Shares at then prevailing prices on the New York Stock Exchange ("NYSE"), all
in the manner provided in paragraph (iii) of this Section 2.02(e) which sale
transactions shall be made at such times, in such manner and on such terms as
the Exchange Agent shall determine in its reasonable discretion.
(iii) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent practicable. Until the net proceeds of any such
sale or sales have been distributed to such holders of Halter Marine Common
Stock, the Exchange Agent will hold such proceeds in trust for such holders of
Halter Marine Common Stock as part of the Exchange Fund. Friede Goldman shall
pay all commissions, transfer taxes and other out-of-pocket transaction costs
of the Exchange Agent incurred in connection with such sale or sales of Excess
Shares. In addition, Friede Goldman shall pay the Exchange Agent's compensation
and expenses in connection with such sale or sales. The Exchange Agent shall
determine the portion of such net proceeds to which each holder of Halter
Marine Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction the numerator of which is the amount of
the fractional share interest to which such holder of Halter Marine Common
Stock is entitled (after taking into account all shares of Halter Marine Common
Stock then held by such holder) and the denominator of which is the aggregate
amount of fractional share interests to which all holders of Certificates
representing Halter Marine Common Stock are entitled.
(iv) Notwithstanding the provisions of Section 2.02(e)(ii) and (iii), Friede
Goldman may elect at its option, exercised prior to the Effective Time, in lieu
of the issuance and sale of Excess Shares and the making of the payments
hereinabove contemplated, to pay each former holder of Halter Marine Common
Stock an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such former holder (after taking into
account all shares of Halter Marine Common Stock held at the Effective Time by
such holder) would otherwise be entitled by (B) the closing price for a share
of Friede Goldman Common Stock as reported on the NYSE (as reported in The Wall
Street Journal or, if not reported thereby, any other authoritative source) on
the date of the Effective Time, and, in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
Section 2.02(e)(iv).
(v) As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Halter Marine Common Stock with respect to any
fractional share interests, the Exchange Agent shall promptly
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pay such amounts to such holders of Halter Marine Common Stock subject to and
in accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Halter Marine Common Stock for one year
after the Effective Time shall be delivered to Friede Goldman, upon demand, and
any holders of Halter Marine Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Friede Goldman for the
shares of Friede Goldman Common Stock, any cash in lieu of fractional shares of
Friede Goldman Common Stock to which they are entitled pursuant to Section
2.02(e) and any dividends or other distributions with respect to Friede Goldman
Common Stock to which they are entitled pursuant to Section 2.02(c), in each
case, without any interest thereon.
(g) No Liability. Neither Friede Goldman nor Halter Marine shall be liable
to any holder of shares of Halter Marine Common Stock for any such shares of
Friede Goldman Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any abandoned property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Friede
Goldman, the posting by such person of a bond in such reasonable amount as
Friede Goldman may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of Friede
Goldman Common Stock, any cash in lieu of fractional shares of Friede Goldman
Common Stock to which the holders thereof are entitled pursuant to Section
2.02(e) and any dividends or other distributions to which the holders thereof
are entitled pursuant to Section 2.02(c), in each case, without any interest
thereon.
(i) Withholding. Friede Goldman or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Halter Marine Common Stock such amounts as Friede
Goldman or the Exchange Agent are required to deduct and withhold under the
Code, or any provision of state, local or foreign tax law, with respect to the
making of such payment. To the extent that amounts are so withheld by Friede
Goldman or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Halter Marine
Common Stock in respect of whom such deduction and withholding was made by
Friede Goldman or the Exchange Agent.
(j) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Friede Goldman, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Friede Goldman.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of Halter Marine shall be closed and there shall be no further
registration of transfers of shares of Halter Marine Common Stock thereafter on
the records of Halter Marine. From and after the Effective Time, the holders of
certificates representing shares of Halter Marine Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Halter Marine Common Stock except as otherwise
provided herein or by Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Friede Goldman for any reason shall be
converted into the shares of Friede Goldman Common Stock, any cash in lieu of
fractional shares of Friede Goldman Common Stock to which the holders thereof
are entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.02(c).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HALTER MARINE
Except as set forth in the Disclosure Schedule delivered by Halter Marine to
Friede Goldman prior to the execution of this Agreement (the "Halter Marine
Disclosure Schedule"), which shall identify exceptions by specific Section
references, Halter Marine hereby represents and warrants to Friede Goldman as
follows:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of Halter
Marine and each subsidiary of Halter Marine (collectively, the "Halter Marine
Subsidiaries") has been duly organized and is validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Halter Marine Material Adverse Effect (as defined below).
Each of Halter Marine and the Halter Marine Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing or good standing necessary,
except for such failures to be so qualified or licensed and in good standing
that would not, individually or in the aggregate, have a Halter Marine Material
Adverse Effect. For purposes of this Agreement, "Halter Marine Material Adverse
Effect" means any change in or effect on the business of Halter Marine and the
Halter Marine Subsidiaries that is, or is reasonably likely to be, materially
adverse to the business, financial condition, results of operations or
prospects of Halter Marine and the Halter Marine Subsidiaries taken as a whole
other than any change, effect, event or occurrence relating to (i) the United
States economy in general, (ii) this Agreement or the transactions contemplated
hereby or the announcement thereof, (iii) the failure to obtain applicable
regulatory or third party consents that may be required in connection with this
Agreement or the transactions contemplated hereby, or (iv) to the offshore oil
services industry in general; provided, however, that a Halter Marine Material
Adverse Effect shall include any change in or effect on the business of Halter
Marine and the Halter Marine Subsidiaries that is, or is reasonably likely to
be, materially adverse to the business, financial condition, results of
operations or prospects of Halter Marine and the Halter Marine Subsidiaries
taken as a whole if such change or effect is significantly more adverse to
Halter Marine and the Halter Marine Subsidiaries taken as a whole than to the
offshore oil services industry in general. Section 3.01 of Halter Marine
Disclosure Schedule sets forth a complete and correct list of all of the Halter
Marine Subsidiaries. Halter Marine has made available to Friede Goldman prior
to the execution of this Agreement complete and correct copies of its
certificate of incorporation and by-laws, as amended to date.
SECTION 3.02. Capitalization. The authorized capital stock of Halter Marine
consists of (a) 150,000,000 shares of Halter Marine Common Stock and (b)
1,000,000 shares of preferred stock, par value $0.01 per share (the "Halter
Marine Preferred Stock"). As of April 30, 1999, (i) 28,856,661 shares of Halter
Marine Common Stock were issued and outstanding, all of which were validly
issued and fully paid, nonassessable and free of preemptive rights, (ii) no
shares of Halter Marine Common Stock were held in the treasury of Halter Marine
or by the Halter Marine Subsidiaries, (iii) 3,585,600 shares of Halter Marine
Common Stock were reserved for issuance upon exercise of Halter Marine Options
heretofore granted pursuant to the Halter Marine Stock Option Plans, and (iv)
no shares of Halter Marine Preferred Stock were issued or outstanding. Except
for (i) 3,268,600 Halter Marine Options, 862,656 shares of Restricted Stock and
no Stock Equivalents (as such terms are defined in the Halter Marine Stock
Option Plans) granted pursuant to the Halter Marine Stock Option Plans, (ii)
the rights (the "Halter Marine Preferred Stock Rights") issued pursuant to the
Stockholder Rights Agreement dated as of September 23, 1996 between the Company
and The Bank of New York as Rights Agent (the "Halter Marine Rights
Agreement"), (iii) the $185 million aggregate principal amount of 4 1/2%
Convertible Subordinated Notes due September 15, 2004 (the "Convertible
Notes"), or (iv) agreements or arrangements described in Section 3.02 or 3.08
of the Halter Marine Disclosure Schedule, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which
Halter Marine or any Halter Marine Subsidiary is a party or by which Halter
Marine or any Halter Marine Subsidiary is bound relating to
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the issued or unissued capital stock of Halter Marine or any Halter Marine
Subsidiary, or securities convertible into or exchangeable for such capital
stock, or obligating Halter Marine or any Halter Marine Subsidiary to issue or
sell any shares of capital stock, or securities convertible into or
exchangeable for such capital stock of, or other equity interests in, Halter
Marine or any Halter Marine Subsidiary. Since April 30, 1999, Halter Marine has
not issued any shares of its capital stock, or securities convertible into or
exchangeable for such capital stock, other than those shares of capital stock
reserved for issuance as set forth in this Section 3.02 or as set forth in
Section 3.02 of the Halter Marine Disclosure Schedule. Halter Marine has
previously provided Friede Goldman with a list, as of the date hereof, of the
prices at which outstanding Halter Marine Options may be exercised under the
applicable Halter Marine Stock Option Plan and the number of Halter Marine
Options outstanding at each such price. All shares of Halter Marine Common
Stock subject to issuance as aforesaid, upon issuance prior to the Effective
Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth in this
Section 3.02 or Section 3.02 of Halter Marine Disclosure Schedule, there are no
outstanding contractual obligations of Halter Marine or any Halter Marine
Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights
of, (iii) requiring the repurchase, redemption or disposition of, (iv)
requiring the registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, any shares of Halter Marine Common Stock or
any capital stock of any Halter Marine Subsidiary. Each outstanding share of
capital stock of each Halter Marine Subsidiary is duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, is owned by
Halter Marine or another Halter Marine Subsidiary and is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Halter Marine's or such other Halter Marine
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except where failure to own such shares free and clear would not,
individually or in the aggregate, have a Halter Marine Material Adverse Effect.
Except as set forth in Section 3.02 of the Halter Marine Disclosure Schedule,
there are no material outstanding contractual obligations of Halter Marine or
any Halter Marine Subsidiary to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any Halter Marine
Subsidiary or any other person, other than guarantees by Halter Marine of any
indebtedness of any Halter Marine Subsidiary.
SECTION 3.03. Authority Relative to This Agreement. Halter Marine has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated herein to be consummated by Halter Marine. The execution and
delivery of this Agreement by Halter Marine and the consummation by Halter
Marine of such transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Halter Marine and no other stockholder votes are necessary to authorize this
Agreement or to consummate such transactions (other than, with respect to the
Merger, the adoption of this Agreement by the affirmative vote of a majority of
the outstanding shares of Halter Marine Common Stock entitled to vote thereon
(the "Halter Marine Stockholder Approval")). The Board of Directors of Halter
Marine, at a meeting duly called and held, has (i) determined that this
Agreement, and the transactions contemplated hereby (including the Merger), are
fair to and in the best interests of the Company's stockholders, (ii) approved,
adopted and declared the advisability of this Agreement and the transactions
contemplated hereby (including the Merger), (iii) resolved to recommend
approval and adoption of this Agreement by its stockholders and (iv) directed
that this Agreement and the transactions contemplated hereby be submitted to
Halter Marine's stockholders for approval at a meeting of such stockholders.
This Agreement has been duly authorized and validly executed and delivered by
Halter Marine and constitutes the legal, valid and binding obligation of Halter
Marine, enforceable against Halter Marine in accordance with its terms. Halter
Marine has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL will not apply with respect
to or as a result of the Merger and the transactions contemplated by this
Agreement, without any further action on the part of the stockholders or the
Board of Directors of Halter Marine. To Halter Marine's knowledge, no other
state takeover statute is applicable to the Merger. Halter Marine has taken all
action necessary to render the Halter Marine Preferred Stock Rights issued
pursuant to the terms of the Halter Marine Rights Agreement inapplicable to, or
not exercisable as a result of, the Merger, the execution and delivery of this
Agreement or the transactions contemplated by this Agreement.
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SECTION 3.04. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Halter Marine do not, and the performance of
this Agreement by Halter Marine will not, (i) assuming the Halter Marine
Stockholder Approval is obtained, conflict with or violate any provision of
Halter Marine's Certificate of Incorporation ("Halter Marine Certificate") or
Halter Marine's By-laws ("Halter Marine By-laws") or any equivalent
organizational documents of any Halter Marine Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
3.04(b) have been obtained and all filings described in Section 3.04(b) have
been made, conflict with or violate any foreign or domestic law, statute, code,
ordinance, rule, regulation, order, judgment, writ, stipulation, award,
injunction or decree ("Law") applicable to Halter Marine or any Halter Marine
Subsidiary or by which any property or asset of Halter Marine or any Halter
Marine Subsidiary is bound or affected or (iii) except as set forth in Section
3.04(a) of the Halter Marine Disclosure Schedule, result in any breach of, any
loss of any benefit under or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Halter
Marine or any Halter Marine Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, Halter Marine Permit (as
defined in Section 3.05) or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences that would neither, individually or in
the aggregate, (A) have a Halter Marine Material Adverse Effect nor (B) prevent
or materially delay the performance of this Agreement by Halter Marine. The
execution and delivery of this Agreement by Halter Marine do not, and the
performance of this Agreement by Halter Marine will not, result in any breach
of, any loss or any benefit under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Halter Marine, under the
Indenture dated as of September 15, 1997, among Halter Marine and U.S. Trust
Company of Texas, N.A., as Trustee (the "Halter Marine Indenture") relating to
the Convertible Notes or give rise to any obligation to make an offer to
purchase the Convertible Notes pursuant to the terms of the Halter Marine
Indenture.
(b) Except as set forth in Section 3.04(b) of the Halter Marine Disclosure
Schedule, the execution and delivery of this Agreement by Halter Marine do not,
and the performance of this Agreement by Halter Marine will not, require any
consent, approval, authorization or permit of or filing with or notification to
any domestic or foreign governmental, administrative, judicial or regulatory
authority ("Governmental Entity"), except (i) for applicable requirements of
the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), state securities or "blue sky" laws ("Blue
Sky Laws"), the American Stock Exchange (the "AMEX"), premerger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), filing and
recordation of the Certificate of Merger and Articles of Merger as required by
the DGCL and MBCA, respectively, and as otherwise set forth in Section 3.04(b)
of the Halter Marine Disclosure Schedule and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (A) prevent or materially delay consummation of the
Merger, (B) otherwise prevent Halter Marine from performing its material
obligations under this Agreement or (C) individually or in the aggregate, have
a Halter Marine Material Adverse Effect.
SECTION 3.05. Permits; Compliance. Each of Halter Marine and the Halter
Marine Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals, clearances and orders of any Governmental Entity necessary for
Halter Marine or any Halter Marine Subsidiary to own, lease and operate its
properties or to carry on their respective businesses substantially in the
manner described in Halter Marine SEC Filings (as defined herein) and as it is
now being conducted (the "Halter Marine Permits"), and all such Halter Marine
Permits are valid, and in full force and effect, except where the failure to
have, or the suspension or cancellation of, any of the Halter Marine Permits
would neither, individually or in the aggregate, (a) have a Halter Marine
Material Adverse Effect nor (b) prevent or materially delay the performance of
this Agreement by Halter Marine, and, as of the date of this Agreement, no
suspension or cancellation of any of the Halter Marine Permits is pending or,
to the knowledge
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of Halter Marine, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Halter Marine Permits would neither,
individually or in the aggregate, (x) have a Halter Marine Material Adverse
Effect nor (y) prevent or materially delay the performance of this Agreement by
Halter Marine. Neither Halter Marine nor any Halter Marine Subsidiary is in
conflict with, or in default or violation of, (i) any Law applicable to Halter
Marine or any Halter Marine Subsidiary or by which any property, asset or
operation of Halter Marine or any Halter Marine Subsidiary is bound or affected
or (ii) any Halter Marine Permits, except for any such conflicts, defaults or
violations that would neither, individually or in the aggregate, (A) have a
Halter Marine Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Halter Marine.
SECTION 3.06. SEC Filings; Financial Statements. (a) Halter Marine has
timely filed all registration statements, prospectuses, forms, reports and
documents required to be filed by it under the Securities Act or the Exchange
Act, as the case may be, since June 30, 1997 (collectively, the "Halter Marine
SEC Filings"). The Halter Marine SEC Filings (i) complied as to form in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No Halter Marine Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Halter Marine SEC Filings was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto) and each presented fairly the consolidated
financial position of Halter Marine and the consolidated Halter Marine
Subsidiaries as of the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments that were
not and are not expected, individually or in the aggregate, to have a Halter
Marine Material Adverse Effect). The books and records of Halter Marine and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance sheet
of Halter Marine and the consolidated Halter Marine Subsidiaries as of March
31, 1998 included in Halter Marine's Form 10-K for the year ended March 31,
1998, including the notes thereto, neither Halter Marine nor any Halter Marine
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except for
liabilities or obligations (i) disclosed in the Halter Marine SEC Filings filed
under the Securities Act or the Exchange Act prior to the date hereof or (ii)
incurred in the ordinary course of business since March 31, 1998 that would
neither individually or in the aggregate (A) have a Halter Marine Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by Halter Marine.
SECTION 3.07. Absence of Certain Changes or Events. Since March 31, 1998,
except as contemplated by or as disclosed in this Agreement, as set forth in
Section 3.07 of the Halter Marine Disclosure Schedule or as disclosed in any
Halter Marine SEC Filing filed prior to the date of this Agreement, Halter
Marine and the Halter Marine Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (a) any Halter Marine Material Adverse Effect or
an event or development (including in connection with the Merger) that would,
individually or in the aggregate, have a Halter Marine Material Adverse Effect,
(b) any event that could reasonably be expected to prevent or materially delay
the performance of this Agreement by Halter Marine, or (c) any action taken by
Halter Marine or any of the Halter Marine Subsidiaries during the period from
April 1, 1998 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.01.
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SECTION 3.08. Employee Benefit Plans; Labor Matters. (a) Section 3.08(a) of
the Halter Marine Disclosure Schedule sets forth a true and complete list as of
the date hereof of each material employee benefit plan, program, arrangement
and contract (including, without limitation, any "employee benefit plan", as
defined in section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), maintained or contributed to by Halter Marine or any
Halter Marine Subsidiary, or with respect to which Halter Marine or any Halter
Marine Subsidiary could incur material liability under Section 4069, 4212(c) or
4204 of ERISA (the "Halter Marine Benefit Plans"). With respect to each Halter
Marine Benefit Plan that is a stock-based plan, Halter Marine has heretofore
delivered to Friede Goldman a true and complete copy of such Halter Marine
Benefit Plan. With respect to each other Halter Marine Benefit Plan, Halter
Marine will make available to Friede Goldman, promptly after the date hereof, a
true and complete copy of such Halter Marine Benefit Plan and (i) the most
recent annual report (Form 5500) filed with the Internal Revenue Service (the
"IRS"), if any, (ii) the most recent actuarial report or valuation (if any)
relating to any Halter Marine Benefit Plan subject to Title IV of ERISA and
(iii) the most recent determination letter, if any, issued by the IRS with
respect to any Halter Marine Benefit Plan qualified under Section 401(a) of the
Code.
(b) With respect to each Halter Marine Benefit Plan that is subject to Title
IV of ERISA, (A) no "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Halter Marine Benefit Plan for which
the 30-day notice requirement has not been waived, except where such reportable
event would not have a Halter Marine Material Adverse Effect and (B) no
condition exists that would subject Halter Marine or any Halter Marine
Subsidiary to any fine under Section 4071 of ERISA, except where such condition
would not have a Halter Marine Material Adverse Effect. No Halter Marine
Benefit Plan is a "multiemployer pension plan" (as such term is defined in
section 3(37) of ERISA).
(c) With respect to the Halter Marine Benefit Plans, no event has occurred
and, to the knowledge of Halter Marine, there exists no condition or set of
circumstances in connection with which Halter Marine or any Halter Marine
Subsidiary could be subject to any liability under the terms of such Halter
Marine Benefit Plans, ERISA, the Code or any other applicable Law that,
individually or in the aggregate, would have a Halter Marine Material Adverse
Effect. Each of the Halter Marine Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws and
administrative or governmental rules and regulations, including, but not
limited to, ERISA and the Code, except where a violation of any such law, rule
or regulation would not have a Halter Marine Material Adverse Effect. Each of
the Halter Marine Benefit Plans intended to be "qualified" within the meaning
of Section 401(a) of the Code has received a favorable determination letter as
to such qualification from the IRS, and no event has occurred, either by reason
of any action or failure to act, that would cause the loss of any such
qualification, except where such loss of qualification would not have a Halter
Marine Material Adverse Effect. Except as set forth in Section 3.08(c) of the
Halter Marine Disclosure Schedule, no Halter Marine Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of Halter Marine or
any Halter Marine Subsidiary beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death
benefits or retirement benefits under any "employee pension plan" (as such term
is defined in Section 3(2) of ERISA), (iii) deferred compensation benefits
accrued as liabilities on the books of Halter Marine or any Halter Marine
Subsidiary or (iv) benefits the full cost of which is borne by the current or
former employee (or his beneficiary). All contributions or other amounts
payable by Halter Marine or any Halter Marine Subsidiary as of the Effective
Time with respect to each Halter Marine Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP and Section
412 of the Code.
(d) Except as set forth in Section 3.08(d) of the Halter Marine Disclosure
Schedule, neither Halter Marine nor any Halter Marine Subsidiary is a party to
any collective bargaining or other labor union contract applicable to persons
employed by Halter Marine or any Halter Marine Subsidiary and no collective
bargaining agreement or other labor union contract is being negotiated by
Halter Marine or any Halter Marine Subsidiary that is material to Halter Marine
and the Halter Marine Subsidiaries taken as a whole. As of the date of this
Agreement, there is no material labor dispute, strike, slowdown or work
stoppage against Halter Marine or any
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Halter Marine Subsidiary pending or, to the knowledge of Halter Marine,
threatened that may interfere with the respective business activities of Halter
Marine or any Halter Marine Subsidiary, except where such dispute, strike,
slowdown or work stoppage would not have a Halter Marine Material Adverse
Effect. As of the date of this Agreement, to the knowledge of Halter Marine,
none of Halter Marine, any Halter Marine Subsidiary or their respective
representatives or employees has committed any unfair labor practices in
connection with the operation of the respective businesses of Halter Marine or
any Halter Marine Subsidiary, and there is no charge or complaint against
Halter Marine or any Halter Marine Subsidiary by the National Labor Relations
Board or any comparable state or foreign agency pending or, to the knowledge of
Halter Marine, threatened, except where such unfair labor practice, charge or
complaint would not have a Halter Marine Material Adverse Effect.
(e) Halter Marine has identified in Section 3.08(e) of the Halter Marine
Disclosure Schedule and has made available to Friede Goldman true and complete
copies of (i) all severance and employment agreements with directors, executive
officers, key employees or material consultants of Halter Marine; (ii) all
severance programs and policies of each of Halter Marine and each Halter Marine
Subsidiary with or relating to its employees; and (iii) all plans, programs,
agreements and other arrangements of each of Halter Marine and each Halter
Marine Subsidiary with or relating to its employees that contain change in
control provisions (the "Halter Marine Change in Control Arrangements"). Except
as set forth in Section 3.08(e) of the Halter Marine Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any material payment
(including, without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any employee of Halter
Marine or any of its affiliates from Halter Marine or any of its affiliates
under any Halter Marine Benefit Plan or otherwise, (ii) materially increase any
benefits otherwise payable under any Halter Marine Benefit Plan or (iii) result
in any acceleration of the time of payment or vesting of any material benefits.
(f) Halter Marine is currently in compliance with all applicable laws,
regulations and rules relating to the employment of labor, including those
related to wages, hours and the payment of withholding taxes and other sums
required by a governmental authority and has withheld and paid to the
appropriate government authority or is holding for payment not yet due to such
authority all amounts required to be withheld on behalf of any of Halter
Marine's employees, and is not liable for arrears of wages, taxes, penalties or
other sums for failure to comply with the foregoing.
SECTION 3.09. Contracts; Debt Instruments. Except as disclosed in or
attached as exhibits to the Halter Marine SEC Filings or as disclosed in
Section 3.09(a) of Halter Marine Disclosure Schedule, neither Halter Marine nor
any of the Halter Marine Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (a
"contract") (i) except as set forth in Section 3.08(e) of the Halter Marine
Disclosure Schedule, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, (ii) as of the date hereof, any vessel or
customer contract that is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC), that requires expenditures in
excess of $10 million or that requires annual expenditures in excess of $10
million and is not cancelable within one year, that has not been filed or
incorporated by reference in the Halter Marine SEC Filings, (iii) that contains
any material non-compete provisions with respect to any line of business or
geographic area in which business is conducted with respect to Halter Marine or
any of the Halter Marine Subsidiaries or that restricts the conduct of any line
of business by Halter Marine or any of the Halter Marine Subsidiaries or any
geographic area in which Halter Marine or any of the Halter Marine Subsidiaries
may conduct business, in each case in any material respect, (iv) that would
prohibit or materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement, (v) that obligates Halter Marine
or any of the Halter Marine Subsidiaries to make any compensation payments or
issue or pay anything of value to any director, executive officer, key employee
or consultant, or (vi) that is a loan, credit or similar contract. Each
contract, arrangement, commitment or understanding of the type described in
this Section 3.09, whether or not set forth in Section 3.09 of the Halter
Marine Disclosure Schedule, is referred to herein as
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a "Halter Marine Material Contract." Each Halter Marine Material Contract is
valid and binding on Halter Marine or any of the Halter Marine Subsidiaries, as
applicable, and in full force and effect, and Halter Marine and each of the
Halter Marine Subsidiaries have in all material respects performed all
obligations required to be performed by them to date under each Halter Marine
Material Contract, except where such noncompliance, individually or in the
aggregate, would not have a Halter Marine Material Adverse Effect. Neither
Halter Marine nor any Halter Marine Subsidiary knows of, or has received notice
of, any violation or default under (nor does there exist any condition which
with the passage of time or the giving of notice would cause such a violation
of or default under) any Halter Marine Material Contract or any other loan or
credit agreement, note, bond, mortgage, indenture or lease, or any other
contract, agreement, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that would not, individually or in the aggregate, result in a Halter
Marine Material Adverse Effect. Set forth in Section 3.09(c) of the Halter
Marine Disclosure Schedule is a description of any material changes to the
amount and terms of the indebtedness of Halter Marine and the Halter Marine
Subsidiaries from that described in the notes to the financial statements
incorporated in Halter Marine's Form 10-K for the year ended March 31, 1998.
SECTION 3.10. Litigation. Except as disclosed in the Halter Marine SEC
Filings or in Section 3.10 of the Halter Marine Disclosure Schedule, as of the
date hereof there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Halter Marine, threatened in writing against
Halter Marine or any Halter Marine Subsidiary by or before any Governmental
Entity that (a) individually or in the aggregate, is reasonably likely to have
a Halter Marine Material Adverse Effect or (b) challenges the validity or
propriety, or seeks to prevent consummation of, the transactions contemplated
by this Agreement. Except as disclosed in the Halter Marine SEC Filings or in
Section 3.10 of the Halter Marine Disclosure Schedule, neither Halter Marine
nor any Halter Marine Subsidiary is subject to any outstanding order, writ,
injunction or decree that has had or, insofar as can be reasonably foreseen,
individually or in the aggregate, would have a Halter Marine Material Adverse
Effect.
SECTION 3.11. Environmental Matters. Except as disclosed in the Halter
Marine SEC Filings or in Section 3.11 of the Halter Marine Disclosure Schedule
or as would not, individually or in the aggregate, have a Halter Marine
Material Adverse Effect:
(a) Halter Marine and the Halter Marine Subsidiaries (i) are in
compliance with all, and are not subject to any liability pursuant to,
applicable Environmental Laws (as defined below), (ii) hold or have applied
for all Environmental Permits (as defined below) and (iii) are in
compliance with their respective Environmental Permits;
(b) neither Halter Marine nor any Halter Marine Subsidiary has received
any written notice, demand, letter, claim, request for information or other
written communication alleging that Halter Marine or any of its
Subsidiaries may be in violation of, or liable under, any Environmental
Law;
(c) neither Halter Marine nor any Halter Marine Subsidiary (i) has
entered into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials (as defined below) and, to the knowledge of Halter Marine, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto, or (ii) is an indemnitor in connection with
any threatened or asserted claim by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials; and
(d) none of the real property owned or leased by Halter Marine or any
Halter Marine Subsidiary is listed or, to the knowledge of Halter Marine,
proposed for listing on the "National Priorities List" or the Comprehensive
Environmental Response, Compensation and Liability Information Systems
under CERCLA, or any similar state or foreign list of sites requiring
investigation or cleanup, in each case as updated through the Effective
Time.
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(e) No Hazardous Material has been released, discharged or disposed of
at, to or from, or transported offsite from, any property currently owned
or operated by Halter Marine or any Halter Marine Subsidiary or, during the
period of such ownership or operation, any property formerly owned or
operated by Halter Marine or any Halter Marine Subsidiary.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the Effective Date.
"Environmental Laws" means any federal, state, local or foreign statute,
law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree, judgment,
stipulation, injunction, permit, authorization, policy, opinion, or agency
requirement, in each case having the force and effect of law, relating to
the pollution, protection, investigation or restoration of the environment,
health and safety or natural resources, including, without limitation,
those relating to the use, handling, presence, transportation, treatment,
storage, disposal, release, threatened release or discharge of Hazardous
Materials or noise, odor, wetlands, pollution, contamination or any injury
or threat of injury to persons or property.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under or issued pursuant
to any applicable Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (b) any chemical, material or
other substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
SECTION 3.12. Trademarks, Patents and Copyrights. Except as set forth in
Section 3.12 of the Halter Marine Disclosure Schedule, or to the extent the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), individually or in the aggregate, would not have a Halter Marine
Material Adverse Effect, Halter Marine and each of the Halter Marine
Subsidiaries own or possess adequate licenses or other legal rights to use all
patents, patent rights, trademarks, trademark rights, trade names, trade dress,
trade name rights, copyrights, service marks, trade secrets, software, mailing
lists, mask works, know-how and other proprietary rights and information,
including all applications with respect thereto (collectively, "Proprietary
Rights") used or held for use in connection with the business of Halter Marine
and the Halter Marine Subsidiaries as currently conducted or as contemplated to
be conducted, and Halter Marine is unaware of any assertion or claim
challenging the validity of any of the foregoing. The conduct of the business
of Halter Marine and the Halter Marine Subsidiaries as currently conducted and
as contemplated to be conducted did not, does not and will not infringe in any
way any Proprietary Rights of any third party that, individually or in the
aggregate, could have a Halter Marine Material Adverse Effect. To Halter
Marine's knowledge, there are no infringements of any Proprietary Rights owned
by or licensed by or to Halter Marine or any Halter Marine Subsidiary that,
individually or in the aggregate, could have a Halter Marine Material Adverse
Effect.
SECTION 3.13. Taxes. (a) Except for such matters as would not have a Halter
Marine Material Adverse Effect, (i) Halter Marine and the Halter Marine
Subsidiaries have timely filed or will timely file all returns and reports
required to be filed by them with any taxing authority with respect to Taxes
(as defined below) for any period ending on or before the Effective Time,
taking into account any extension of time to file granted to or obtained on
behalf of Halter Marine and the Halter Marine Subsidiaries, (ii) all Taxes that
are due (whether or not shown to be due on such returns or reports) prior to
the Effective Time have been paid or will be paid (other than Taxes that (1)
are not yet delinquent or (2) are being contested in good faith and have not
been finally determined), (iii) as of the date hereof, no deficiency for any
Tax has been asserted or assessed by a taxing authority against Halter Marine
or any of the Halter Marine Subsidiaries, which deficiency has not been paid
other than any deficiency being contested in good faith and (iv) Halter Marine
and the Halter Marine Subsidiaries have provided adequate reserves (in
accordance with GAAP) in their financial statements for any
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Taxes that have not been paid, whether or not shown as being due on any
returns. As used in this Agreement, "Taxes" shall mean any and all taxes, fees,
levies, duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any Governmental Entity or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchise, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customs duties, tariffs and similar charges.
(b) To the best of Halter Marine's knowledge, there are no material disputes
pending, or claims asserted in writing for, Taxes or assessments upon Halter
Marine or any of its Subsidiaries, nor has Halter Marine or any of its
Subsidiaries been requested in writing to give any currently effective waivers
extending the statutory period of limitation applicable to any federal or state
income tax return for any period which disputes, claims, assessments or waivers
are reasonably likely to have a Halter Marine Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of Halter Marine or
any of the Halter Marine Subsidiaries except liens for current Taxes not yet
due and except for liens that have not had and are not reasonably likely to
have a Halter Marine Material Adverse Effect.
(d) Neither Halter Marine nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by Halter Marine or any of
its Subsidiaries, and the IRS has not initiated or proposed any such adjustment
or change in accounting method, in either case which adjustment or change has
had or is reasonably likely to have a Halter Marine Material Adverse Effect.
(e) Except as set forth in the financial statements described in Section
3.06, neither Halter Marine nor any of its Subsidiaries has entered into a
transaction that is being accounted for under the installment method of Section
453 of the Code, which would be reasonably likely to have a Halter Marine
Material Adverse Effect.
(f) Neither Halter Marine nor any of its Subsidiaries has made an election
under Section 341(f) of the Code.
(g) Except as set forth in Section 3.13(g) of the Halter Marine Disclosure
Schedule, neither Halter Marine nor any of the Halter Marine Subsidiaries is a
party to any agreement providing for the allocation, sharing or indemnification
of Taxes with any entity that is not, directly or indirectly, a wholly owned
corporate subsidiary of Halter Marine, other than agreements the consequences
of which are fully and adequately reserved for in the Halter Marine and Halter
Marine Subsidiaries financial statements.
(h) As of the time of the March 31, 1997 distribution of Halter Marine stock
by Trinity Industries, Inc. there had been no negotiations, agreements or
arrangements regarding the acquisition of the stock or assets of Halter Marine
by Friede Goldman or the acquisition of the stock or assets of Friede Goldman
by Halter Marine between (1) the management or the Board of Directors of Halter
Marine or Halter Marine's representatives in their capacity as such and (2) the
management or the Board of Directors of Friede Goldman or Friede Goldman's
representatives in their capacity as such.
(i) As of the time of the March 31, 1997 distribution of Halter Marine stock
by Trinity Industries, Inc., neither the management nor the Board of Directors
of Halter Marine had a plan or intent to effect the acquisition of the stock of
Halter Marine by Friede Goldman (or anyone else) or a plan or intent to engage
in any other transaction that would have caused the Halter Marine stockholders
(as determined immediately after the March 31, 1997 distribution of Halter
Marine stock by Trinity Industries, Inc.) to fail to own Halter Marine stock
constituting "control" within the meaning of Section 368(c) of the Code.
(j) As of the time immediately after the March 31, 1997 distribution of
Halter Marine stock by Trinity Industries, Inc., the management of Halter
Marine was not aware of any plan or intention of any Halter Marine
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stockholder that individually owned 5 percent or more of the stock of Halter
Marine (as determined immediately after the March 31, 1997 distribution of
Halter Marine stock by Trinity Industries, Inc.) (each such stockholder
referred to as a "5% Stockholder") to transfer Halter Marine stock after the
distribution that would have caused, individually or in aggregate with
transfers by other 5% Stockholders, the Halter Marine stockholders (as
determined immediately after the March 31, 1997 distribution of Halter Marine
stock by Trinity Industries, Inc.) to fail to own Halter Marine stock
constituting "control" within the meaning of Section 368(c) of the Code.
SECTION 3.14. Opinion of Financial Advisor. Donaldson Lufkin & Jenrette
Incorporated ("DLJ") has delivered to the Board of Directors of Halter Marine
its written opinion dated as of June 1, 1999, a copy of which opinion has been
delivered to Friede Goldman, that, as of such date, the Exchange Ratio is fair
from a financial point of view to the holders of Halter Marine Common Stock.
SECTION 3.15. Vote Required. The Halter Marine Stockholder Approval is the
only vote of the holders of any class or series of capital stock of Halter
Marine necessary to approve the Merger.
SECTION 3.16. Brokers. No broker, finder or investment banker (other than
DLJ) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Halter Marine or any Halter Marine Subsidiary. Halter Marine has heretofore
made available to Friede Goldman a complete and correct copy of all agreements
between Halter Marine and DLJ pursuant to which such firm would be entitled to
any payment relating to the Merger.
SECTION 3.17. Insurance. Halter Marine maintains insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in businesses similar to
that of Halter Marine (taking into account the cost and availability of such
insurance).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FRIEDE GOLDMAN
Except as set forth in the Disclosure Schedule delivered by Friede Goldman
to Halter Marine prior to the execution of this Agreement (the "Friede Goldman
Disclosure Schedule"), which shall identify exceptions by specific Section
references, Friede Goldman hereby represents and warrants to Halter Marine as
follows:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of Friede
Goldman and each other subsidiary of Friede Goldman (collectively, the "Friede
Goldman Subsidiaries") has been duly organized, and is validly existing and in
good standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Friede Goldman Material Adverse Effect (as defined below).
Each of Friede Goldman and the other Friede Goldman Subsidiaries is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing or good
standing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Friede Goldman Material Adverse Effect. For purposes of this Agreement, "Friede
Goldman Material Adverse Effect" means any change in or effect on the business
of Friede Goldman and the Friede Goldman Subsidiaries that is, or is reasonably
likely to be, materially adverse to the business, financial condition, results
of operations or prospects of Friede Goldman and the Friede Goldman
Subsidiaries taken as a whole other than any change, effect, event or
occurrence relating to (i) the United States economy in general, (ii) this
Agreement or the transactions contemplated hereby or the announcement thereof,
(iii) the failure to obtain applicable regulatory or third party consents that
may be required in connection with this Agreement or the transactions
contemplated hereby, or (iv) to the offshore oil services industry in general;
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provided, however, that a Friede Goldman Material Adverse Effect shall include
any change in or effect on the business of Friede Goldman and the Friede
Goldman Subsidiaries that is, or is reasonably likely to be, materially adverse
to the business, financial condition, results of operations or prospects of
Friede Goldman and the Friede Goldman Subsidiaries taken as a whole if such
change or effect is significantly more adverse to Friede Goldman and the Friede
Goldman Subsidiaries taken as a whole than to the offshore oil services
industry in general. Section 4.01 of the Friede Goldman Disclosure Schedule
sets forth a complete and correct list of all of the Friede Goldman
Subsidiaries. Friede Goldman has made available to Halter Marine prior to the
execution of this Agreement complete and correct copies of its certificate of
incorporation and by-laws, as amended to date.
SECTION 4.02. Capitalization. The authorized capital stock of Friede Goldman
consists of (a) 125,000,000 shares of Friede Goldman Common Stock and (b)
5,000,000 shares of preferred stock, par value $0.01 per share (the "Friede
Goldman Preferred Stock"). As of April 30, 1999, (i) 23,356,572 shares of
Friede Goldman Common Stock were issued and outstanding, all of which were
validly issued and fully paid, nonassessable and free of preemptive rights, and
(ii) no shares of Friede Goldman Common Stock were held in the treasury of
Friede Goldman or by the Friede Goldman Subsidiaries. As of April 30, 1999, (i)
2,335,657 shares of Friede Goldman Common Stock were reserved for issuance upon
exercise of current stock options granted pursuant to the stock based plans set
forth in Section 4.08(a) of the Friede Goldman Disclosure Schedule (the "Friede
Goldman Stock Option Plans"), upon exercise of future grants of stock options
and upon conversion or exchange of Friede Goldman Preferred Stock and (ii) no
shares of Preferred Stock were issued and outstanding. Except for (i) Friede
Goldman Options granted pursuant to the Friede Goldman Stock Option Plans, (ii)
the rights (the "Friede Goldman Preferred Stock Rights") issued pursuant to the
Friede Goldman Stockholder Rights Agreement dated as of December 7, 1998
between Friede Goldman and American Stock Transfer & Trust Company as Rights
Agent (the "Friede Goldman Rights Agreement"), (iii) shares issuable upon
conversion of Friede Goldman Preferred Stock or (iv) agreements or arrangements
described in Section 4.02 or Section 4.08 of the Friede Goldman Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Friede Goldman or any
Friede Goldman Subsidiary is a party or by which Friede Goldman or any Friede
Goldman Subsidiary is bound relating to the issued or unissued capital stock of
Friede Goldman or any Friede Goldman Subsidiary, or securities convertible into
or exchangeable for such capital stock or obligating Friede Goldman or any
Friede Goldman Subsidiary to issue or sell any shares of capital stock, or
securities convertible into or exchangeable for such capital stock of, or other
equity interests in, Friede Goldman or any Friede Goldman Subsidiary. Since
April 30, 1999, Friede Goldman has not issued any shares of its capital stock,
or securities convertible into or exchangeable for such capital stock, other
than those shares of capital stock reserved for issuance as set forth in this
Section 4.02 or as set forth in Section 4.02 of the Friede Goldman Disclosure
Schedule. All shares of Friede Goldman Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The shares of Friede Goldman Common Stock to be issued in
connection with the Merger, when issued as contemplated herein, will be duly
authorized, validly issued, fully paid and nonassessable and will not be issued
in violation of any preemptive rights. Except as set forth in this Section 4.02
or Section 4.02 of the Friede Goldman Disclosure Schedule, there are no
outstanding contractual obligations of Friede Goldman or any Friede Goldman
Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights
of, (iii) requiring the repurchase, redemption or disposition of, (iv)
requiring the registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, any shares of Friede Goldman Common Stock
or any capital stock of any Friede Goldman Subsidiary. Each outstanding share
of capital stock of each Friede Goldman Subsidiary is duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, is owned by
Friede Goldman or another Friede Goldman Subsidiary and is free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Friede Goldman's or such other Friede
Goldman Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever, except where failure to own such shares free and clear would
not, individually or in the aggregate, have a Friede Goldman Material Adverse
Effect. Except as set forth in Section 4.02 of the Friede Goldman Disclosure
Schedule, there are no
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material outstanding contractual obligations of Friede Goldman or any Friede
Goldman Subsidiary to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in, any Friede Goldman Subsidiary or
any other person, other than guarantees by Friede Goldman of any indebtedness
of any Friede Goldman Subsidiary.
SECTION 4.03. Authority Relative to This Agreement. Friede Goldman has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated herein to be consummated by Friede Goldman. Each of (i) the
execution and delivery of this Agreement by Friede Goldman and the consummation
by Friede Goldman of such transactions, (ii) the increase in the number of
directors of Friede Goldman to eleven (11) (the "Board Size Increase") and
(iii) the amendments to the Friede Goldman Stock Option Plan pursuant to
Section 6.07 (the "Stock Option Plan Amendment") has been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Friede Goldman are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby other than, with respect to the
approval of (i) the Merger by the affirmative vote of the holders of a majority
of the outstanding shares of Friede Goldman Common Stock and (ii) the Board
Size Increase and the Stock Option Plan Amendment by the affirmative vote of a
majority of votes cast by the holders of outstanding shares of Friede Goldman
Common Stock at a meeting of Friede Goldman Stockholders duly held for such
purposes (together, the "Friede Goldman Stockholder Approval"). The Board of
Directors of Friede Goldman, at a meeting duly called and held, has (i)
determined that this Agreement and the transactions contemplated hereby
(including the Merger) are fair to and in the best interests of Friede
Goldman's Stockholders, (ii) approved, adopted and declared the advisability of
this Agreement and the transactions contemplated hereby (including the Merger,
the Board Size Increase and the Stock Option Plan Amendment), (iii) resolved to
recommend approval and adoption of the Merger, the Board Size Increase and the
Stock Option Plan Amendment by its stockholders and (iv) directed that the
Merger Agreement, Board Size Increase and the Stock Option Plan Amendment be
submitted to Friede Goldman's stockholders for approval at a meeting of such
stockholders. This Agreement has been duly authorized and validly executed and
delivered by Friede Goldman and constitutes the legal, valid and binding
obligation of Friede Goldman, enforceable against Friede Goldman in accordance
with its terms. Friede Goldman has taken all action necessary to render the
Friede Goldman Preferred Stock Rights issued pursuant to the terms of the
Friede Goldman Rights Agreement inapplicable to, or not exercisable as a result
of, the Merger, the execution and delivery of this Agreement or the
transactions contemplated by this Agreement, provided that no stockholder of
Halter Marine would beneficially own 15% or more of the outstanding shares of
Friede Goldman Common Stock at the Effective Time.
SECTION 4.04. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Friede Goldman do not, and the performance of
this Agreement by Friede Goldman will not, (i) assuming the Friede Goldman
Stockholder Approval is obtained, conflict with or violate any provision of the
Articles of Incorporation or By-laws of Friede Goldman or any equivalent
organizational documents of any Friede Goldman Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.04(b) have been obtained and all filings described in Section 4.04(b) have
been made, conflict with or violate any foreign or domestic Law applicable to
Friede Goldman or any Friede Goldman Subsidiary or by which any property or
asset of Friede Goldman or any Friede Goldman Subsidiary is bound or affected
or (iii) except as set forth in Section 4.04(a) of the Friede Goldman
Disclosure Schedule, result in any breach of, any loss of any benefit under or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Friede Goldman or any Friede
Goldman Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, Friede Goldman Permit (as defined in Section 4.05),
other instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
that would neither, individually or in the aggregate, (A) have a Friede Goldman
Material Adverse Effect nor (B) prevent or materially delay the performance of
this Agreement by Friede Goldman.
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(b) Except as set forth in Section 4.04(b) of the Friede Goldman Disclosure
Schedule, the execution and delivery of this Agreement by Friede Goldman do
not, and the performance of this Agreement by Friede Goldman will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign Governmental Entity, except (i) for
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the NYSE, premerger notification requirements of the HSR Act, filing and
recordation of the Certificate of Merger and Articles of Merger, as required by
the DGCL and MBCA, respectively, and as otherwise set forth in Section 4.04(b)
of the Friede Goldman Disclosure Schedule and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (A) prevent or materially delay consummation of the
Merger, (B) otherwise prevent Friede Goldman from performing its material
obligations under this Agreement or (C) individually or in the aggregate, have
a Friede Goldman Material Adverse Effect.
SECTION 4.05. Permits; Compliance. Each of Friede Goldman and the Friede
Goldman Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals, clearances and orders of any Governmental Entity
necessary for Friede Goldman or any Friede Goldman Subsidiary to own, lease and
operate its properties or to carry on their respective businesses substantially
in the manner described in the Friede Goldman SEC Filings (as defined herein)
and as it is now being conducted (the "Friede Goldman Permits"), and all such
Friede Goldman Permits are valid, and in full force and effect, except where
the failure to have, or the suspension or cancellation of, any of the Friede
Goldman Permits would neither, individually or in the aggregate, (a) have a
Friede Goldman Material Adverse Effect nor (b) prevent or materially delay the
performance of this Agreement by Friede Goldman, and, as of the date of this
Agreement, no suspension or cancellation of any of the Friede Goldman Permits
is pending or, to the knowledge of Friede Goldman, threatened, except where the
failure to have, or the suspension or cancellation of, any of the Friede
Goldman Permits would neither, individually or in the aggregate, (x) have a
Friede Goldman Material Adverse Effect nor (y) prevent or materially delay the
performance of this Agreement by Friede Goldman. Neither Friede Goldman nor any
Friede Goldman Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to Friede Goldman or any Friede Goldman Subsidiary or by
which any property, asset or operation of Friede Goldman or any Friede Goldman
Subsidiary is bound or affected or (ii) any Friede Goldman Permits, except for
any such conflicts, defaults or violations that would neither, individually or
in the aggregate, (A) have a Friede Goldman Material Adverse Effect nor (B)
prevent or materially delay the performance of this Agreement by Friede
Goldman.
SECTION 4.06. SEC Filings; Financial Statements. (a) Friede Goldman has
timely filed all registration statements, prospectuses, forms, reports and
documents required to be filed by it under the Securities Act or the Exchange
Act, as the case may be, since July 21, 1997 (collectively, the "Friede Goldman
SEC Filings"). The Friede Goldman SEC Filings (i) complied as to form in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No Friede Goldman Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Friede Goldman SEC Filings was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the consolidated financial position of Friede Goldman and the
consolidated Friede Goldman Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments that were not and are not expected, individually or in the
aggregate, to have a Friede Goldman Material Adverse Effect). The books and
records of Friede Goldman and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
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(c) Except as and to the extent set forth on the consolidated balance sheet
of Friede Goldman and the consolidated Friede Goldman Subsidiaries as of
December 31, 1998 included in Friede Goldman's Form 10-K for the year ended
December 31, 1998, including the notes thereto, neither Friede Goldman nor any
Friede Goldman Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet or in notes thereto prepared in accordance with
GAAP, except for liabilities or obligations (i) disclosed in the Friede Goldman
SEC Filings filed under the Securities Act or the Exchange Act prior to the
date hereof or (ii) incurred in the ordinary course of business since December
31, 1998 that would neither, individually or in the aggregate, (A) have a
Friede Goldman Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Friede Goldman.
SECTION 4.07. Absence of Certain Changes or Events. Since December 31, 1998,
except as contemplated by or as disclosed in this Agreement, as set forth in
Section 4.07 of the Friede Goldman Disclosure Schedule or as disclosed in any
Friede Goldman SEC Filing filed prior to the date of this Agreement, Friede
Goldman and the Friede Goldman Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (a) any Friede Goldman Material Adverse
Effect or an event or development (including in connection with the Merger)
that would, individually or in the aggregate, have a Friede Goldman Material
Adverse Effect, (b) any event that could reasonably be expected to prevent or
materially delay the performance of this Agreement by Friede Goldman or (c) any
action taken by Friede Goldman or any of the Friede Goldman Subsidiaries during
the period from December 31, 1998 through the date of this Agreement that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of Section 5.02.
SECTION 4.08. Employee Benefit Plans; Labor Matters. (a) Section 4.08(a) of
the Friede Goldman Disclosure Schedule sets forth a true and complete list as
of the date hereof of each material employee benefit plan, program, arrangement
and contract (including, without limitation, any "employee benefit plan", as
defined in section 3(3) of ERISA, maintained or contributed to by Friede
Goldman or any Friede Goldman Subsidiary, or with respect to which Friede
Goldman or any Friede Goldman Subsidiary could incur material liability under
section 4069, 4212(c) or 4204 of ERISA (the "Friede Goldman Benefit Plans").
With respect to each Friede Goldman Benefit Plan that is a stock-based plan,
Friede Goldman has heretofore delivered to Halter Marine a true and complete
copy of such Friede Goldman Benefit Plan. With respect to each other Friede
Goldman Benefit Plan, Friede Goldman will make available to Halter Marine,
promptly after the date hereof, a true and complete copy of such Friede Goldman
Benefit Plan and (i) the most recent annual report (Form 5500) filed with the
IRS, if any (ii) the most recent actuarial report or valuation (if any)
relating to any Friede Goldman Benefit Plan subject to Title IV of ERISA and
(iii) the most recent determination letter, if any, issued by the IRS with
respect to any Friede Goldman Benefit Plan qualified under Section 401(a) of
the Code.
(b) With respect to each Friede Goldman Benefit Plan that is subject to
Title IV of ERISA, (A) no "reportable event" (within the meaning of Section
4043 of ERISA) has occurred with respect to any Friede Goldman Benefit Plan for
which the 30-day notice requirement has not been waived, except where such
reportable event would not have a Friede Goldman Material Adverse Effect, and
(B) no condition exists that would subject Friede Goldman or any ERISA
Affiliate to any fine under Section 4071 of ERISA, except where such condition
would not have a Friede Goldman Material Adverse Effect. Except as set forth in
Section 4.08(b) of the Friede Goldman Disclosure Schedule, no Friede Goldman
Benefit Plan is a "multiemployer pension plan" (as such term is defined in
section 3(37) of ERISA).
(c) With respect to the Friede Goldman Benefit Plans, no event has occurred
and, to the knowledge of Friede Goldman, there exists no condition or set of
circumstances in connection with which Friede Goldman or any Friede Goldman
Subsidiary could be subject to any liability under the terms of such Friede
Goldman Benefit Plans, ERISA, the Code or any other applicable Law that,
individually or in the aggregate, would have a Friede Goldman Material Adverse
Effect. Each of the Friede Goldman Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws and
administrative or governmental rules and regulations, including, but not
limited to, ERISA and the Code, except where a violation of any such
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law, rule or regulation would not have a Friede Goldman Material Adverse
Effect. Each of the Friede Goldman Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter as to such qualification from the IRS, and no event has
occurred, either by reason of any action or failure to act, that would cause
the loss of any such qualification, except where such loss of qualification
would not have a Friede Goldman Material Adverse Effect. Except as set forth on
Section 4.08(c) of the Friede Goldman Disclosure Schedule, no Friede Goldman
Benefit Plan provides benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former employees
of Friede Goldman or any Friede Goldman Subsidiary beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee pension
plan" (as such term is defined in Section 3(2) of ERISA), (iii) deferred
compensation benefits accrued as liabilities on the books of Friede Goldman or
any Friede Goldman Subsidiary, or (iv) benefits the full cost of which is borne
by the current or former employee (or his beneficiary). All contributions or
other amounts payable by Friede Goldman or any Friede Goldman Subsidiary as of
the Effective Time with respect to each Friede Goldman Benefit Plan in respect
of current or prior plan years have been paid or accrued in accordance with
GAAP and Section 412 of the Code.
(d) Except as set forth in Section 4.08(d) of the Friede Goldman Disclosure
Schedule, Friede Goldman and the Friede Goldman Subsidiaries have no
obligations or liabilities (whether accrued, absolute, contingent or otherwise)
with respect to any collective bargaining agreements that, individually or in
the aggregate, would have a Friede Goldman Material Adverse Effect.
(e) Except as set forth in Section 4.08(e) of the Friede Goldman Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of Friede Goldman or any of its affiliates from Friede Goldman or
any of its affiliates under any Friede Goldman Benefit Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Friede
Goldman Benefit Plan or (iii) result in any acceleration of the time of payment
or vesting of any material benefits.
(f) Friede Goldman is currently in compliance with all applicable laws,
regulations and rules relating to the employment of labor, including those
related to wages, hours and the payment of withholding taxes and other sums
required by a governmental authority and has withheld and paid to the
appropriate government authority or is holding for payment not yet due to such
authority all amounts required to be withheld on behalf of any of Friede
Goldman's employees, and is not liable for arrears of wages, taxes, penalties
or other sums for failure to comply with the foregoing.
SECTION 4.09. Contracts; Debt Instruments. Except as disclosed in or
attached as exhibits to the Friede Goldman SEC Filings or as disclosed in
Section 4.09(a) of the Friede Goldman Disclosure Schedule, neither Friede
Goldman nor any of the Friede Goldman Subsidiaries is a party to or bound by
any contract (i) except as set forth in Section 4.08(e) of the Friede Goldman
Disclosure Schedule, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, (ii) as of the date hereof, any vessel or
customer contract that is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC), that requires expenditures in
excess of $10 million or that requires annual expenditures in excess of $10
million and is not cancelable within one year, that has not been filed or
incorporated by reference in the Friede Goldman SEC Filings, (iii) that
contains any material non-compete provisions with respect to any line of
business or geographic area in which business is conducted with respect to
Friede Goldman or any of the Friede Goldman Subsidiaries or that restricts the
conduct of any line of business by Friede Goldman or any of the Friede Goldman
Subsidiaries or any geographic area in which Friede Goldman or any of the
Friede Goldman Subsidiaries may conduct business, in each case in any material
respect, (iv) that would prohibit or materially delay the consummation of the
Merger or any of the transactions contemplated by this Agreement, (v) that
obligates Friede Goldman or any of the Friede Goldman Subsidiaries to make any
compensation
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payments or issue or pay anything of value to any director, executive officer,
key employee or consultant, or (vi) that is a loan, credit or similar contract.
Each contract, arrangement, commitment or understanding of the type described
in this Section 4.09, whether or not set forth in Section 4.09 of the
Disclosure Schedule, is referred to herein as a "Friede Goldman Material
Contract." Each Friede Goldman Material Contract is valid and binding on Friede
Goldman or any of the Friede Goldman Subsidiaries, as applicable, and in full
force and effect, and Friede Goldman and each of the Friede Goldman
Subsidiaries have in all material respects performed all obligations required
to be performed by them to date under each Friede Goldman Material Contract,
except where such noncompliance, individually or in the aggregate, would not
have a Friede Goldman Material Adverse Effect. Neither Friede Goldman nor any
Friede Goldman Subsidiary knows of, or has received notice of, any violation or
default under (nor does there exist any condition which with the passage of
time or the giving of notice would cause such a violation of or default under)
any Friede Goldman Material Contract or any other loan or credit agreement,
note, bond, mortgage, indenture or lease, or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that would
not, individually or in the aggregate, result in a Friede Goldman Material
Adverse Effect. Set forth in Section 4.09(c) of the Friede Goldman Disclosure
Schedule is a description of any material changes to the amount and terms of
the indebtedness of Friede Goldman and the Friede Goldman Subsidiaries from
that described in the notes to the financial statements incorporated in Friede
Goldman's Form 10-K for the year ended December 31, 1998.
SECTION 4.10. Litigation. Except as disclosed in the Friede Goldman SEC
Filings or in Section 4.10 of the Friede Goldman Disclosure Schedule, as of the
date hereof, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Friede Goldman, threatened in writing against
Friede Goldman or any Friede Goldman Subsidiary by or before any Governmental
Entity that (a) individually or in the aggregate, is reasonably likely to have
a Friede Goldman Material Adverse Effect or (b) challenges the validity or
propriety, or seeks to prevent consummation of, the transactions contemplated
by this Agreement. Except as disclosed in the Friede Goldman SEC Filings or in
Section 4.10 of the Friede Goldman Disclosure Schedule, neither Friede Goldman
nor any Friede Goldman Subsidiary is subject to any outstanding order, writ,
injunction or decree that has had or, insofar as can be reasonably foreseen,
individually or in the aggregate, would have a Friede Goldman Material Adverse
Effect.
SECTION 4.11. Environmental Matters. Except as disclosed in the Friede
Goldman SEC Filings or in Section 4.11 of the Friede Goldman Disclosure
Schedule or as would not, individually or in the aggregate, have a Friede
Goldman Material Adverse Effect:
(a) Friede Goldman and the Friede Goldman Subsidiaries (i) are in
compliance with all, and are not subject to any liability pursuant to,
applicable Environmental Laws, (ii) hold or have applied for all
Environmental Permits and (iii) are in compliance with their respective
Environmental Permits;
(b) neither Friede Goldman nor any Friede Goldman Subsidiary has
received any written notice, demand, letter, claim, request for information
or other written communication alleging that Friede Goldman or any of its
Subsidiaries may be in violation of, or liable under, any Environmental
Law;
(c) neither Friede Goldman nor any Friede Goldman Subsidiary (i) has
entered into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and, to the knowledge of Friede Goldman, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect thereto, or (ii) is an indemnitor in connection with any threatened
or asserted claim by any third-party indemnitee for any liability under any
Environmental Law or relating to any Hazardous Materials;
(d) none of the real property owned or leased by Friede Goldman or any
Friede Goldman Subsidiary is listed or, to the knowledge of Friede Goldman,
proposed for listing on the "National Priorities List" or the Comprehensive
Environmental Response, Compensation and Liability Information System under
CERCLA, or any similar state or foreign list of sites requiring
investigation or cleanup, in each case as updated through the Effective
Date; and
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(e) No Hazardous Material has been released, discharged or disposed of
at, to or from, or transported offsite from, any property currently owned
or operated by Friede Goldman or any Friede Goldman Subsidiary or, during
the period of such ownership or operation, any property formerly owned or
operated by Friede Goldman or any Friede Goldman Subsidiary.
SECTION 4.12. Trademarks, Patents and Copyrights. Except as set forth in
Section 4.12 of the Friede Goldman Disclosure Schedule, or to the extent the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), individually or in the aggregate, would not have a Friede Goldman
Material Adverse Effect, Friede Goldman and each of the Friede Goldman
Subsidiaries own or possess adequate licenses or other legal rights to use all
Proprietary Rights used or held for use in connection with the business of
Friede Goldman and the Friede Goldman Subsidiaries as currently conducted or as
contemplated to be conducted, and Friede Goldman is unaware of any assertion or
claim challenging the validity of any of the foregoing. The conduct of the
business of Friede Goldman and the Friede Goldman Subsidiaries as currently
conducted and as contemplated to be conducted did not, does not and will not
infringe in any way any Proprietary Rights of any third party that,
individually or in the aggregate, could have a Friede Goldman Material Adverse
Effect. To Friede Goldman's knowledge, there are no infringements of any
Proprietary Rights owned by or licensed by or to Friede Goldman or any Friede
Goldman Subsidiary that, individually or in the aggregate, could have a Friede
Goldman Material Adverse Effect.
SECTION 4.13. Taxes. (a) Except for such matters as would not have a Friede
Goldman Material Adverse Effect, (i) Friede Goldman and the Friede Goldman
Subsidiaries have timely filed or will timely file all returns and reports
required to be filed by them with any taxing authority with respect to Taxes
for any period ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of Friede Goldman
and the Friede Goldman Subsidiaries, (ii) all Taxes that are due (whether or
not shown to be due on such returns or reports) prior to the Effective Time
have been paid or will be paid (other than Taxes that (1) are not yet
delinquent or (2) are being contested in good faith and have not been finally
determined), (iii) as of the date hereof, no deficiency for any Tax has been
asserted or assessed by a taxing authority against Friede Goldman or any of the
Friede Goldman Subsidiaries, which deficiency has not been paid other than any
deficiency being contested in good faith and (iv) Friede Goldman and the Friede
Goldman Subsidiaries have provided adequate reserves (in accordance with GAAP)
in their financial statements for any Taxes that have not been paid, whether or
not shown as being due on any returns.
(b) To the best of Friede Goldman's knowledge, there are no material
disputes pending, or claims asserted in writing for, Taxes or assessments upon
Friede Goldman, or any of the Friede Goldman Subsidiaries, nor has Friede
Goldman or any of the Friede Goldman Subsidiaries been requested in writing to
give any currently effective waivers extending the statutory period of
limitation applicable to any federal or state income tax return for any period
which disputes, claims, assessments or waivers are reasonably likely to have a
Friede Goldman Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of Friede Goldman or
any of the Friede Goldman Subsidiaries except liens for current Taxes not yet
due and except for liens that have not had and are not reasonably likely to
have a Friede Goldman Material Adverse Effect.
(d) Neither Friede Goldman nor any of the Friede Goldman Subsidiaries has
been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by
Friede Goldman or any of its Subsidiaries, and the IRS has not initiated or
proposed any such adjustment or change in accounting method, in either case
which adjustment or change has had or is reasonably likely to have a Friede
Goldman Material Adverse Effect.
(e) Except as set forth in the financial statements described in Section
4.06, neither Friede Goldman nor any of the Friede Goldman Subsidiaries has
entered into a transaction that is being accounted for under the installment
method of Section 453 of the Code, which would be reasonably likely to have a
Friede Goldman Material Adverse Effect.
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(f) Neither Friede Goldman nor any of its Subsidiaries has made an election
under Section 341(f) of the Code.
(g) Neither Friede Goldman nor any of the Friede Goldman Subsidiaries is a
party to any agreement providing for the allocation, sharing or indemnification
of Taxes with any entity that is not, directly or indirectly, a wholly owned
corporate subsidiary of Friede Goldman, other than agreements the consequences
of which are fully and adequately reserved for in the Friede Goldman and Friede
Goldman Subsidiaries financial statements.
(h) As of the time of the March 31, 1997 distribution of Halter Marine stock
by Trinity Industries, Inc. there had been no negotiations, agreements or
arrangements regarding the acquisition of the stock or assets of Halter Marine
by Friede Goldman or the acquisition of the stock or assets of Friede Goldman
by Halter Marine between (1) the management or the Board of Directors of Friede
Goldman or Friede Goldman's representatives in their capacity as such and (2)
the management or the Board of Directors of Trinity Industries, Inc. or Trinity
Industries, Inc.'s representatives or the management or the Board of Directors
of Halter Marine or Halter Marine's representatives in their capacity as such.
SECTION 4.14. Opinion of Financial Advisor. Jefferies & Company, Inc.
("Jefferies") has delivered to the Board of Directors of Friede Goldman its
written opinion dated as of June 1, 1999, a copy of which opinion has been
delivered to Halter Marine, that, as of such date, the Exchange Ratio is fair
from a financial point of view to the holders of Friede Goldman Common Stock.
SECTION 4.15. Vote Required. The Friede Goldman Stockholder Approval is the
only vote of the holders of any class or series of capital stock of Friede
Goldman necessary to approve the transactions contemplated by this Agreement.
SECTION 4.16. Brokers. No broker, finder or investment banker (other than
Jefferies) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Friede Goldman or any Friede Goldman Subsidiary. Friede Goldman has heretofore
made available to Halter Marine a complete and correct copy of all agreements
between Friede Goldman and Jefferies pursuant to which such firms would be
entitled to any payment relating to the Merger.
SECTION 4.17. Insurance. Friede Goldman maintains insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in businesses similar to
that of Friede Goldman (taking into account the cost and availability of such
insurance).
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business by Halter Marine Pending the Closing.
Halter Marine agrees that, between the date of this Agreement and the Effective
Time, except as set forth in Section 5.01 of the Halter Marine Disclosure
Schedule or as contemplated by any other provision of this Agreement, unless
Friede Goldman shall otherwise agree in writing, which agreement shall not be
unreasonably withheld or delayed, (1) the business of Halter Marine and the
Halter Marine Subsidiaries shall be conducted only in, and Halter Marine and
the Halter Marine Subsidiaries shall not take any action except in, the
ordinary course of business consistent with past practice and (2) Halter Marine
shall use its reasonable best efforts to keep available the services of such of
the current officers, significant employees and consultants of Halter Marine
and the Halter Marine Subsidiaries and to preserve the current relationships of
Halter Marine and the Halter Marine Subsidiaries with such of the customers,
suppliers and other persons with which Halter Marine or any Halter Marine
Subsidiary has significant business relations as Halter Marine deems reasonably
necessary in order to preserve substantially intact its business organization.
By way of amplification and not limitation, except as set forth in Section 5.01
of Halter Marine Disclosure Schedule or as contemplated by any other provision
of this
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Agreement, the Board of Directors of Halter Marine shall not (unless required
by applicable Laws or stock exchange regulations) cause or permit Halter Marine
or any Halter Marine Subsidiary to, and shall neither cause nor permit any of
Halter Marine's affiliates (over which it exercises control), or any of their
officers, directors, employees and agents to, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or agree to do,
any of the following without the prior written consent of Friede Goldman, which
consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Certificate of Incorporation or By-
laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license, guarantee or encumbrance of, (i) any
shares of capital stock of Halter Marine or any Halter Marine Subsidiary of
any class, or securities convertible or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights of
any kind to acquire any shares of such capital stock or such convertible or
exchangeable securities, or any other ownership interest (including,
without limitation, any phantom interest), of Halter Marine or any Halter
Marine Subsidiary or (ii) except in the ordinary course of business and in
a manner consistent with past practice, any property or assets of Halter
Marine or any Halter Marine Subsidiary, except (A) the issuance of Halter
Marine Common Stock upon the exercise of Halter Marine Options,
(B) pursuant to contracts or agreements in force at the date of this
Agreement, (C) sales, transfers or dispositions of receivables in
connection with the securitization of such receivables or (D) the award of
options pursuant to the Halter Marine Stock Option Plan in connection with
promotions and new employee hires in the ordinary course of business and
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (other than dividends paid by the Halter Marine Subsidiaries
to Halter Marine or to other Halter Marine Subsidiaries in the ordinary
course) or enter into any agreement with respect to the voting of its
capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) except as disclosed in Section 5.01(e) of the Halter Marine
Disclosure Schedule, (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any
division thereof (other than a wholly owned Halter Marine Subsidiary) or
any assets, other than (A) acquisitions of assets in the ordinary course of
business consistent with past practice and (B) any other acquisitions for
consideration that are not, in the case of clause (A) or clause (B)
individually, in excess of $1,000,000; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person for borrowed money, except for (A) indebtedness
for borrowed money incurred in the ordinary course of business and
consistent with past practice and (B) other indebtedness for borrowed money
with a maturity of not more than one year in a principal amount not, in the
aggregate, in excess of $5,000,000; (iii) terminate, cancel or request any
material change in, or agree to any material change in, any Halter Marine
Material Contract or enter into any contract or agreement material to the
business, results of operations or financial condition of Halter Marine and
Halter Marine Subsidiaries taken as a whole, in either case other than in
the ordinary course of business, consistent with past practice; (iv) make
or authorize any capital expenditure, other than capital expenditures that
are not individually in excess of $1,000,000 for Halter Marine and the
Halter Marine Subsidiaries taken as a whole; or (v) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed,
would not be permitted under this Section 5.01(e);
(f) except as may be required by contractual commitments or corporate
policies with respect to severance or termination pay in existence on the
date hereof as disclosed in Section 3.08 of the Halter Marine Disclosure
Schedule: (i) increase the compensation payable or to become payable to its
officers or employees (except for increases in accordance with past
practices in salaries or wages of employees of
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Halter Marine or any Halter Marine Subsidiary which are not across-the-
board increases), (ii) grant any rights to severance or termination pay to,
or enter into any employment or severance agreement with, any director,
officer or other employee of Halter Marine or any Halter Marine Subsidiary,
or establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee, except as contemplated by
this Agreement or to the extent required by applicable Law or the terms of
a collective bargaining agreement or (iii) take any affirmative action to
accelerate the vesting of any stock-based compensation;
(g) take any action with respect to accounting policies or procedures,
other than actions in the ordinary course of business and consistent with
past practice or except as required by changes in GAAP;
(h) waive, release, assign, settle or compromise any material claims or
litigation except in the ordinary course of business and consistent with
past practice;
(i) make or revoke any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(j) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code;
(k) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision
of this Agreement, except, in each case, as may be required by applicable
law; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 5.02. Conduct of Business by Friede Goldman Pending the Closing.
Friede Goldman agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.02 of the Friede Goldman
Disclosure Schedule or as contemplated by any other provision of this
Agreement, unless Halter Marine shall otherwise agree in writing, which
agreement shall not be unreasonably withheld or delayed, (1) the businesses of
Friede Goldman and the Friede Goldman Subsidiaries shall be conducted only in,
and Friede Goldman and the Friede Goldman Subsidiaries shall not take any
action except in, the ordinary course of business consistent with past practice
and (2) Friede Goldman shall use its reasonable best efforts to keep available
the services of such of the current officers, significant employees and
consultants of Friede Goldman and the Friede Goldman Subsidiaries and to
preserve the current relationships of Friede Goldman and the Friede Goldman
Subsidiaries with such of the customers, suppliers and other persons with which
Friede Goldman or any Friede Goldman Subsidiary has significant business
relations as Friede Goldman deems reasonably necessary in order to preserve
substantially intact its business organization. By way of amplification and not
limitation, except as set forth in Section 5.02 of the Friede Goldman
Disclosure Schedule or as contemplated by any other provision of this
Agreement, the Board of Directors of Friede Goldman shall not (unless required
by applicable Laws or stock exchange regulations) cause or permit Friede
Goldman or any Friede Goldman Subsidiary to, and shall neither cause nor permit
any of Friede Goldman's affiliates (over which it exercises control), or any of
their officers, directors, employees and agents to, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or agree to do,
any of the following, without the prior written consent of Halter Marine, which
consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Articles of Incorporation or By-laws
or equivalent organizational documents except for an amendment to the
Articles of Incorporation to eliminate cumulative voting with respect to
the election of directors;
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(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license, guarantee or encumbrance of, (i) any
shares of capital stock of Friede Goldman or any Friede Goldman Subsidiary
of any class, or securities convertible or exchangeable or exercisable for
any shares of such capital stock, or any options, warrants or other rights
of any kind to acquire any shares of such capital stock or such convertible
or exchangeable securities, or any other ownership interest (including,
without limitation, any phantom interest) of Friede Goldman or any Friede
Goldman Subsidiary or (ii) except in the ordinary course of business and in
a manner consistent with past practice, any property or assets of Friede
Goldman or any Friede Goldman Subsidiary, except (A) the issuance of Friede
Goldman Common Stock upon the exercise of Friede Goldman Options or (B)
pursuant to contracts or agreements in force at the date of this Agreement
or (C) sales, transfers or dispositions of receivables in connection with
the securitization of such receivables, or (D) the award of options
pursuant to the Friede Goldman Option Plan in connection with promotions
and new employee hires in the ordinary course of business and consistent
with past practice or (E) the automatic annual grant of options to non-
employee directors of Friede Goldman pursuant to the Friede Goldman Option
Plan;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (other than dividends paid by Friede Goldman Subsidiaries to
Friede Goldman or to another Friede Goldman Subsidiary in the ordinary
course) or enter into any agreement with respect to the voting of its
capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) except pursuant to the Friede Goldman's 1999 capital expenditure
budget, a copy of which has been provided to Halter Marine, (i) acquire
(including, without limitation, by merger, consolidation, or acquisition of
stock or assets) any interest in any corporation, partnership, other
business organization, person or any division thereof (other than a wholly
owned Friede Goldman Subsidiary) or any assets, other than acquisitions of
assets in the ordinary course of business consistent with past practice and
any other acquisitions for consideration that are not, in the aggregate, in
excess of $5,000,000; (ii) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person for
borrowed money, except for (A) indebtedness for borrowed money incurred in
the ordinary course of business and consistent with past practice or in
connection with transactions otherwise permitted under this Section 5.02,
(B) indebtedness incurred to refinance any existing indebtedness of Friede
Goldman, Halter Marine or any of their respective subsidiaries in
connection with the Merger or (C) other indebtedness for borrowed money
with a maturity of not more than one year in a principal amount not, in the
aggregate, in excess of $5,000,000; (iii) terminate, cancel or request any
material change in, or agree to any material change in, any Friede Goldman
Material Contract or, except in connection with transactions permitted
under this Section 5.02(e), enter into any contract or agreement material
to the business, results of operations or financial condition of Friede
Goldman and the Friede Goldman Subsidiaries taken as a whole, in either
case other than in the ordinary course of business, consistent with past
practice; (iv) make or authorize any capital expenditure, other than
capital expenditures as set forth in Friede Goldman's 1999 capital
expenditure budget that are not, in the aggregate, in excess of $5,000,000
for Friede Goldman and the Friede Goldman Subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this Section
5.02(e);
(f) except as may be required by contractual commitments or corporate
policies with respect to severance or termination pay in existence on the
date hereof as disclosed in Section 4.08 of the Friede Goldman Disclosure
Schedule: (i) increase the compensation payable or to become payable to its
officers or employees (except for increases in accordance with past
practices in salaries or wages of employees of Friede Goldman or any Friede
Goldman Subsidiary which are not across-the-board increases), (ii) grant
any rights to severance or termination pay to, or enter into any employment
or severance agreement with, any director, officer or other employee of
Friede Goldman or any Friede Goldman Subsidiary, or establish,
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adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer or employee, except as contemplated by this
Agreement or to the extent required by applicable Law or the terms of a
collective bargaining agreement or (iii) take any affirmative action to
accelerate the vesting of any stock-based compensation;
(g) take any action with respect to accounting policies or procedures,
other than actions in the ordinary course of business and consistent with
past practice or except as required by changes in GAAP;
(h) waive, release, assign, settle or compromise any material claims or
litigation except in the ordinary course of business and consistent with
past practice;
(i) make or revoke any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(j) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code;
(k) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision
of this Agreement, except, in each case, as may be required by applicable
law; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 5.03. Cooperation. Halter Marine and Friede Goldman shall coordinate
and cooperate in connection with (i) the preparation of the Registration
Statement and the Proxy Statement, (ii) determining whether any action by or in
respect of, or filing with, any Governmental Entity is required, or any
actions, consents, approvals or waivers are required to be obtained from
parties to any Friede Goldman Material Contracts or Halter Marine Material
Contracts, in connection with the consummation of the Merger and (iii) seeking
any such actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the
Registration Statement and the Proxy Statement and timely seeking to obtain any
such actions, consents, approvals or waivers.
SECTION 5.04. Notices of Certain Events. Each of Halter Marine and Friede
Goldman shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or
may be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger; (iii)
any actions, suits, claims, investigations or proceedings commenced or
threatened in writing against, relating to or involving or otherwise affecting
Halter Marine, any Halter Marine Subsidiary, Friede Goldman or any Friede
Goldman Subsidiary that relate to the consummation of the Merger; (iv) the
occurrence of a default or event that, with notice or lapse of time or both,
will become a material default under any Friede Goldman Material Contract or
Halter Marine Material Contract; and (v) any change that is reasonably likely
to result in any Friede Goldman Material Adverse Effect or a Halter Marine
Material Adverse Effect or is likely to delay or impede the ability of either
Friede Goldman or Halter Marine to consummate the transactions contemplated by
this Agreement or to fulfill its obligations set forth herein.
SECTION 5.05. Contractual Consents. Prior to or at the Effective Time, each
of Halter Marine and Friede Goldman shall use its reasonable best efforts to
obtain any consents necessary such that the Merger will not constitute a change
of control, or any similar event which constitutes a default (or an event which
with notice or lapse of time or both would become a default) under, or would
permit the other party or parties thereto to terminate, any material contract
(including a Halter Marine Material Contract or Friede Goldman Material
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Contract, as the case may be), agreement, lease, license, permit, franchise or
other instrument or obligation to which it or any of its subsidiaries is a
party.
SECTION 5.06. Rights Agreements. (a) Promptly following the execution and
delivery of this Agreement, Halter Marine shall take all action necessary to
render the Preferred Stock Rights issued pursuant to the terms of the Halter
Marine Rights Agreement inapplicable to, or not exercisable as a result of, the
Merger, the execution and delivery of this Agreement.
(b) Promptly following the execution and delivery of this Agreement, Friede
Goldman shall take all action necessary to (i) render the Preferred Stock
Rights issued pursuant to the terms of the Friede Goldman Rights Agreement
inapplicable to, or not exercisable as a result of, the Merger, the execution
and delivery of this Agreement or the transactions contemplated by this
Agreement, provided that no stockholder of Halter Marine would beneficially own
15% or more of the outstanding shares of Friede Goldman Common Stock at the
Effective Time, and (ii) amend the Friede Goldman Rights Agreement to provide
that from and after the Effective Time until the termination of the
Stockholder's Agreement any action by the Board of Directors of Friede Goldman
thereunder must be approved by a vote of two-thirds of the members of the
Board.
SECTION 5.07. Affiliate Letters. At least 30 days prior to the Effective
Time, Halter Marine shall deliver to Friede Goldman a list, which shall be
reasonably acceptable to Friede Goldman, identifying all persons whom it
believes are, at the time this Agreement is submitted for approval to the
stockholders of Halter Marine, "affiliates" of Halter Marine for purposes of
Rule 145 under the Securities Act. Halter Marine shall use all reasonable
efforts to deliver or cause to be delivered to Friede Goldman on or prior to
the Effective Time a duly executed affiliate letter in the form of Exhibit 8
for each such "affiliate" of Halter Marine. Friede Goldman shall be entitled to
place legends as specified in such affiliate letters on the certificates
evidencing any Friede Goldman Stock to be received by such "affiliates"
pursuant to the terms of this Agreement and to issue appropriate stop transfer
instructions to the transfer agent for Friede Goldman Stock consistent with the
terms of such affiliate letters.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement. (a) As promptly as
practicable after the execution of this Agreement, (i) Friede Goldman and
Halter Marine shall prepare and file with the SEC a joint proxy statement
relating to the meetings of Halter Marine's stockholders and Friede Goldman's
stockholders to be held in connection with the Merger (together with any
amendments thereof or supplements thereto, the "Proxy Statement") and (ii)
Friede Goldman shall prepare and file with the SEC a registration statement on
Form S-4 (together with all amendments thereto, the "Registration Statement")
in which the Proxy Statement shall be included as a prospectus, in connection
with the registration under the Securities Act of the shares of Friede Goldman
Common Stock to be issued to the stockholders of Halter Marine pursuant to the
Merger. Each of Friede Goldman and Halter Marine will use all reasonable
efforts to cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement,
Friede Goldman shall take all or any action required under any applicable
federal or state securities laws in connection with the issuance of shares of
Friede Goldman Common Stock in the Merger. Each of Friede Goldman and Halter
Marine shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions and the preparation of the Registration Statement and Proxy Statement.
As promptly as practicable after the Registration Statement shall have become
effective, each of Friede Goldman and Halter Marine shall mail the Proxy
Statement to its respective stockholders. The Proxy Statement shall include the
recommendation of the Board of Directors of each of Friede Goldman and Halter
Marine in favor of the Merger, except as otherwise provided in Section 6.04(b)
or Section 6.05(b) hereof.
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No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Friede Goldman or Halter Marine without the approval
of the other party (which approval shall not be unreasonably withheld or
delayed). Friede Goldman and Halter Marine each will advise the other, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Friede
Goldman Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(b) The information supplied by Friede Goldman for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of Friede Goldman and Halter Marine, (iii) the time of each of the
Stockholders' Meetings (as defined below), and (iv) the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any event or
circumstance relating to Friede Goldman or any Friede Goldman Subsidiary, or
their respective officers or directors, should be discovered by Friede Goldman
which should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Friede Goldman shall promptly inform Halter
Marine. All documents that Friede Goldman is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder and the Exchange
Act and the rules and regulations thereunder.
(c) The information supplied by Halter Marine for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of Halter Marine and Friede Goldman, (iii) the time of each of the
Stockholders' Meetings, and (iv) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to Halter Marine or any Halter Marine Subsidiary, or
their respective officers or directors, should be discovered by Halter Marine
which should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Halter Marine shall promptly inform Friede
Goldman. All documents that Halter Marine is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder and the Exchange
Act and the rules and regulations thereunder.
SECTION 6.02. Stockholders' Meetings. Halter Marine shall call and hold a
meeting of its stockholders (the "Halter Marine Meeting") and Friede Goldman
shall call and hold a meeting of its stockholders (the "Friede Goldman Meeting"
and, together with the Halter Marine Meeting, the "Stockholders' Meetings") as
promptly as practicable for the purpose of obtaining the Halter Marine
Stockholder Approval and the Friede Goldman Stockholder Approval, respectively,
Friede Goldman and Halter Marine shall use their best efforts to hold the
Stockholders' Meetings on the same day and as soon as practicable after the
date on which the Registration Statement becomes effective.
SECTION 6.03. Access to Information; Confidentiality. (a) Except as required
pursuant to any confidentiality agreement or similar agreement or arrangement
to which Halter Marine or Friede Goldman or any of their respective
subsidiaries is a party or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules the parties are required to comply, from the date of this Agreement to
the Effective Time, Halter Marine and Friede Goldman shall (and shall cause
their respective subsidiaries to): (i) provide to the other party (and the
other party's officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives, collectively, "Representatives")
access, at reasonable times upon prior notice, to its and its Subsidiaries'
officers,
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employees, agents, properties, offices, facilities books and records and (ii)
furnish promptly such information concerning its and its Subsidiaries'
business, properties, contracts, assets, liabilities and personnel as the other
party or its Representatives may reasonably request. No investigation conducted
pursuant to this Section 6.03 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Confidentiality Agreement dated October 23, 1998 between Halter Marine and
Friede Goldman (the "Confidentiality Agreement") with respect to the
information disclosed pursuant to this Section 6.03.
SECTION 6.04. No Solicitation by Halter Marine. (a) Halter Marine shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any inquiries or
the making of any proposal which constitutes any Halter Marine Takeover
Proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding any Halter Marine Takeover Proposal; provided, however,
that if the Board of Directors of Halter Marine determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to Halter Marine's stockholders under
applicable law, Halter Marine may, in response to a Halter Marine Superior
Proposal (as defined in Section 6.04(b)) which was not solicited by it or which
did not otherwise result from a breach of this Section 6.04(a), and subject to
providing prior written notice of its decision to take such action to Friede
Goldman (the "Halter Marine Notice") (x) furnish information with respect to
Halter Marine and its subsidiaries to any person making a Halter Marine
Superior Proposal pursuant to a customary confidentiality agreement (as
determined by Halter Marine after consultation with its outside counsel) and
(y) participate in discussions or negotiations regarding such Halter Marine
Superior Proposal. For purposes of this Agreement, a "Halter Marine Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a business that constitutes 15%
or more of the net revenues, net income or the assets of Halter Marine and its
subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of Halter Marine or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of Halter Marine or any of
its subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Halter Marine or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Agreement, neither the Board of
Directors of Halter Marine nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Friede Goldman, the recommendation by such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend, or propose publicly
to recommend, any Halter Marine Takeover Proposal or (iii) cause Halter Marine
to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Halter Marine Acquisition
Agreement") related to any Halter Marine Takeover Proposal. Notwithstanding the
foregoing, in the event that the Board of Directors of Halter Marine receives a
Halter Marine Superior Proposal, the Board of Directors of Halter Marine may
(subject to this and the following sentences) terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause Halter
Marine to enter into any Halter Marine Acquisition Agreement with respect to
any Halter Marine Superior Proposal) but only after the fifth business day
following Friede Goldman's receipt of written notice advising Friede Goldman
that the Board of Directors of Halter Marine is prepared to accept a Halter
Marine Superior Proposal, specifying the material terms and conditions of such
Halter Marine Superior Proposal and identifying the person making such Halter
Marine Superior Proposal. For purposes of this Agreement, a "Halter Marine
Superior Proposal" means any written proposal made by a third party (i) to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting
of cash and/or securities, more than 50% of the combined voting power of the
shares of Halter
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Marine Common Stock then outstanding or all or substantially all the assets of
Halter Marine, (ii) that is otherwise on terms which the Board of Directors of
Halter Marine determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
Halter Marine's stockholders than the Merger, (iii) for which financing, to the
extent required, is then committed or which, in the good faith judgment of the
Board of Directors of Halter Marine, is reasonably capable of being obtained by
such third party and (iv) for which, in the good faith judgment of the Board of
Directors of Halter Marine, no regulatory approvals are required, including
antitrust approvals, that could not reasonably be expected to be obtained.
(c) In addition to the obligations of Halter Marine set forth in paragraphs
(a) and (b) of this Section 6.04, Halter Marine shall as promptly as
practicable (and in no event later than 24 hours) advise Friede Goldman orally
and in writing of any request for information or of any Halter Marine Takeover
Proposal, including the material terms and conditions of such request or Halter
Marine Takeover Proposal and the identity of the person making such request or
Halter Marine Takeover Proposal. Halter Marine will keep Friede Goldman fully
informed of the status and details (including amendments or proposed
amendments) of any such request or Halter Marine Takeover Proposal on a daily
basis or more frequently as may be reasonably requested by Friede Goldman.
(d) Nothing contained in this Section 6.04 shall prohibit Halter Marine from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any disclosure to Halter
Marine's stockholders if, in the good faith judgment of the Board of Directors
of Halter Marine, after consultation with outside counsel, failure so to
disclose would be inconsistent with its fiduciary obligations under applicable
law.
SECTION 6.05. No Solicitation by Friede Goldman. (a) Friede Goldman shall
not, nor shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any inquiries or
the making of any proposal which constitutes any Friede Goldman Takeover
Proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding any Friede Goldman Takeover Proposal; provided, however,
that if the Board of Directors of Friede Goldman determines in good faith,
after consultation with outside counsel, that it is necessary to do so in order
to comply with its fiduciary duties to Friede Goldman's stockholders under
applicable law, Friede Goldman may, in response to a Friede Goldman Superior
Proposal (as defined in Section 6.05(b)) which was not solicited by it or which
did not otherwise result from a breach of this Section 6.05(a), and subject to
providing prior written notice of its decision to take such action to Halter
Marine (the "Friede Goldman Notice") (x) furnish information with respect to
Friede Goldman and its subsidiaries to any person making a Friede Goldman
Superior Proposal pursuant to a customary confidentiality agreement (as
determined by Friede Goldman after consultation with its outside counsel) and
(y) participate in discussions or negotiations regarding such Friede Goldman
Superior Proposal. For purposes of this Agreement, "Friede Goldman Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a business that constitutes 15%
or more of the net revenues, net income or the assets of Friede Goldman and its
subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of Friede Goldman or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of Friede Goldman or any
of its subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Friede Goldman or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 6.05, neither the Board of
Directors of Friede Goldman nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Halter Marine, the recommendation by such Board of Directors or such committee
of the Merger, this Agreement or the issuance of Friede Goldman Common Stock in
connection with the Merger, (ii)
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approve or recommend, or propose publicly to recommend, any Friede Goldman
Takeover Proposal or (iii) cause Friede Goldman to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "Friede Goldman Acquisition Agreement") related to any
Friede Goldman Takeover Proposal. Notwithstanding the foregoing, in the event
that the Board of Directors of Friede Goldman receives a Friede Goldman
Superior Proposal, the Board of Directors of Friede Goldman may (subject to
this and the following sentences) terminate this Agreement (and concurrently
with or after such termination, if it so chooses, cause Friede Goldman to enter
into any Friede Goldman Acquisition Agreement with respect to any Friede
Goldman Superior Proposal) but only after the fifth business day following
Halter Marine's receipt of written notice advising Halter Marine that the Board
of Directors of Friede Goldman is prepared to accept a Friede Goldman Superior
Proposal, specifying the material terms and conditions of such Friede Goldman
Superior Proposal and identifying the person making such Friede Goldman
Superior Proposal. For purposes of this Agreement, a "Friede Goldman Superior
Proposal" means any written proposal made by a third party (i) to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of Friede
Goldman Common Stock then outstanding or all or substantially all of the assets
of Friede Goldman, (ii) that is otherwise on terms which the Board of Directors
of Friede Goldman determines in its good faith judgment (based on the advice of
a financial advisor of nationally recognized reputation) to be more favorable
to Friede Goldman's stockholders than the Merger, (iii) for which financing, to
the extent required, is then committed or which, in the good faith judgment of
the Board of Directors of Friede Goldman, is reasonably capable of being
obtained by such third party and (iv) for which, in the good faith judgment of
the Board of Directors of Friede Goldman, no regulatory approvals are required,
including antitrust approvals, that could not reasonably be expected to be
obtained.
(c) In addition to the obligation of Friede Goldman set forth in paragraphs
(a) and (b) of this Section 6.05, Friede Goldman shall as promptly as
practicable (and in no event later than 24 hours) advise Halter Marine orally
and in writing of any request for information or of any Friede Goldman Takeover
Proposal, including the material terms and conditions of such request or Friede
Goldman Takeover Proposal and the identify of the person making such request or
Friede Goldman Takeover Proposal. Friede Goldman will keep Halter Marine fully
informed of the status and details (including amendments or proposed
amendments) of any such request or Friede Goldman Takeover Proposal on a daily
basis or more frequently as may be reasonably requested by Halter Marine.
(d) Nothing contained in this Section 6.05 shall prohibit Friede Goldman
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Friede Goldman's stockholders if, in the good faith judgment of the Board of
Directors of Friede Goldman, after consultation with outside counsel, failure
so to disclose would be inconsistent with its fiduciary obligations under
applicable law.
SECTION 6.06. Reasonable Efforts. (a) (i) Each of Halter Marine and Friede
Goldman shall use all reasonable efforts to (A) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under applicable Law or otherwise to consummate and make effective
the transactions contemplated by this Agreement as promptly as practicable, (B)
obtain from any Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Friede
Goldman or Halter Marine or any of their subsidiaries, or to avoid any action
or proceeding by any Governmental Entity (including, without limitation, those
in connection with the HSR Act), in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein, including, without limitation, the Merger,
and (iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (x)
the Securities Act and the Exchange Act, and any other applicable federal or
state securities Laws, (y) the HSR Act and (z) any other applicable Law;
provided that Friede Goldman and Halter Marine shall cooperate with each other
in connection with the making of all such filings, including providing copies
of all such
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documents to the non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. Halter Marine and Friede Goldman shall furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law (including all
information required to be included in the Proxy Statement and the Registration
Statement) in connection with the transactions contemplated by this Agreement.
Halter Marine and Friede Goldman shall not take any action, or refrain from
taking any action, the effect of which would be to delay or impede the ability
of Halter Marine and Friede Goldman to consummate the transactions contemplated
by this Agreement.
(ii) Each of the parties hereto agrees, and shall cause each of its
respective subsidiaries to cooperate and to use their respective reasonable
best efforts to obtain promptly any government clearances required for
completion of the transactions (including through compliance with the HSR Act
and any applicable foreign governmental reporting requirements), to respond to
any government requests for information, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement. The parties hereto will consult
and cooperate with one another, and consider in good faith the views of one
another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or in
behalf of any party hereto in connection with proceedings under or relating to
the HSR Act or any other federal, state or foreign antitrust or fair trade law.
Each party shall promptly notify the other party of any communication to that
party from any Governmental Entity in connection with any required filing with,
or approval or review by, such Governmental Entity in connection with the
Merger and permit the other party to review in advance any such proposed
communication to any Governmental Entity. Neither party shall agree to
participate in any meeting with any Governmental Entity in respect of any such
filings, investigation or other inquiry unless it consults with the other party
in advance and, to the extent permitted by such Governmental Entity, gives the
other party the opportunity to attend and participate thereat.
(iii) Notwithstanding any provision of paragraph (i) or paragraph (ii)
above, neither Halter Marine nor Friede Goldman shall be required to take any
action pursuant to this Section 6.06 that would require either Halter Marine or
Friede Goldman to sell, divest, dispose of or hold separate any assets
(including any shipyard) or business unit.
(iv) In the event any claim, action, suit, investigation or other proceeding
by any governmental body or other person or other legal or administrative
proceeding is commenced that questions the validity or legality of the
transactions contemplated hereby or seeks damages in connection therewith,
before the Effective Time, each of Halter Marine and Friede Goldman agree to
cooperate and use their reasonable efforts to defend against and respond
thereto.
(b) (i) Halter Marine and Friede Goldman shall give (or shall cause their
respective subsidiaries to give) any notices to third parties, and use, and
cause their respective subsidiaries to use, all reasonable efforts to obtain
any third party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, (B) disclosed or required to be
disclosed in the Halter Marine Disclosure Schedule or the Friede Goldman
Disclosure Schedule, as the case may be, or (C) required to prevent a Halter
Marine Material Adverse Effect from occurring prior to or after the Effective
Time or a Friede Goldman Material Adverse Effect from occurring after the
Effective Time.
(ii) In the event that either party shall fail to obtain any third party
consent described in subsection (b)(i) above, such party shall use all
reasonable efforts, and shall take any such actions reasonably requested by the
other party hereto, to minimize any adverse effect upon Halter Marine and
Friede Goldman, their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
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(c) From the date of this Agreement until the Effective Time, each party
shall promptly notify the other party in writing of any pending or, to the
knowledge of such notifying party, threatened action, proceeding or
investigation by any Governmental Entity or any other person (i) challenging or
seeking material damages in connection with the Merger or the conversion of
Halter Marine Common Stock into Friede Goldman Common Stock pursuant to the
Merger or (ii) seeking to restrain or prohibit the consummation of the Merger
or otherwise limit the right of Friede Goldman to own or operate all or any
portion of the businesses or assets of Halter Marine or its subsidiaries, which
in either case is reasonably likely to have a Halter Marine Material Adverse
Effect or a Friede Goldman Material Adverse Effect prior to or after the
Effective Time.
SECTION 6.07. Stock Options and Other Stock Awards; Employee Benefit Plans.
(a) Prior to the Effective Time, Halter Marine shall take such action as may be
necessary to cause each unvested option to purchase shares of Halter Marine
Common Stock (each, a "Halter Marine Option") outstanding as of the Effective
Time under Halter Marine's Amended and Restated 1996 Stock Option and Incentive
Plan (the "Halter Marine 1996 Plan"), copies of which (as amended through the
date hereof) have heretofore been provided to Friede Goldman by Halter Marine,
to be fully vested and immediately exerciseable in accordance with the terms of
the Halter Marine 1996 Plan. At least thirty (30) days prior to the Effective
Time, Halter Marine shall give written notice to each holder of Halter Marine
Options pursuant to Section 9(d) of the Halter Marine 1996 Plan for the purpose
of fixing a date which is not less than thirty (30) days after the date of the
giving of such notice and which is prior to the Effective Time such that, after
such date, any unexercised Halter Marine Option shall terminate, be canceled
and be of no further effect.
(b) From and after the Effective Time, the Friede Goldman Benefit Plans and
the Halter Marine Benefit Plans in effect as of the Effective Time shall,
subject to applicable law, the terms of this Agreement and the terms of such
plans, remain in effect with respect to the employees of Friede Goldman or
Halter Marine (or their respective subsidiaries), as the case may be, until
such time as Friede Goldman shall adopt new employee benefit plans and
arrangements with respect to employees of the Surviving Corporation and its
subsidiaries (the "Replacement Plans"). From and after the Effective Time,
Friede Goldman shall, and shall cause its subsidiaries to, honor in accordance
with their terms all Friede Goldman Benefit Plans and Halter Marine Benefit
Plans, respectively, as amended as permitted hereunder, and all other
contracts, arrangements and commitments that apply to current or former
employees or directors of Friede Goldman, Halter Marine or their respective
subsidiaries.
(c) Prior to the Effective Time, a committee (consisting of the Chairman and
Chief Executive Officer of Halter Marine and the Chairman and Chief Executive
Officer of Friede Goldman and an equal number of representatives from Halter
Marine and Friede Goldman) shall be formed to conduct a review of Friede
Goldman's and Halter Marine's respective employee benefit and compensation
plans and programs in order to coordinate the provision of benefits and
compensation to the employees of the Friede Goldman and its subsidiaries after
the Effective Time and to eliminate duplicative benefits, including, without
limitation, through the establishment of the Replacement Plans. The Replacement
Plans shall, in all material respects, (i) treat similarly situated employees
of Friede Goldman and Halter Marine and their respective subsidiaries on a
substantially equivalent basis, taking into account all relevant factors,
including, without limitation, duties, geographic location, tenure,
qualifications and abilities, and (ii) not discriminate between employees who
were covered by the Friede Goldman Benefit Plans, on the one hand, and those
covered by the Halter Marine Benefit Plans, on the other, at the Effective
Time. Notwithstanding the foregoing, the employee benefit plans and
arrangements maintained for current and former employees of Friede Goldman,
Halter Marine and their respective subsidiaries following the Effective Time
shall provide, until any applicable Replacement Plan has been implemented (or,
if earlier, through the first anniversary of the Effective Time), a level of
compensation and benefits that is substantially comparable in the aggregate to
that provided under the Friede Goldman Benefit Plans or the Halter Marine
Benefit Plans, as the case may be, as in effect immediately prior to the date
of this Agreement; provided, however, that changes may be made to such plans to
the extent necessary to comply with applicable law.
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(d) Employees of Friede Goldman, Halter Marine and their respective
subsidiaries shall receive credit for purposes of eligibility to participate,
vesting, benefit accrual and eligibility to receive benefits under any employee
benefit plan, program or arrangement established or maintained by the Surviving
Corporation or any of its subsidiaries for service accrued or deemed accrued
prior to the Effective Time with Friede Goldman, Halter Marine or any of their
respective subsidiaries, as the case may be; provided, however, that such
crediting of service shall not operate to duplicate any benefit or the funding
of any such benefit.
SECTION 6.08. Letters of Accountants. (a) Halter Marine shall use its best
efforts to cause to be delivered to Friede Goldman "cold comfort" letters of
Ernst & Young LLP, its independent public accountant, dated the date on which
the Registration Statement shall become effective and as of the Effective Time,
respectively, and addressed to Friede Goldman, in form and substance reasonably
satisfactory to Friede Goldman and reasonably customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement and transactions
such as those contemplated by this Agreement.
(b) Friede Goldman shall use its best efforts to cause to be delivered to
Halter Marine "cold comfort" letters of Arthur Andersen, LLP, its independent
public accountant, dated the date on which the Registration Statement shall
become effective and as of the Effective Time, respectively, and addressed to
Halter Marine, in form and substance reasonably satisfactory to Halter Marine
and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement and transactions such as those
contemplated by this Agreement.
SECTION 6.09. Update Disclosure; Breaches. From and after the date of this
Agreement until the Effective Time, each party hereto shall promptly notify the
other party hereto by written update to its Disclosure Schedule of (i) the
occurrence, or non-occurrence, of any event that would be likely to cause any
condition to the obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement not to be satisfied, or (ii) the
failure of Halter Marine or Friede Goldman, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it pursuant to this Agreement which would be likely to result in
any condition to the obligations of any party to effect the Merger and the
other transactions contemplated by this Agreement not to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section
6.09 shall not cure any breach of any representation or warranty requiring
disclosure of such matter prior to the date of this Agreement or otherwise
limit or affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.10. Public Announcements. Friede Goldman and Halter Marine shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by Law or any listing agreement with the AMEX or the
NYSE.
SECTION 6.11. NYSE Listing. Friede Goldman shall promptly prepare and submit
to the NYSE a listing application covering the shares of Friede Goldman Common
Stock to be issued in the Merger, and shall use reasonable best efforts to
cause such shares to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Effective Time.
SECTION 6.12. Indemnification of Directors and Officers. (a) Friede Goldman
agrees that the indemnification obligations set forth in Friede Goldman's
Certificate and By-laws, in each case as of the date of this Agreement, (i)
shall be amended, effective as of the Effective Time, to the fullest extent
permissible under Mississippi law, to provide protections and rights for the
officers, directors, employees and agents of Friede Goldman and for persons
serving at the request of Friede Goldman as officers, directors, employees or
agents of other corporations, at least as favorable as the protections and
rights provided under Halter Marine's Certificate of Incorporation and By-laws
to officers, directors, employees and agents of Halter Marine and such other
persons serving at the request of Halter Marine, (ii) as so amended, shall
survive the Merger and (iii) shall not be further amended, repealed or
otherwise modified for a period of six years after the Effective Time
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in any manner that would adversely affect the rights thereunder of the
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of Halter Marine or its subsidiaries.
(b) Halter Marine shall, to the fullest extent permitted under applicable
Law and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable Law, indemnify and hold harmless,
each present and former director, officer, trustee, fiduciary, employee or
agent of Halter Marine and each Halter Marine Subsidiary and each such person
who served at the request of Halter Marine or any Halter Marine Subsidiary as a
director, officer, trustee, partner, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (collectively, the "Halter Marine Indemnified
Parties") against all costs and expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, administrative or investigative, arising out of or pertaining to any
action or omission in their capacity as an officer or director, in each case
occurring before the Effective Time (including the transactions contemplated by
this Agreement). Without limiting the foregoing, in the event of any such
claim, action, suit, proceeding or investigation, (i) Halter Marine or the
Surviving Corporation, as the case may be, shall pay the fees and expenses of
counsel selected by any Halter Marine Indemnified Party, which counsel shall be
reasonably satisfactory to Halter Marine or to the Surviving Corporation, as
the case may be, promptly after statements therefor are received (unless the
Surviving Corporation shall elect to defend such action) and (ii) Halter Marine
and the Surviving Corporation shall cooperate in the defense of any such
matter.
(c) For five years from the Effective Time, the Surviving Corporation shall
provide to the current directors and officers of Halter Marine and Friede
Goldman liability insurance protection with an aggregate limitation on
liability of no less then $50 million and having customary terms, provisions,
conditions and exclusions.
(d) Friede Goldman shall, to the fullest extent permitted under applicable
Law and regardless of whether the Merger becomes effective, indemnify and hold
harmless, each present and former director, officer, trustee, fiduciary,
employee or agent of Friede Goldman and each Friede Goldman Subsidiary and each
such person who served at the request of Friede Goldman or any Friede Goldman
Subsidiary as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the "Friede Goldman
Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, administrative or investigative, arising out of or pertaining to any
action or omission in their capacity as an officer or director, in each case
occurring before the Effective Time (including the transactions contemplated by
this Agreement). Without limiting the foregoing, in the event of any such
claim, action, suit, proceeding or investigation, (i) Friede Goldman shall pay
the fees and expenses of counsel selected by any Friede Goldman Indemnified
Party, which counsel shall be reasonably satisfactory to Friede Goldman
promptly after statements therefor are received (unless Friede Goldman shall
elect to defend such action) and (ii) Friede Goldman shall cooperate in the
defense of any such matter.
(e) In the event Halter Marine or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person or shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successors and assigns of Halter Marine or the
Surviving Corporation, as the case may be, honor the indemnification
obligations set forth in this Section 6.12.
(f) The obligations of Halter Marine and the Surviving Corporation under
this Section 6.12 shall not be terminated or modified in such a manner as to
adversely affect any director, officer, employee, agent or other person to whom
this Section 6.12 applies without the consent of such affected director,
officer, employees,
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agents or other persons (it being expressly agreed that each such director,
officer, employee, agent or other person to whom this Section 6.12 applies
shall be third-party beneficiaries of this Section 6.12).
SECTION 6.13. Plan of Reorganization. The Agreement is intended to
constitute a "plan of reorganization" within the meaning of section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date hereof and until the Effective Time, each party hereto shall use its
reasonable best efforts to cause the Merger to qualify, and will not knowingly
take any actions or cause any actions to be taken which could prevent the
Merger from qualifying, as a reorganization under the provisions of section
368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Friede Goldman nor any of their affiliates shall knowingly take
any action or knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization under section 368(a) of the Code.
SECTION 6.14. Headquarters; Name. As promptly as reasonably practicable
after the Effective Time, Friede Goldman and Halter Marine shall take all
action necessary such that their combined headquarters shall be located at
Gulfport, Mississippi; provided that nothing in this Section 6.14 shall
prohibit Friede Goldman from moving the combined headquarters of Friede Goldman
and Halter Marine following the Effective Time if the Board of Directors of
Friede Goldman determines that it is necessary or advisable to relocate the
combined headquarters. Effective as of the Effective Time, Friede Goldman shall
amend its Articles of Incorporation such that its name shall be changed to
Friede Goldman Halter Marine International Inc.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated or, to the knowledge of Friede
Goldman or Halter Marine, threatened by the SEC.
(b) Stockholder Approval. The Friede Goldman Stockholder Approval and
the Halter Marine Stockholder Approval shall have been obtained.
(c) No Order. (i) No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in
any case which is in effect and which prevents or prohibits consummation of
the Merger or any other transactions contemplated in this Agreement.
(ii) No Governmental Entity shall have instituted any action or
proceeding (which remains pending at what would otherwise be the date of
the Effective Time) or threatened to institute any action or proceeding in
each case before any United States court or other governmental body of
competent jurisdiction seeking to enjoin, restrain or otherwise prohibit
consummation of the transactions contemplated by this Agreement.
(d) Consents and Approvals. All consents, approvals and authorizations
set forth in Section 3.04 or 4.04 or the related sections of the Halter
Marine Disclosure Schedule or the Friede Goldman Disclosure Schedule
required to be obtained to consummate the Merger shall have been obtained,
except for such consents, approvals and authorizations the failure of which
to obtain would not have a Halter Marine Material Adverse Effect or a
Friede Goldman Material Adverse Effect after the Effective Time.
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(e) HSR Act. The applicable waiting period, together with any extensions
thereof, under the HSR Act shall have expired or been terminated without
any action being taken, or any agreement having been entered into by Halter
Marine, Friede Goldman or any of their respective subsidiaries or any
consent decree or other order having been issued by any Governmental
Entity, to sell, divest, dispose of or hold separate any assets (including
any shipyard) or business unit of Halter Marine, Friede Goldman or any of
their respective subsidiaries.
(f) NYSE. The shares of Friede Goldman Common Stock issuable to Halter
Marine's stockholders in the Merger shall have been approved for listing on
the NYSE subject to official notice of issuance.
SECTION 7.02. Additional Conditions to Obligations of Friede Goldman. The
obligations of Friede Goldman to effect the Merger and the other transactions
contemplated herein are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Halter Marine contained in this Agreement, without giving
effect to any update to the Halter Marine Disclosure Schedule under Section
6.09, shall be true and correct in all material respects (except that where
any statement in a representation or warranty expressly includes a standard
of materiality, such statement shall be true and correct in all respects
giving effect to such standard) as of the Effective Time as though made on
and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects
giving effect to such standard) as of such date. Friede Goldman shall have
received a certificate of the Chief Executive Officer or Chief Financial
Officer of Halter Marine to that effect.
(b) Agreements and Covenants. Halter Marine shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. Friede Goldman shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
Halter Marine to that effect.
(c) Tax Opinion. Friede Goldman shall have received the opinion of
Andrews & Kurth L.L.P., special counsel to Friede Goldman, dated the date
of the Effective Time and in form and substance reasonably satisfactory to
Friede Goldman, based upon facts, representations and assumptions set forth
in such opinion which are consistent with the state of facts existing at
the Effective Time, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code, and Friede Goldman and Halter
Marine will each be a party to the reorganization. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of Friede Goldman, Halter Marine and certain
stockholders of Friede Goldman and Halter Marine.
(d) Spin-Off Opinion. Friede Goldman shall have received an opinion of
Andrews & Kurth L.L.P. or other counsel reasonably satisfactory to Friede
Goldman, dated as of the date of the Effective Time and in form and
substance reasonably satisfactory to Friede Goldman, on the basis of
certain facts, representations from Friede Goldman, Halter Marine and their
respective employees and assumptions set forth in such opinion, to the
effect that the Merger pursuant to this Agreement and in accordance with
applicable state law will not adversely affect the federal income tax
consequences determined by the IRS in the private letter ruling issued to
Trinity Industries, Inc. on January 17, 1997.
(e) Accountant Letters. Friede Goldman shall have received from Halter
Marine "cold comfort" letters of Ernst & Young, LLP, dated the date on
which the Registration Statement shall become effective and the Effective
Time, respectively, and addressed to Friede Goldman, in form and substance
satisfactory to Friede Goldman, and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration
Statement and transactions such as those contemplated by this Agreement.
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(f) Fairness Opinion. At the time the Proxy Statement is mailed to
Friede Goldman stockholders in connection with the Friede Goldman Meeting,
the opinion of Jefferies referred to in Section 4.14 shall not have been
modified in any manner materially adverse to Friede Goldman or withdrawn.
SECTION 7.03. Additional Conditions to Obligations of Halter Marine. The
obligation of Halter Marine to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Friede Goldman contained in this Agreement, without giving
effect to any update to the Friede Goldman Disclosure Schedule under
Section 6.09, shall be true and correct in all material respects (except
that where any statement in a representation or warranty expressly includes
a standard of materiality, such statement shall be true and correct in all
respects giving effect to such standard) as of the Effective Time as though
made on and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects
giving effect to such standard) as of such date. Halter Marine shall have
received a certificate of the Chief Executive Officer or Chief Financial
Officer of Friede Goldman to that effect.
(b) Agreements and Covenants. Friede Goldman shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. Halter Marine shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
Friede Goldman to that effect.
(c) Stockholder's Agreement. The Stockholder's Agreement shall remain in
full force and effect and shall not have been rescinded or repudiated by
any party thereto and all covenants therein to be complied with on or prior
to the Effective Time shall have been complied with.
(d) Tax Opinion. Halter Marine shall have received the opinion of
Shearman & Sterling, dated the date of the Effective Time, in form and
substance reasonably satisfactory to Halter Marine based upon facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of section 368(a) of the
Code, and Friede Goldman and Halter Marine will each be a party to the
reorganization. In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of Friede
Goldman, Halter Marine and certain stockholders of Friede Goldman and
Halter Marine.
(e) Accountant Letters. Halter Marine shall have received from Friede
Goldman "cold comfort" letters of Arthur Andersen, LLP, dated the date on
which the Registration Statement shall become effective and the Effective
Time, respectively, and addressed to Halter Marine, in form and substance
satisfactory to Halter Marine, and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration
Statement and transactions such as those contemplated by this Agreement.
(f) Fairness Opinion. At the time the Proxy Statement is mailed to
Halter Marine stockholders in connection with the Halter Marine Meeting,
the opinion of DLJ referred to in Section 3.14 shall not have been modified
in any manner materially adverse to Halter Marine or withdrawn.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Halter Marine
Stockholder Approval or the Friede Goldman Stockholder Approval:
(a) by mutual written consent of Friede Goldman and Halter Marine;
(b) by either Friede Goldman or Halter Marine:
(i) if the Merger shall not have been consummated by March 31, 2000;
provided, however, that the right to terminate this Agreement pursuant
to this Section 8.01(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results
in the failure of the Merger to be consummated by such time;
(ii) if the approval of the Halter Marine Stockholder Approval shall
not have been obtained at the Halter Marine Meeting duly convened
therefor or at any adjournment or postponement thereof;
(iii) if the Friede Goldman Stockholder Approval shall not have been
obtained at the Friede Goldman Meeting duly convened therefor or at any
adjournment or postponement thereof; or
(iv) if there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining any party from consummating the
Merger is entered and such judgment, injunction, order or decree shall
have become final and non-appealable.
(c) by Friede Goldman, if (i) Halter Marine shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 7.03(a) or (b), and (B) is incapable of
being cured by Halter Marine or is not cured within 30 days of notice of
such breach or failure or (ii) if the opinion of Jefferies referred to in
Section 4.14 shall have been modified in any manner materially adverse to
Friede Goldman or withdrawn at any time prior to the time of mailing of the
Proxy Statement to the Friede Goldman stockholders in connection with the
Friede Goldman Meeting;
(d) by Friede Goldman in accordance with Section 6.05(b); provided that,
in order for the termination of this Agreement pursuant to this paragraph
(d) to be deemed effective, Friede Goldman shall have complied with all
provisions contained in Section 6.05, including the notice provisions
therein, and with applicable requirements, including the payment of the
Termination Fee and Halter Marine Out-of Pocket Expenses, of Section 8.05;
(e) by Halter Marine, if (i) Friede Goldman shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 7.02(a) or (b), and (B) is incapable of
being cured by Friede Goldman or is not cured within 30 days of notice of
such breach or failure or (ii) if the opinion of DLJ referred to in Section
3.14 shall have been modified in any manner materially adverse to Halter
Marine or withdrawn at any time prior to the time of mailing of the Proxy
Statement to the Halter Marine stockholders in connection with the Halter
Marine Meeting; or
(f) by Halter Marine in accordance with Section 6.04(b); provided that,
in order for the termination of this Agreement pursuant to this paragraph
(g) to be deemed effective, Halter Marine shall have complied with all
provisions of Section 6.04, including the notice provisions therein, and
with applicable requirements, including the payment of the Termination Fee
and Friede Goldman Out-of-Pocket Expenses, of Section 8.05.
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SECTION 8.02. Effect of Termination. In the event of termination of this
Agreement by either Halter Marine or Friede Goldman as provided in Section
8.01, this Agreement shall forthwith become void and have no effect, without
any liability or obligation on the part of Friede Goldman or Halter Marine,
other than the provisions of Section 3.16, Section 4.16, Section 6.03(b), this
Section 8.02, Section 8.05 and Article IX, which provisions will survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement. No such
termination will release any party from any liabilities or damages resulting
from any willful or grossly negligent breach by that party of any provision of
this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after the Halter
Marine Stockholder Approval is obtained, no amendment may be made which would
reduce the amount or change the type of consideration into which each share of
Halter Marine Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein; provided, however,
that after the Halter Marine Stockholder Approval is obtained, there may not
be, without further approval of such stockholders, any extension or waiver of
this Agreement or any portion thereof which reduces the amount or changes the
form of the consideration to be delivered to the holders of Halter Marine
Common Stock hereunder other than as contemplated by this Agreement. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby, but such extension
or waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
SECTION 8.05. Fees. (a) Except as provided in this Section 8.05, all fees
and expenses incurred in connection with the Merger, this Agreement, and the
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of Friede Goldman and Halter Marine shall bear and pay one-
half of the costs and expenses incurred in connection with (i) the preparation,
filing, printing and mailing of the Form S-4 and the Joint Proxy Statement
(including SEC filing fees) and (ii) the filings of the premerger notification
and report forms under the HSR Act (including filing fees). Friede Goldman
shall file any return with respect to, and shall pay, any state or local taxes
(including any penalties or interest with respect thereto), if any, which are
attributable to the transfer of the beneficial ownership of Halter Marine's
real property (collectively, the "Real Estate Transfer Taxes") as a result of
the Merger. Halter Marine shall cooperate with Friede Goldman in the filing of
such returns, including, in the case of Halter Marine, supplying in a timely
manner a complete list of all real property interests held by Halter Marine and
any information with respect to such property that is reasonably necessary to
complete such returns. The fair market value of any real property of Halter
Marine subject to the Real Estate Transfer Taxes shall be as agreed to between
Friede Goldman and Halter Marine.
(b) In the event that (i) a Halter Marine Takeover Proposal shall have been
made known to Halter Marine or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make a Halter Marine
Takeover Proposal and thereafter this Agreement is terminated by either Friede
Goldman or Halter Marine pursuant to Section 8.01(b)(i) or (ii) or (ii) this
Agreement is terminated by Halter Marine pursuant to Section 8.01(f), then
Halter Marine shall promptly, but in no event later than two days after the
date of such termination, pay Friede Goldman a fee equal to the sum of $6.5
million (the "Termination Fee") plus the Friede Goldman Out-of-Pocket Expenses
payable by wire transfer of same day funds; provided, however, that no
Termination Fee shall be payable to Friede Goldman pursuant to clause (i) of
this paragraph (b) unless and until within 18 months of such termination Halter
Marine or any of its Subsidiaries enters into any Halter Marine Acquisition
Agreement
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or consummates any Halter Marine Takeover Proposal (for the purposes of the
foregoing proviso the terms "Halter Marine Acquisition Agreement" and "Halter
Marine Takeover Proposal" shall have the meanings assigned to such terms in
Section 6.04 except that the references to 15% in the definition of "Halter
Marine Takeover Proposal" in Section 6.04(a) shall be deemed to be references
to 35% and "Halter Marine Takeover Proposal" shall only be deemed to refer to a
transaction involving Halter Marine, or with respect to assets (including the
shares of any subsidiary), of Halter Marine and its Subsidiaries, taken as a
whole, and not any of its Subsidiaries alone), in which event the Termination
Fee shall be payable upon the first to occur of such events. "Friede Goldman
Out-of-Pocket Expenses" means the lesser of (A) all documented out-of-pocket
expenses and fees incurred by Friede Goldman (including, without limitation,
fees and expenses payable to all legal, accounting, financial, public relations
and other professional advisers) arising out of, in connection with or related
to this Agreement and the transactions contemplated herein and (B) $2 million.
Halter Marine acknowledges that the agreements contained in this Section
8.05(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Friede Goldman would not enter
into this Agreement; accordingly, if Halter Marine fails promptly to pay the
amount due pursuant to this Section 8.05(b), and, in order to obtain such
payment, Friede Goldman commences a suit which results in a judgment against
Halter Marine for the fee set forth in this Section 8.05(b), Halter Marine
shall pay to Friede Goldman its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
(c) In the event that (i) a Friede Goldman Takeover Proposal shall have been
made known to Friede Goldman or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make a Friede Goldman
Takeover Proposal and thereafter this Agreement is terminated by either Friede
Goldman or Halter Marine pursuant to Section 8.01(b)(i) or (iii) or (ii) this
Agreement is terminated by Friede Goldman pursuant to Section 8.01(d) then
Friede Goldman shall promptly, but in no event later than two days after the
date of such termination, pay Halter Marine the sum of the Termination Fee and
the Halter Marine Out-of-Pocket Expenses, payable by wire transfer of same day
funds; provided, however, that no Termination Fee shall be payable to Halter
Marine pursuant to clause (i) of this paragraph (c) unless and until within 18
months of such termination Friede Goldman or any of its subsidiaries enters
into any Friede Goldman Acquisition Agreement or consummates any Friede Goldman
Takeover Proposal (for the purposes of the foregoing proviso the terms "Friede
Goldman Acquisition Agreement" and "Friede Goldman Takeover Proposal" shall
have the meanings assigned to such terms in Section 6.05 except that the
references to 15% in the definition of "Friede Goldman Takeover Proposal" in
Section 6.05(a) shall be deemed to be references to 35% and "Friede Goldman
Takeover Proposal" shall only be deemed to refer to a transaction involving
Friede Goldman, or with respect to assets (including the shares of any
subsidiary), of Friede Goldman and its subsidiaries, taken as a whole, and not
any of its subsidiaries alone), in which event the Termination Fee shall be
payable upon the first to occur of such events. "Halter Marine Out-of-Pocket
Expenses" means the lesser of (A) all documented out-of-pocket expenses and
fees incurred by Halter Marine (including, without limitation, fees and
expenses payable to all legal, accounting, financial, public relations and
other professional advisers) arising out of, in connection with or related to
this Agreement and the transactions contemplated herein and (B) $2 million.
Friede Goldman acknowledges that the agreements contained in this Section
8.05(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Halter Marine would not enter
into this Agreement; accordingly, if Friede Goldman fails promptly to pay the
amount due pursuant to this Section 8.05(c), and, in order to obtain such
payment, Halter Marine commences a suit which results in a judgment against
Friede Goldman for the fee set forth in this Section 8.05(c), Friede Goldman
shall pay to Halter Marine its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications given or made pursuant hereto shall be given (and shall be
deemed to have been duly given upon receipt) or by delivery in person, by
facsimile, cable, telecopy, telegram or telex, or by registered or certified
mail (postage prepaid, return receipt requested) or nationally recognized
courier service to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
(a) If to Friede Goldman, addressed to it at:
525 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
Telecopier No.: (601) 352-1052
Attention: General Counsel
With a copy to:
Andrews & Kurth L.L.P.
4200 Chase Tower
Houston, Texas 77002
Telecopier No.: (713) 220-4285
Attention: Thomas P. Mason, Esq.
(b) If to Halter Marine, addressed to it at:
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Telecopier No.: (228) 897-4866
Attention: General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopier No.: (212) 848-7179
Attention: John J. Madden, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with the first-mentioned person;
(b) "beneficial owner" means, with respect to any shares of Halter
Marine Common Stock or Friede Goldman Common Stock, a person who shall be
deemed to be the beneficial owner of such shares (i) which such person or
any of its affiliates or associates beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates
(as such term is defined in Rule 12b-2 of the Exchange Act) has, directly
or indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote
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pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any such shares or (iv) pursuant to Section 13(d) of the
Exchange Act and any rules or regulations promulgated thereunder;
(c) "Business Day" shall mean any day other than a day on which banks in
the State of New York are authorized or obligated to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock
or as trustee or executor, by contract or credit arrangement or otherwise;
(e) "knowledge" will be deemed to be present when the matter in question
was brought to the attention of any executive officer of Friede Goldman or
Halter Marine, as the case may be;
(f) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d) of the Exchange Act);
(g) "subsidiary" or "subsidiaries" of Friede Goldman, Halter Marine, the
Surviving Corporation or any other person means any corporation,
partnership, joint venture or other legal entity of which Friede Goldman,
Halter Marine, the Surviving Corporation or such other person, as the case
may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such
corporation or other legal entity.
SECTION 9.04. Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the terms of this Agreement remain as originally contemplated to the fullest
extent possible.
SECTION 9.06. Entire Agreement. This Agreement (together with the Exhibits,
Friede Goldman and Halter Marine Disclosure Schedules and the other documents
delivered pursuant hereto) and the Confidentiality Agreements constitute the
entire agreement of the parties and supersede all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly
provided herein, are not intended to confer upon any other person any rights or
remedies hereunder. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by both parties hereto.
SECTION 9.07. Assignment. This Agreement shall not be assigned by operation
of law or otherwise.
SECTION 9.08. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied,
other than pursuant to Section 6.07 or 6.12 or the right to receive the
consideration payable in the Merger pursuant to Article II, is intended to or
shall confer upon any other person any rights, benefits or remedies,
obligations or liabilities of any nature whatsoever under or by reason of this
Agreement.
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SECTION 9.09. Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
SECTION 9.10. Governing Law. This Agreement shall be governed by the Laws of
the State of Delaware as applied to contracts executed and to be performed
entirely in such state.
SECTION 9.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, Friede Goldman and Halter Marine have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
FRIEDE GOLDMAN INTERNATIONAL INC.
/s/ J. L. Holloway
By:__________________________________
Name:J. L. Holloway
Title: President, Chief Executive
Officer and Chairman of
the Board
HALTER MARINE GROUP, INC.
/s/ John Dane III
By:__________________________________
Name:John Dane III
Title: President, Chief Executive
Officer and Chairman of
the Board
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<PAGE>
ANNEX B
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of September 14, 1999 (this "Amendment"), between
HALTER MARINE GROUP, INC., a Delaware corporation ("Halter Marine"), and FRIEDE
GOLDMAN INTERNATIONAL INC., a Mississippi corporation ("Friede Goldman").
WHEREAS, Halter Marine and Friede Goldman are parties to an Agreement and
Plan of Merger, dated as of June 1, 1999 (the "Merger Agreement"; terms defined
in the Merger Agreement and not otherwise defined herein are being used herein
as therein defined);
WHEREAS, the Boards of Directors of Halter Marine and Friede Goldman have
determined that it is appropriate to amend the Merger Agreement as set forth in
this Amendment; and
WHEREAS, pursuant to Section 8.03 of the Merger Agreement, the Merger
Agreement may be amended by the parties hereto.
NOW THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE MERGER AGREEMENT
SECTION 1.01. Amendment to Preamble. The Preamble to the Merger Agreement is
hereby amended by deleting the phrase "(this "Agreement")" in its entirety and
inserting in lieu thereof the phrase "(as amended by Amendment No. 1, this
"Agreement")".
SECTION 1.02. Amendment to Section 2.01(a). Section 2.01(a) of the Merger
Agreement is hereby amended by deleting the number "0.4614" in the fifth line
thereof and inserting in lieu thereof the number "0.57".
SECTION 1.03. Amendment to Section 6.06. Section 6.06 of the Merger
Agreement is hereby amended by adding the following new paragraph (d) at the
end of Section 6.06:
"(d) Each party shall cooperate with the other and shall use all
commercially reasonable efforts to promptly arrange bank financing for the
Surviving Corporation necessary to satisfy the condition set forth in
Section 7.01(g) hereof."
SECTION 1.04. Amendment to Section 6.07. Section 6.07 of the Merger
Agreement is hereby amended by deleting the section reference to "9(d)" of the
Halter Marine 1996 Plan in the tenth line thereof and inserting in lieu thereof
"10(e)".
SECTION 1.05. Amendment to Section 7.01. Section 7.01 of the Merger
Agreement is hereby amended by adding the following new paragraph (g) at the
end of Section 7.01:
"(g) Financing. Bank financing of at least $175 million shall have been
arranged for the Surviving Corporation effective as of the Effective Time
on terms reasonably acceptable to Halter Marine and Friede Goldman and that
in the reasonable judgment of both Halter Marine and Friede Goldman would
meet the needs of the Surviving Corporation."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations of Halter Marine. Halter Marine hereby
represents and warrants to Friede Goldman as follows:
(a) Halter Marine has all necessary corporate power and authority to
execute and deliver this Amendment, to perform its obligations under the
Merger Agreement (as amended by this Amendment) and to consummate the
transactions contemplated by the Merger Agreement (as amended by this
Amendment).
(b) The execution and delivery of this Amendment by Halter Marine have
been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of Halter Marine are necessary to
authorize this Amendment.
(c) This Amendment has been duly and validly executed and delivered by
Halter Marine and, assuming the due authorization, execution and delivery
by Friede Goldman, the Merger Agreement (as amended by this Amendment)
constitutes the legal, valid and binding obligation of Halter Marine,
enforceable against Halter Marine in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or principles governing the availability of equitable
remedies).
SECTION 2.02. Representations and Warranties of Friede Goldman. Friede
Goldman hereby represents and warrants to Halter Marine that:
(a) Friede Goldman has all necessary corporate power and authority to
execute and deliver this Amendment, to perform its obligations under the
Merger Agreement (as amended by this Amendment) and to consummate the
transactions contemplated by the Merger Agreement (as amended by this
Amendment).
(b) The execution and delivery of this Amendment by Friede Goldman have
been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of Friede Goldman are necessary to
authorize this Amendment.
(c) This Amendment has been duly and validly executed and delivered by
Friede Goldman and, assuming the due authorization, execution and delivery
by Halter Marine, the Merger Agreement (as amended by this Amendment)
constitutes the legal, valid and binding obligation of Friede Goldman,
enforceable against Friede Goldman in accordance with its terms (except in
each such case insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or principles governing the
availability of equitable remedies).
ARTICLE III
GENERAL PROVISIONS
SECTION 3.01. Effect on Merger Agreement. Except as amended hereby, the
provisions of the Merger Agreement are and shall remain in full force and
effect.
SECTION 3.02. Counterparts. This Amendment may be executed in two
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Amendment by telecopier shall
be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 3.03. Governing Law. This Amendment shall be governed by and
construed in accordance with the Laws of the State of Delaware as applied to
contracts executed and to be performed entirely in such state.
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<PAGE>
SECTION 3.04. Entire Agreement. The Merger Agreement (as amended by this
Amendment) and the Confidentiality Agreements constitute the entire agreement
of the parties hereto with respect to the subject matter hereof and supercede
all prior agreements and undertakings, both written and oral between Halter
Marine and Friede Goldman with respect to the subject matter hereof.
IN WITNESS WHEREOF, Friede Goldman and Halter Marine have each caused this
Amendment to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HALTER MARINE GROUP, INC.
/s/ Rick S. Rees
By:__________________________________
Name: Rick S. Rees
Title: Executive Vice President
FRIEDE GOLDMAN INTERNATIONAL INC.
/s/ John F. Alford
By:__________________________________
Name: John F. Alford
Title: Executive Vice President
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<PAGE>
ANNEX C
STOCKHOLDER'S AGREEMENT
By and Between
FRIEDE GOLDMAN INTERNATIONAL INC.
and
J. L. HOLLOWAY
<PAGE>
STOCKHOLDER'S AGREEMENT
STOCKHOLDER'S AGREEMENT, dated as of June 1, 1999 (this "Agreement"), by and
between FRIEDE GOLDMAN INTERNATIONAL INC., a Mississippi corporation (the
"Company"), and J.L. HOLLOWAY (the "Stockholder").
R E C I T A L S
WHEREAS, the Stockholder is the record and beneficial owner of 9,919,977
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock"), representing approximately 42% of all issued and outstanding shares of
Common Stock;
WHEREAS, concurrently with the execution and delivery of this Agreement, the
Company is entering into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement") with Halter Marine Group, Inc., a Delaware
corporation ("Halter Marine"), pursuant to which Halter Marine will be merged
with and into the Company, and the shareholders of Halter Marine shall receive,
in exchange for their shares of Halter Marine common stock, shares of Common
Stock at the exchange ratio provided for in the Merger Agreement; and
WHEREAS, the Merger Agreement further contemplates that the Company and the
Stockholder shall enter into this Agreement which sets forth the understanding
among the Company, the Stockholder and Halter Marine as to the matters set
forth herein with respect to, among other things, the holding, acquisition and
transfer of the Common Stock by the Stockholder and his Affiliates (as defined
below) following consummation of the merger contemplated by the Merger
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereto hereby agree as
follows:
SECTION 1. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2, as in effect on
the date hereof, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
"beneficially own" shall have the meaning set forth in Rule 13d-3, as in
effect on the date hereof, under the Exchange Act.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day that is not a Saturday, Sunday or United
States federal holiday.
"Effective Time" shall mean the Effective Time as defined in the Merger
Agreement.
"Employee Plan" shall mean any equity incentive plan, agreement, bonus,
award, stock purchase plan, stock option plan or other stock arrangement with
respect to any directors, officers or other employees of the Company.
"Friede Goldman Rights Agreement" shall mean the Stockholder Rights
Agreement dated as of December 7, 1998 between the Friede Goldman International
Inc. and American Stock Transfer and Trust Company or any amendment thereof.
"Group" shall have the meaning set forth in Rule 13d-5, as in effect on the
date hereof, under the Exchange Act.
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"Person" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3)
of the Exchange Act.
"Required Board Approval" means approval of the Board by majority vote
including the affirmative vote of at least one director originally nominated by
Halter Marine.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Voting Stock" shall mean the Common Stock and any other security or
securities the holders of which are entitled, other than solely by reason of
events of default or the failure to pay dividends, to vote for the election of
the members of the Board, and options and rights to acquire such securities and
securities convertible into such securities, in each case now or hereafter
outstanding.
SECTION 2. Restrictions. The Stockholder covenants and agrees that during
the term of this Agreement, without the prior written consent of the Company
approved by two-thirds of the directors of the Company, the Stockholder and
each of his Affiliates shall not, directly or indirectly, alone or through or
with others:
(a) except as provided in Section 3 hereof, acquire, announce an intention
to acquire, offer to acquire, or enter into any agreement, arrangement or
undertaking of any kind the purpose of which is to acquire, by purchase,
exchange or otherwise, (i) any shares of Voting Stock (other than by means of a
stock split or stock dividend of Voting Stock, or pursuant to any Employee
Plan) or (ii) any other security convertible into, or any option, warrant or
right to acquire, Voting Stock (other than by means of a dividend paid to
holders of Voting Stock, or pursuant to any Employee Plan) or (iii) all or any
substantial part of the assets of the Company or any of its Affiliates;
(b) solicit, or participate in any solicitation of, proxies with respect to
any Voting Stock, or become a "participant" in a "solicitation" (as such terms
are defined in Regulation 14A of the Exchange Act) in opposition to any matter
that has been recommended by the directors of the Company or in favor of any
matter that has not been approved by the directors of the Company, in each case
approved by the Required Board Approval;
(c) propose or otherwise solicit stockholders of the Company for the
approval of one or more stockholder proposals, seek or solicit support for
(whether publicly or privately) any written consent of stockholders of the
Company, attempt to call a special meeting of stockholders, or nominate or
attempt to nominate any Person for election as a director of the Company;
(d) deposit any Voting Stock in a voting trust or similar agreement or
subject any Voting Stock to any arrangement or agreement with respect to the
voting of such Voting Stock;
(e) take any action to form, join or in any way participate in any
partnership, limited partnership, syndicate or other Group with respect to
Voting Stock or otherwise act in concert with any Person for the purpose of
circumventing the provisions or purposes of this Agreement;
(f) make or in any way advance any request or proposal to amend, modify or
waive any provision of this Agreement except in a nonpublic and confidential
manner; or
(g) announce an intention to do, or solicit, assist, prompt, induce or
attempt to induce any Person to do, any of the actions restricted or prohibited
under subparagraphs (a) through (f) above.
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SECTION 3. Additional Purchases. (a) Notwithstanding the restrictions
contained in Section 2 hereof, during the term of this Agreement:
(i) In the event of the "commencement" (as that term is defined in Rule
14d-2, as in effect on the date hereof, under the Exchange Act) of a bona
fide tender offer by an independent Person or Group to acquire a majority
or more of the total voting power of the Voting Stock then outstanding,
which tender offer meets all of the requirements set forth in this Section
3(a)(i) and which is opposed, or is not supported by the Required Board
Approval within ten (10) Business Days after the date of commencement of
the tender offer, the Stockholder and his Affiliates may, directly or
indirectly, acquire, announce an intent to acquire, offer to acquire or
enter into agreements or undertakings to acquire by purchase, exchange or
otherwise, Voting Stock. In addition to meeting the requirements set forth
in the preceding sentence, (A) such tender offer must contain no material
conditions except (1) a requirement or requirements that a minimum number
of shares of Voting Stock be tendered, and (2) a condition for receipt of
necessary regulatory approvals, consents and exemptions and (B) in the
reasonable judgment of the Stockholder and a nationally recognized
investment banker jointly chosen by the Stockholder and the Company, the
Person or Group making such tender offer has a reasonable probability of
succeeding in such tender offer. The right of the Stockholder and his
Affiliates to acquire shares of Voting Stock in response to any tender
offer under this Section 3(a)(i) shall terminate upon the termination of
such tender offer; provided, however, that the Stockholder and his
Affiliates have the right to fulfill any commitments with respect to Voting
Stock which they may have on the date such tender offer is terminated.
(ii) In the event of (A) a tender offer by a Person or Group other than
the Company or its subsidiaries to acquire a majority or more of the total
voting power of the Voting Stock then outstanding which is supported by the
Required Board Approval within ten (10) Business Days after the date of the
commencement of the tender offer or (B) the announcement by the Company of
the acceptance by the Required Board Approval of a proposal by any person
or Group to acquire, by consolidation, merger or otherwise, a majority or
more of the total voting power of the Voting Stock then outstanding or all
or substantially all of the assets of the Company and its subsidiaries;
then the Stockholder and/or his Affiliates may make, and purchase Voting
Stock in, a tender offer pursuant to Section 14 of the Exchange Act and the
regulations thereunder to acquire (in addition to Voting Stock then held by
the Stockholder and/or his Affiliates) at least that percentage of the
total voting power of the Voting Stock sought to be acquired in the offer
or proposal referred to in clause (A) or (B) of this Section 3(a)(ii) (or
at least that percentage of Voting Stock equal to the percentage of assets
of the Company sought to be acquired in the offer or proposal referred to
in clause (B) of this Section 3(a)(ii)) for any consideration it may select
at a per share price or value which, in the determination of a nationally
recognized investment banker selected jointly by the Stockholder and the
Company, exceeds the per share price or value of the tender offer or
proposal described in clause (A) or (B) of this Section 3(a)(ii). Any offer
made by the Stockholder or any Affiliate under this Section 3(a)(ii) must
include the agreement of the Stockholder or such Affiliate to take any
additional action which has been agreed to by the Person or Group making
the tender offer or proposal referred to in clause (A) or (B) of this
Section 3(a)(ii); provided, however, that if it is not possible for the
Stockholder or his Affiliate to take such action, it may substitute an
agreement which, in the determination of a nationally recognized investment
banker selected jointly by the Stockholder and the Company, is of at least
equal value with the agreement of such Person or Group.
(iii) In the event that it is publicly disclosed that Voting Stock
representing more than 30% of the total voting power of the shares of
Voting Stock then outstanding have been acquired by any Person or Group
(other than the Stockholder and his Affiliates or employee benefit plans of
the Company), the Stockholder and his Affiliates may acquire, announce an
intent to acquire, offer to acquire or enter into agreements or
undertakings to acquire by purchase, exchange or otherwise, Voting Stock in
an amount up to that, when added to the Voting Stock then owned by the
Stockholder and his Affiliates, would equal the amount owned by such other
Person or Group.
(iv) The Stockholder and his Affiliates may purchase additional shares
of Voting Stock provided that, as a result of such additional purchases the
Stockholder and his Affiliates, in the aggregate, do not beneficially own
more than 30% of the total voting power of the shares of Voting Stock then
outstanding.
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(b) The Stockholder or his Affiliates, as the case may be, shall give notice
to the Company on or prior to the third business day after such purchases or
acquisitions of additional shares of Voting Stock pursuant to Section 3(a),
indicating the number of shares of Voting Stock which the Stockholder and each
of his Affiliates have acquired.
(c) The Stockholder and his Affiliates shall not be obligated to dispose of
any Voting Stock if the aggregate percentage ownership of the Stockholder and
his Affiliates is increased as a result of a recapitalization of the Company or
any other action taken by the Company.
(d) Notwithstanding any other provisions of this Section 3, neither the
Stockholder nor any of his Affiliates may purchase additional shares of Voting
Stock if any of the Stockholder and his Affiliates are in default under, or
have breached any material provision of, this Agreement.
(e) All shares of Voting Stock acquired pursuant to this Section 3 or as a
result of a recapitalization of the Company or any other action taken by the
Company, shall be subject to all of the terms, covenants and conditions of this
Agreement.
SECTION 4. Sales and Other Dispositions. (a) The Stockholder covenants and
agrees that during the term of this Agreement neither he nor any of his
Affiliates shall sell, transfer, hypothecate, pledge or otherwise dispose of
any shares of Voting Stock except:
(i) to the Company;
(ii) to a Person or Group not disapproved on a reasonable basis by the
Required Board Approval within ten (10) Business Days after receipt of
written notice to the Company from the Stockholder identifying the person
or members of the Group, which immediately after the acquisition of such
shares would not be the beneficial owner of more than 10% of the total
voting power of shares of Voting Stock then outstanding and which
acknowledges in a writing reasonably satisfactory to the Company that such
Person or Group has received a copy of this Agreement and agrees to be
bound by all of its provisions with respect to the Voting Stock as if such
Person or Group were the Stockholder;
(iii) in a bona fide underwritten registered public offering or in the
market in accordance with the timing and volume provisions of paragraph (e)
of Rule 144 (whether or not applicable) and of paragraphs (f) and (g) of
Rule 144, as in effect on the date hereof, under the Securities Act;
(iv) in privately negotiated sales or distributions to any Person or
Group in amounts which would result in such Person or Group beneficially
owning not more than 5% of the total voting power of shares of Voting Stock
then outstanding;
(v) in privately negotiated sales or distributions to any Person or
Group in amounts not to exceed 5% of the total voting power of shares of
Voting Stock then outstanding which would result in such Person or Group
beneficially owning in the aggregate less than 10% of the total voting
power of shares of Voting Stock then outstanding;
(vi) in privately negotiated sales or distributions to any Financial
Institution in amounts not to exceed 5% of the total voting power of shares
of Voting Stock then outstanding which would result in such Financial
Institution beneficially owning in the aggregate less than 15% of the total
voting power of shares of Voting Stock then outstanding. "Financial
Institution" is defined herein to include (A) any bank as defined in
section 3(a)(2) of the Securities Act that is not affiliated to the
Stockholder; or (B) any investment company registered under the Investment
Company Act of 1940 or a business development company as defined in section
2(a)(48) of that Act;
(vii) in privately negotiated sales or distributions during a single
twelve-month period to any Financial Institution in amounts not to exceed
2% of the total voting power of shares of Voting Stock then outstanding;
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(viii) pursuant to a bona fide pledge of, or granting of a security
interest, in the Voting Stock owned by the Stockholder and his Affiliates
to an institutional lender for money borrowed or pursuant to the
foreclosure of any such pledge or security interest; provided, however,
that either (A) such pledge relates to no more than an aggregate of 25,000
shares of Voting Stock, or (B) such lender (a "Lender") prior thereto
acknowledges in a writing reasonably satisfactory to the Company that it
has received a copy of this Agreement and agrees to be bound by all of the
provisions of Annex A with respect to the Voting Stock;
(ix) pursuant to a tender in response to a tender offer described in
Section 3(a)(ii) of this Agreement;
(x) to an Affiliate of the Stockholder, if such Affiliate acknowledges
in a writing reasonably satisfactory to the Company that it has received a
copy of this Agreement and agrees to be bound by all its provisions with
respect to the Voting Stock as if it were the Stockholder; or
(xi) pursuant to a merger or consolidation in which the Company is
acquired, or a plan of liquidation of the Company.
(b) Any purported sale or transfer of Voting Stock not in compliance with
Section 4 of this Agreement during the term hereof shall be void and of no
force or effect and the Company shall not be required to transfer any Voting
Stock to the new purported owner or recognize it as a stockholder for any
purpose. Notwithstanding anything to the contrary contained in this Agreement,
bona fide pledges of shares of Voting Stock outstanding as of the date hereof
shall not be subject to the rights and obligations contained in Section 4.
(c) Notwithstanding any other provision in this Agreement, the Stockholder
shall be permitted to purchase puts, sell calls and enter into other
derivative transactions with respect to the Voting Stock, provided that (i)
any such transaction is entered into solely for the purpose of reducing risk
with respect to the market price of the Voting Stock and (ii) any other party
or parties to any such transaction agrees to be bound by the terms of this
Agreement unless any such put, call or other derivative transaction is
transacted on an national securities exchange or over-the-counter market and
the other party to such transaction is unknown to the Stockholder.
(d) In the event that the Stockholder shall receive from any Person an
offer, proposal or other indication of interest (i) to purchase 5% or more of
Voting Stock, (ii) to enter into any merger, consolidation or other business
combination with the Company, (iii) to enter into a transaction or series of
transactions to purchase, lease or otherwise acquire a substantial portion of
the assets of the Company or (iv) to enter into any other extraordinary
business transaction involving or otherwise relating to the Company (for the
purposes of this paragraph (d), a "Proposed Offer"), the Stockholder shall
promptly notify the Board of his receipt of such Proposed Offer and provide to
the Board such details with respect to such Proposed Offer as any director
shall request, including, without limitation, (A) the identity of the Person
making the Proposed Offer and (B) a description of the terms of the Proposed
Offer.
SECTION 5. Voting Agreement; Management Succession. (a) The Stockholder
shall take such action as may be required so that all Voting Stock owned by
the Stockholder and each of his Affiliates are (i) voted for the Company's
nominees for election as directors of the Company and (ii) voted in support of
the Management Succession Plan (as defined below). The Stockholder and his
Affiliates agree that all Voting Stock held by them shall be present, in
person or by proxy, at all meetings of stockholders of the Company so that all
such Voting Stock may be counted for the purpose of determining the presence
of a quorum at such meetings.
(b) The Stockholder hereby agrees to resign as Chairman and CEO of the
Company by the second anniversary of the Effective Time (as defined in the
Merger Agreement), and further agrees to support the appointment of John Dane
III to succeed him in such positions at the time of his resignation (the
"Management Succession Plan").
SECTION 6. Registration Rights. The Stockholder shall be entitled to the
registration rights set forth in Annex B hereto, which is incorporated herein
by reference.
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SECTION 7. Representations; Covenants. (a) The Company represents and
warrants that it has the requisite corporate power to enter into this
Agreement, that it has duly authorized, executed and delivered this Agreement
and that the Agreement constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Stockholder represents and warrants that:
(i) he has the requisite power to enter into this Agreement, that he has
duly executed this Agreement and that this Agreement constitutes the valid
and binding obligation of the Stockholder, enforceable against the
Stockholder and his Affiliates in accordance with its terms;
(ii) as of the date hereof, the Stockholder and his Affiliates own,
beneficially, in the aggregate 9,919,977 shares of Common Stock, and no
other Voting Stock or other securities issued by the Company;
(iii) all of such shares of Common Stock so owned as set forth in clause
(ii) above are owned by the Stockholder free and clear of any pledge, lien,
security interest, mortgage, charge, claim, proxy, voting restriction or
other encumbrance of any kind, other than pursuant to this Agreement, the
Voting and Proxy Agreement referred to in the recitals to the Merger
Agreement, the Agreement dated August 19, 1998 between the Stockholder and
A.G. Edwards & Sons, Inc. with respect to not more than 1,309,500 shares of
Common Stock, and the Credit Agreement and the two Pledge Agreements each
dated July 15, 1998 between the Stockholder and Nations Bank (the "Nations
Bank Agreements") with respect to not more than 5,229,500 shares of Common
Stock and except that the Stockholder does not own 650,000 shares of Voting
Stock listed on Exhibit A but only the voting rights with respect to such
shares pursuant to a Voting Trust Agreement, dated as of January 25, 1999
by and between the Stockholder and Phyllis D. Holloway;
(iv) except for the Stockholder and his Affiliates, no other Person,
corporation, entity or association is, or may be deemed to be, a member of
a Group which includes the Stockholder or any of his Affiliates with
respect to the Voting Stock; and
(v) the Stockholder has been informed by the Company that the Company is
under no obligation to register the sale, transfer or other disposition of
the Common Stock except pursuant to Section 6 of this Agreement or to take
any other action necessary in order to make an exemption from registration
under the Securities Act available.
(c) The Stockholder agrees that (i) he will not permit any Voting Stock to
be owned by any Affiliates of the Stockholder unless either (A) the Stockholder
owns at least a majority of the outstanding securities of such Affiliate which
are ordinarily entitled to vote for the election of directors or others
performing similar functions with respect to such Affiliate or (B) with respect
to an Affiliate that is a trust or partnership, the Stockholder otherwise
controls, or has the authority to control, such Affiliate in the Stockholder's
capacity as a trustee or general partner, as the case may be, of such
Affiliate, (ii) that he will not sell or otherwise dispose of any voting
securities of any Affiliate of the Stockholder which owns Voting Stock so as to
reduce its actual or potential (assuming the conversion of any such convertible
securities) ownership of the outstanding voting securities of such Affiliate to
below 50.1%, unless either (A) prior thereto the shares of Voting Stock held by
such entity are transferred to the Stockholder or one or more of its Affiliates
in which the Stockholder owns at least a majority of the outstanding securities
which are ordinarily entitled to vote for the election of directors or other
performing similar functions with respect to such Affiliate or (B) with respect
to an Affiliate that is a trust or partnership, such transfer will not result
in the loss of control, or the loss of the authority to control, such Affiliate
in the Stockholder's capacity as a trustee or general partner, as the case may
be, of such Affiliate and (iii) that he will use his reasonable best efforts to
maintain all voting and dispositive rights on the Voting Stock pledged pursuant
to the Nations Bank Agreements.
SECTION 8. Term of Agreement; Amendments. (a) This Agreement shall be in
full force and effect for a term of five (5) years following the Effective Time
(as defined in the Merger Agreement), which five (5) year period shall
constitute the term of this Agreement. This Agreement shall be binding on the
parties hereto from the date hereof.
C-6
<PAGE>
(b) Neither this Agreement nor any provision hereof may be amended or waived
orally or in writing, except by a writing signed by the parties hereto and
approved by two-thirds of the Board; provided that, any such amendment or
waiver prior to the Effective Time shall also require the written consent of
Halter Marine to be effective.
SECTION 9. Termination. This agreement shall terminate in the event that:
(i) the Merger Agreement shall be terminated prior to the Effective
Time; or
(ii) (A) the aggregate amount of Voting Stock beneficially owned by
Stockholder shall be less than 15% of the total voting power of shares of
Voting Stock then outstanding, (B) the Stockholder shall not have been an
officer or director of the Company during the previous six months; and (C)
the Friede Goldman Rights Agreement shall be in full force and effect.
SECTION 10. Specific Enforcement. The Stockholder acknowledges and agrees
that the Company and its stockholders would be irreparably injured in the event
that any provision of this Agreement is breached or not performed by the
Stockholder and his Affiliates in accordance with its specific terms.
Accordingly, it is agreed that each party shall be entitled to temporary and
permanent injunctive relief with respect to each and any breach or purported
repudiation of this Agreement by the other and to specifically enforce strict
adherence to this Agreement and the terms and provisions hereof against the
other in any action instituted in a court of competent jurisdiction, in
addition to any other remedy which such aggrieved party may be entitled to
obtain. Moreover, in the event of the breach of any of the provisions of this
Agreement, timeliness in obtaining relief is of the essence.
SECTION 11. Miscellaneous.
(a) Notices. All notices and other communications provided for herein shall
be in writing and shall be delivered by hand, by facsimile, telecopied or sent
by certified or registered mail, return receipt requested, postage prepaid,
addressed in the manner set forth below (or in such other manner for a party as
shall be specified in a notice given in accordance with this Section 11(a)):
(i) if to the Company, to:
Friede Goldman International Inc.
525 E. Capitol Street, 7th Floor
Jackson, Mississippi 39201
Telecopier No.: (601) 352-1052
Attention: General Counsel
(ii) if to the Stockholder, to:
J.L. Holloway
525 E. Capitol Street, 7th Floor
Jackson, Mississippi 39201
Telecopier No.: (601) 352-1052
All such notices shall be conclusively deemed to be received and shall be
effective, if sent by facsimile, hand delivery or telecopied, upon receipt, or
if sent by registered or certified mail, on the fifth day after the day on
which such notice is mailed.
(b) Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such costs and expenses.
(c) Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties.
This Agreement may not be assigned by the Stockholder without the prior written
consent of the directors of the Company, approved by the Required Board
Approval.
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<PAGE>
(d) Third Party Beneficiaries. Nothing expressed or implied in this
Agreement is intended or shall be construed to give any Person, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement;
provided that, during the period from the date hereof until the earlier of the
Effective Time or the termination of the Merger Agreement in accordance with
its terms, Halter Marine shall be an intended beneficiary of this Agreement.
(e) Entire Agreement. This Agreement is intended by the parties to be a
final expression of their agreement and a complete and exclusive statement of
their agreement and understanding in respect of the subject matter contained
herein. This Agreement supercedes all prior agreements and understandings
between the parties with respect to such subject matter.
(f) Severability. In the event that any provision contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(g) Waiver; Remedies. No delay on the part of any party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party hereto of any right, power or
privilege hereunder operate as a waiver of any other right, power or privilege
hereunder, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
(h) Attorneys' Fees. In any action at law or in equity brought to enforce or
interpret any provision of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements, in
addition to any other relief to which such party may be entitled.
(i) Waiver of Jury Trial. The Company and the Stockholder hereby irrevocably
waives all right to trial by jury in any action or proceeding (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within that State.
(k) Service of Process; Consent to Jurisdiction. Each party hereto
irrevocably (i) appoints The Corporation Trust Company as its lawful agent and
attorney to accept and acknowledge service of process against such party, and
upon whom process may be served in any action, suit or proceeding arising out
of, or in connection with, this Agreement or the transactions contemplated
hereby with the same effect as if such parties were a resident of the State of
Delaware and had been lawfully served with such process in such jurisdiction,
and (ii) consents to the service of any process, pleading, notices or other
papers by the mailing of copies thereof by registered, certified or first class
mail postage prepaid or by reputable courier service, to such party at such
party's address set forth herein, or by any other method provided or permitted
under Delaware law, with the same effect as if such parties were a resident of
the State of Delaware and had been lawfully served with such process in such
jurisdiction.
To the fullest extent permitted by applicable law, (x) each party hereto
agrees that any claim, action or proceeding by such party seeking any relief
whatsoever arising out of, or in connection with, this Agreement or the
transactions contemplated hereby shall be brought only in the United States
District Court in the State of Delaware and in any Delaware State court and not
in any other State or Federal court in the United States of America or any
court in any other country, (y) to submit to the exclusive jurisdiction of such
courts located in the State of Delaware for purposes of all legal proceedings
arising out of, or in connection with, this Agreement or the transactions
contemplated hereby, and (z) irrevocably waives any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
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<PAGE>
(l) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(m) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(n) Action as Director. Notwithstanding the restrictions contained in this
Agreement, actions taken by the Stockholder as a member of the Board pursuant
to his responsibilities in such capacity shall not be deemed to violate this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
their individual capacity or caused it to be duly executed by their respective
authorized signatories thereunto duly authorized as of the date first above
written.
FRIEDE GOLDMAN INTERNATIONAL INC.
/s/ James A. Lowe III
By___________________________________
Name: James A. Lowe III
Title: Secretary and General
Counsel
/s/ J. L. Holloway
----------------------------------
J. L. HOLLOWAY
C-9
<PAGE>
Annex A
(to Stockholder's
Agreement)
Agreement of Lender Regarding Voting Stock
Subject to Pledge or Security Interest
SECTION 1. Definitions. (a) As used herein, the following terms shall have
the following meanings:
"Price" per share of Common Stock or Voting Stock shall mean the last
reported sale price for such shares on the New York Stock Exchange; or if such
shares are not then listed on such exchange, then the last reported sale price
on the largest exchange (based on the aggregate dollar value of securities
listed) on which such shares are listed; or, if such shares are not listed or
traded on any exchange, then the average of the last reported sale prices for
such shares on the NASDAQ National Market, or (if not authorized for quotation
on the NASDAQ National Market) in the over-the-counter market, as reported on
the National Association of Securities Dealers Automated Quotation System; or,
if such sale price is not reported thereon, the average of the closing bid and
asked prices so reported; or if such prices shall not be reported thereon, the
value set by good faith negotiations between the Lender and the Company,
provided that, if the Lender and the Company are unable to agree upon such
value, the value shall be set by a nationally recognized investment banker
jointly chosen by the Lender and the Company.
"Stockholder's Agreement" shall mean the Stockholder's Agreement, dated as
of June 1, 1999 between J.L. Holloway and Friede Goldman International Inc.
SECTION 2. Sales and Dispositions. The Lender covenants and agrees that, in
the event of the ownership by the Lender of any shares of Voting Stock pursuant
to the foreclosure of any pledge or security interest relating to shares of
Voting Stock subject to the Stockholder's Agreement, the Lender shall not take
any action that would violate Section 4 of the Stockholder's Agreement as if
the Lender were the Stockholder.
SECTION 3. Right of First Offer. (a) The Lender covenants and agrees that in
the event that the Lender or any of its Affiliates proposes to sell any Voting
Stock pursuant to any transaction, sale or other disposition permitted under
paragraphs (ii), (iii), (iv), (v) or (vi) of Section 4(a) of the Stockholder's
Agreement, then the Lender, its Affiliates, or each of them, as the case may,
shall first deliver to the Company (i) a written offer to sell to the Company
or its assignee the Voting Stock proposed to be sold, along with a statement of
intention to transfer; (ii) the name and address of the prospective
transferees, if known by the Lender; (iii) the amount and type of Voting Stock
involved in the proposed transfer; and (iv) the price and other terms of the
proposed transfer. The right to purchase Voting Stock pursuant to such offer to
the Company shall be fully assignable in whole or in part by the Company to one
or more other Persons in its sole discretion.
(b) As soon as reasonably practicable but not later than five (5) Business
Days after the Company's receipt of such offer, the Company or the Person or
Persons to whom the offer is assigned may elect, by written notice to the
offeror, to purchase all or arrange for an assignee to purchase all, but not
less than all, the Voting Stock involved in the proposed transfer. In the event
that the proposed transfer is pursuant to Section 4(a)(ii) or 4(a)(iv) of the
Stockholder's Agreement, the Company or its assignees shall be entitled to
purchase such Voting Stock for the same price and on the same terms (including
any installment or extended payment terms) and conditions as the proposed
transfer; provided, however, that if the price and payment terms proposed for
such proposed transfer provide for consideration other than cash, the Company
or its assignees may, at their option, substitute cash equal to the value of
such non-cash consideration (which value shall be determined by a nationally
recognized investment banking firm jointly chosen by the Lender and the
Company). The date on which the Company must exercise its right of first offer
shall be within five (5) Business Days from the date specified above.
(c) In the event that the proposed transfer is pursuant to Section 4(a)(iii)
of the Stockholder's Agreement, the cash price to be paid by the Company or its
assignees shall be the average Price per share of Common Stock (or other Voting
Stock) for the five (5) consecutive trading days immediately preceding the
Company's receipt of such offer.
C-10
<PAGE>
(d) If the Company or its assignees elect to purchase such Voting Stock,
such purchase shall be consummated at a closing to be held at a time and place
mutually agreeable to the offeror and the Company or its assignees not later
than twenty (20) days after acceptance of the offer (or if any regulatory,
stockholder or other approval of such purchase is required, within twenty (20)
days after receipt of such approval).
(e) If the Company does not exercise its right of first offer hereunder
within the time period specified for such exercise, the party giving the
written offer to the Company shall be free during the period of ninety (90)
days following the expiration of such time period to sell the Voting Stock
specified in such offer to the prospective transferees and/or in the manner
identified therein at the price specified therein (or at any price in excess
thereof) and on the terms set forth in such written offer.
(f) Any purported sale or transfer of Voting Stock not in compliance with
this Section 3 shall be void and of no force or effect and the Company shall
not be required to transfer any Voting Stock to the new purported owner or
recognize it as a stockholder for any purpose.
C-11
<PAGE>
Annex B
(to Stockholder's
Agreement)
Registration Rights
(a) In the event that the Stockholder shall desire to sell any of the shares
of Voting Stock during the term of this Agreement, and such sale requires, in
the opinion of counsel to the Stockholder (which opinion shall be, in the
reasonable judgment of the Company and its counsel, satisfactory in form and
substance to the Company and its counsel), registration of such shares under
the Securities Act, the Company shall cooperate with the Stockholder and any
underwriters in registering such shares for resale, including, without
limitation, promptly filing a registration statement which complies with the
requirements of applicable federal and state securities laws and entering into
an underwriting agreement with such underwriters upon such terms and conditions
as are customarily contained in underwriting agreements with respect to
secondary distributions; provided, however, that the Company shall not be
required to have declared effective more than three registration statements
hereunder and shall be entitled to delay the filing or effectiveness of any
registration statement for up to 120 days if the offering would, in the
judgment of the Board, require premature disclosure of any material corporate
development or otherwise interfere with or adversely affect any pending or
proposed offering of securities of the Company or any other material
transaction involving the Company. The Stockholder agrees to use all reasonable
efforts to cause, and to cause any underwriters of any Sale to cause, any Sale
pursuant to such registration statement to be effected on a widely distributed
basis so that upon consummation thereof no purchaser or transferee shall
acquire beneficially more than 2% of the then outstanding voting power of the
Company.
(b) If the Company proposes to register any shares of Voting Stock under the
Securities Act in connection with an underwritten public offering of such
shares, the Company will promptly give written notice to the Stockholder of its
intention to do so and, upon the written request of the Stockholder given
within 30 days after receipt of any such notice (which request shall specify
the number of shares of Voting Stock intended to be included in such
underwritten public offering by the Stockholder), the Company will cause all
such shares for which the Stockholder requests participation in such
registration, to be so registered and included in such underwritten public
offering; provided, however, that the Company may elect not to cause any such
shares to be so registered (i) if the underwriters in good faith object for
valid business reasons or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration statement filed on Form S-
4 of the Securities Act (or any successor form thereto).
(c) If the Stockholder's shares are registered pursuant to the provisions of
this Annex B, the Company agrees (i) to furnish copies of the registration
statement and prospectus relating to the shares covered thereby in such numbers
as the Stockholder may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
shares meeting the requirements of such securities laws, and to furnish the
Stockholder such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Company shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Company, except that the Stockholder shall pay
the fees and disbursements of his counsel and the underwriting fees and selling
commissions applicable to the shares sold by the Stockholder. The Company shall
indemnify and hold harmless the Stockholder and his Affiliates from and against
any and all losses, claims, damages, liabilities and expenses (including,
without limitation, reasonable attorney's fees) arising out of or based upon
any statements contained in, omissions or alleged omissions from, each
registration statement filed pursuant to this Annex B; provided, however, that
this provision shall not apply to any loss, liability, claim, damage or expense
to the extent it arises out of any untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Stockholder and his Affiliates and other representatives
expressly for use in any registration statement (or any
C-12
<PAGE>
amendment thereto) or any preliminary prospectus filed pursuant to this Annex
B. The Company shall also indemnify and hold harmless each underwriter and each
person who controls any underwriter within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable attorney's
fees) arising out of or based upon any statements contained in, omissions or
alleged omissions from, each registration statement filed pursuant to this
Annex B; provided, however, that this provision shall not apply to any loss,
liability, claim, damage or expense to the extent it arises out of any untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the underwriters expressly for use in
any registration statement (or any amendment thereto) or any preliminary
prospectus filed pursuant to this Annex B.
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<PAGE>
ANNEX D
VOTING AND PROXY AGREEMENT
Between
HALTER MARINE GROUP, INC.
and
J.L. HOLLOWAY
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
ARTICLE I
TRANSFER AND VOTING OF SHARES
<S> <C>
1.01. Voting Agreement..................................................... 1
1.02. No Disposition or Encumbrance of Shares.............................. 2
1.03. Voting of Shares; Further Assurances................................. 2
1.04. No Solicitation of Transactions...................................... 3
1.05. Action in Shareholder Capacity Only.................................. 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
2.01. Authorization, etc................................................... 4
2.02. No Conflict; Required Filings and Consents........................... 4
2.03. Title to Shares...................................................... 4
2.04. No Finder's Fees..................................................... 5
2.05. Total Shares......................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HALTER MARINE
3.01. Due Organization; Authority Relative to this Agreement............... 5
3.02. No Conflict; Required Filings and Consents........................... 5
ARTICLE IV
ADDITIONAL AGREEMENTS
4.01. Other Action......................................................... 6
ARTICLE V
MISCELLANEOUS
5.01. Expenses............................................................. 6
5.02. Notices.............................................................. 6
5.03. Severability......................................................... 7
5.04. Assignment........................................................... 8
5.05. Parties in Interest.................................................. 8
5.06. Specific Performance................................................. 8
5.07. Governing Law; Consent to Jurisdiction............................... 8
5.08. Headings............................................................. 8
5.09. Counterparts......................................................... 8
5.10. Waiver of Jury Trial................................................. 9
5.11. Termination.......................................................... 9
5.12. Entire Agreement..................................................... 9
5.13. Further Assurances................................................... 9
5.14. Certain Events....................................................... 9
5.15. Attorneys' Fees...................................................... 9
</TABLE>
D-i
<PAGE>
VOTING AND PROXY AGREEMENT dated as of June 1, 1999 (this "Agreement") by
and between HALTER MARINE GROUP, INC., a Delaware corporation ("Halter
Marine"), and J.L. HOLLOWAY (the "Stockholder").
WHEREAS, as of the date hereof, the Stockholder owns (beneficially or of
record) the number (i) of shares of common stock ("Company Common Stock"), par
value $0.01 per share, of Friede Goldman International Inc., a Mississippi
corporation (the "Company"), and (ii) options and warrants to acquire shares of
the Company Common Stock, each as set forth opposite such Stockholder's name on
Exhibit A hereto (all such shares now owned (beneficially or of record) and
which may hereafter be acquired, pursuant to the exercise of such options or
warrants or otherwise, by the Stockholders prior to the termination of this
Agreement being referred to herein as the "Shares");
WHEREAS, Halter Marine and the Company have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized
terms used but not otherwise defined in this Agreement have the meanings
assigned to such terms in the Merger Agreement), which provides, upon the terms
and subject to the conditions set forth therein, for the merger of Halter
Marine with and into Columbus (the "Merger"); and
WHEREAS, as a condition to the willingness of Halter Marine to enter into
the Merger Agreement, Halter Marine has required that the Stockholder agree,
and in order to induce Halter Marine to enter into the Merger Agreement, the
Stockholder has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
TRANSFER AND VOTING OF SHARES
SECTION 1.01. Voting Agreement. The Stockholder hereby agrees that from the
date hereof until the termination of this Agreement, at any meeting of the
stockholders of the Company, however called, and in any action by consent of
the stockholders of the Company, such Stockholder shall vote the Shares over
which such Stockholder has voting power: (A) in favor of the Merger and the
Merger Agreement (as amended from time to time) and each of the actions
contemplated by Halter Marine in connection with the Merger or pursuant to the
Merger Agreement and (B) against any proposal for any recapitalization, merger
(other than the Merger), sale of assets or other business combination between
the Company and any person or entity (other than Halter Marine) or any other
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which could result in any of the conditions to
the Merger Agreement not being fulfilled.
SECTION 1.02. No Disposition or Encumbrance of Shares. The Stockholder
hereby covenants and agrees that, from the date hereof to the termination of
this Agreement, he shall not, and shall not offer or agree to, sell, transfer,
tender, assign, hypothecate or otherwise dispose of, or create or permit to
exist any Encumbrance (as hereinafter defined) on the Shares now owned or that
may hereafter be acquired by such Stockholder at any time prior to the
termination of this Agreement; provided, however, Stockholder may sell the
Shares pursuant to Rule 144 of the Securities Act of 1933, as amended, to the
extent such sale is in compliance with applicable law.
SECTION 1.03. Voting of Shares; Further Assurances. (a) The Stockholder, by
this Agreement, with respect to those Shares that he owns of record, that he
has the right to vote or that may hereafter be acquired by such Stockholder at
any time prior to the Effective Time, does hereby (i) revoke any and all
proxies previously granted with respect to the matters set forth in Section
1.01 with respect to such Shares and (ii) constitute and appoint Halter Marine,
or any nominee of Halter Marine, with full power of substitution, from the date
hereof
D-1
<PAGE>
to the termination of this Agreement, as its true and lawful attorney and proxy
(its "Proxy"), for it and in its name, place and stead, to vote each of such
Shares as its Proxy, at every annual, special or adjourned meeting of the
stockholders of the Company, including the right to sign its name (as
Stockholder) to any consent, certificate or other document relating to the
Company that the law of the State of Mississippi may permit or require:
(i) in favor of the Merger and the Merger Agreement (as amended from
time to time) and each of the actions contemplated by Halter Marine in
connection with the Merger or pursuant to the Merger Agreement; and
(ii) against any proposal for any recapitalization, merger (other than
the Merger), sale of assets or other business combination between the
Company and any person or entity (other than Halter Marine) or any other
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which could result in any of the
conditions to the Merger Agreement not being fulfilled.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
The Stockholder acknowledges receipt and review of a copy of the Merger
Agreement.
(b) The Stockholder shall perform such further acts and execute such further
documents and instruments as may reasonably be required to vest in Halter
Marine the power to carry out and give effect to the provisions of this
Agreement.
(c) Prior to the termination of this Agreement pursuant to its terms, the
Stockholder shall not grant any proxies or powers of attorney with respect to
matters set forth in Section 1.01, deposit any of the Shares into a voting
trust or enter into a voting agreement with respect to any of the Shares, in
each case with respect to such matters.
SECTION 1.04. No Solicitation of Transactions. The Stockholder shall not,
directly or indirectly, and will instruct his agents, advisors and other
representatives not to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing non-public information), or take any other
action to facilitate, any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Columbus Takeover
Proposal (as defined in the Merger Agreement), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries, or to obtain a Columbus Takeover Proposal, or agree to or
endorse any Columbus Takeover Proposal. The Stockholder immediately shall cease
and cause to be terminated all existing discussions or negotiations of such
Stockholder and his agents, advisors or other representatives with any person
conducted heretofore with respect to a Columbus Takeover Proposal. The
Stockholder shall notify Halter Marine within 24 hours if any proposal or
offer, or any inquiry or contact with any person with respect thereto,
regarding a Columbus Takeover Proposal is made and shall, in any such notice,
indicate the identity of the person making such proposal, offer, inquiry or
contact and, in reasonable detail, the terms and conditions of such proposal,
offer, inquiry or contact and shall keep Halter Marine informed within 24 hours
of all material changes in such proposal, offer, inquiry or contact.
SECTION 1.05 Action in Shareholder Capacity Only. The Stockholder makes no
agreement or understanding herein in any capacity other than his capacity as a
record holder and beneficial owner of Shares, and nothing herein shall limit or
affect any actions taken in any other capacity.
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<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Halter Marine as follows:
SECTION 2.01. Authorization, etc. The Stockholder has all requisite power
and authority to execute and deliver this Agreement, to appoint Halter Marine
as his Proxy and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by or on behalf of the
Stockholder and, assuming its due authorization, execution and delivery by
Halter Marine, constitutes a legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms.
SECTION 2.02. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by the Stockholder does not, and the performance
of this Agreement by the Stockholder will not, (i) assuming that all filings
and obligations described in subsection (b) have been made, conflict with or
violate any foreign or domestic law, statute, ordinance, rule, regulation,
order, judgement or decree ("Law") applicable to the Stockholder or, if
applicable, by which any property or asset of the Stockholder is bound or
affected or (ii) if applicable, result in any breach of or constitute a default
(or an event which with the giving of notice or lapse of time or both would
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Stockholder pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(i) and (ii), for any such conflicts, violations, breaches, defaults or other
occurrences which would neither, individually or in the aggregate, prevent or
materially delay the performance by the Stockholder of any of his obligations
pursuant to this Agreement.
(b) The execution and delivery of this Agreement do not, and the performance
of this Agreement by Halter Marine will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any
Governmental Entity, except for applicable requirements, if any, of the
Exchange Act.
SECTION 2.03. Title to Shares. The Stockholder is the record and beneficial
owner of the Shares set forth opposite such Stockholder's name on Exhibit A
hereto free and clear of any pledge, lien, security interest, mortgage, charge,
claim, equity, option, proxy, voting restriction, right of first refusal,
limitation on disposition, adverse claim of ownership or use or encumbrance of
any kind, other than pursuant to this Agreement, the Merger Agreement, the
Agreement dated August 19, 1998 between the Stockholder and A.G. Edwards &
Sons, Inc. with respect to not more than 1,309,500 shares of Common Stock, and
the Credit Agreement and the two Pledge Agreements, each dated July 15, 1998
between the Stockholder and Nations Bank with respect to not more than
5,229,500 shares of Common Stock in the aggregate and except that the
Stockholder does not own 650,000 shares of Voting Stock listed on Exhibit A but
only the voting rights with respect to such shares pursuant to a Voting Trust
Agreement, dated as of January 25, 1999 by and between the Stockholder and
Phyllis D. Holloway.
SECTION 2.04. No Finder's Fees. Except as disclosed in the Merger Agreement,
no broker, finder or investment banker is entitled to any broker's, finder's,
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
SECTION 2.05. Total Shares. Except as set forth on Exhibit A hereto, the
Stockholder does not have any option to purchase or right to subscribe for or
otherwise acquire any securities of the Company and, other than with respect to
the Shares set forth on Exhibit A, has no other interest in or voting rights
with respect to any other securities of the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HALTER MARINE
Halter Marine represents and warrants to the Stockholder as follows:
SECTION 3.01. Due Organization; Authority Relative to this Agreement. Halter
Marine is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Halter Marine has all necessary power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation by Halter Marine of the
transactions contemplated hereby by Halter Marine have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Halter Marine are necessary to authorize this Agreement or to
consummate such transactions. This Agreement has been duly and validly executed
and delivered by Halter Marine and, assuming its due authorization, execution
and delivery by the Stockholder, constitutes a legal, valid and binding
obligation of Halter Marine, enforceable against Halter Marine in accordance
with its terms.
SECTION 3.02. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Halter Marine does not, and the performance
of this Agreement by Halter Marine will not (i) conflict with or violate any
the Articles of Incorporation or Bylaws of Halter Marine or any equivalent
organizational documents of any subsidiary of Halter Marine, (ii) assuming that
all consents, approvals, authorizations and permits described in subsection (b)
have been obtained and all filings and obligations described in subsection (b)
have been made, conflict with or violate any Law applicable to Halter Marine or
any subsidiary of Halter Marine or by which any property or asset of Halter
Marine or any subsidiary of Halter Marine is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with the giving of
notice or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of Halter Marine or any subsidiary of Halter Marine pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would neither, individually or in the aggregate, prevent or
materially delay the performance by Halter Marine of any of its obligations
pursuant to this Agreement.
(b) The execution and delivery of this Agreement do not, and the performance
of this Agreement by Halter Marine will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of the
Exchange Act and the HSR Act, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent
Halter Marine from performing its obligations under this Agreement, and would
not, individually or in the aggregate, have a Halter Marine Material Adverse
Effect.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01. Other Action. Each of the parties hereto shall use all
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
hereunder.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses.
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<PAGE>
SECTION 5.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, cable, telecopy, telegram or telex, or by registered or certified
mail (postage prepaid, return receipt requested) or nationally recognized
overnight courier service to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given
in accordance with this Section 5.02):
(a) If to Halter Marine:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Facsimile No.: (228) 897-4866
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No.: (212) 848-7179
Attention: John J. Madden, Esq.
(b) If to the Stockholder, to the address set forth below the
Stockholder's name on the signature pages hereof.
with copies to:
Andrews & Kurth L.L.P.
4200 Chase Tower
Houston, Texas 77002
Telecopier No.: (713) 220-4285
Attention: Thomas P. Mason, Esq.
SECTION 5.03. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the terms of this Agreement remain as originally contemplated to the fullest
extent possible.
SECTION 5.04. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise), without prior written
consent of the other parties except that Halter Marine may assign all or any of
their rights and obligations hereunder to any affiliate of Halter Marine,
provided that no such assignment shall relieve Halter Marine of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 5.05. Parties in Interest. This Agreement shall be binding upon and
shall inure solely to the benefit of, and be enforceable by, the parties hereto
and their respective successors, heirs, representatives and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, express or implied, is intended to or shall confer upon any
person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities of any
nature whatsoever under or by reason of this Agreement.
D-5
<PAGE>
SECTION 5.06. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof, that the parties hereto
would not have an adequate remedy at law for money damages in such event and
that the parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or in equity.
SECTION 5.07. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed in that State.
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in any Delaware State or Federal Court. Each party
hereto irrevocably submits to the nonexclusive jurisdiction of (a) the state
courts of the State of Delaware and (b) the United States federal district
courts located in the State of Delaware for the purposed of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby.
SECTION 5.08. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 5.09. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 5.10. Waiver of Jury Trial. Halter Marine and the Stockholder hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Halter Marine and the Stockholder
in the negotiation, administration, performance and enforcement thereof.
SECTION 5.11. Termination. Except for this Article V, this Agreement shall
terminate and be of no further force and effect, automatically and without any
required action of the parties hereto, at the earlier to occur of (a) the
Effective Time, (b) the termination of the Merger Agreement in accordance with
its terms in any manner in which Halter Marine would not be entitled pursuant
to Section 8.05(c) of the Merger Agreement to payment of the Termination Fee as
specified therein, or (c) three months after the termination of the Merger
Agreement in accordance with its terms in any manner in which Halter Marine
would be entitled pursuant to Section 8.05(c) of the Merger Agreement to
payment of the Termination Fee as specified therein.
SECTION 5.12. Entire Agreement. This Agreement and, to the extent referred
to herein, the Merger Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect thereto; provided, however, that any capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Merger Agreement. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 5.13. Further Assurances. From time to time, at the request of the
Company, in the case of the Stockholder, or at the request of the Stockholder,
in the case of the Company, and without further consideration, each party shall
execute and deliver or cause to be executed and delivered such additional
documents and instruments and take all such further action as may be reasonably
necessary or desirable to consummate the transaction contemplated by this
Agreement.
SECTION 5.14. Certain Events. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Shares and shall be binding upon
any person to which legal or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
SECTION 5.15. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
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<PAGE>
IN WITNESS WHEREOF, Halter Marine has caused this Agreement to be executed
by its officer thereunto duly authorized and the Stockholder has caused this
Agreement to be executed, or duly executed by an authorized signatory, as of
the date first written above.
HALTER MARINE GROUP, INC.
By: John Dane III
----------------------------------------
Name: John Dane III
Title: President, Chief Executive
Officer and Chairman of the Board
/s/ J. L. Holloway
------------------------------------------
Name: J. L. Holloway
Address: c/o Friede Goldman International
Inc.
525 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
Telecopier No.: (601) 352-1052
D-7
<PAGE>
Exhibit A
List of Stockholdings
<TABLE>
<CAPTION>
Number of
Shares of Number of
Common Stock Stock Options
------------ -------------
<S> <C> <C>
J.L. Holloway........................................ 7,349,477 90,000(1)
J.L. Holloway Family Trust........................... 1,920,500
Voting Trust (Phyllis D. Holloway)(2)................ 650,000
--------- ------
Total.............................................. 9,919,977 90,000
========= ======
</TABLE>
- --------
(1) Of such options, none are currently vested.
(2) As trustee under the Voting Trust created pursuant to Voting Trust
Agreement, dated January 25, 1999, between J. L. Holloway and Phyllis D.
Holloway, J. L. Holloway has voting power, but does not have dispository
power or a pecuniary interest, with respect to such shares.
<PAGE>
ANNEX E
FRIEDE & GOLDMAN INTERNATIONAL INC.
AMENDED AND RESTATED 1997 EQUITY INCENTIVE PLAN
Friede & Goldman International Inc., a Delaware corporation (the
"Company"), hereby establishes this Friede Goldman International Inc. Amended
and Restated 1997 Equity Incentive Plan (the "Plan").
1. Purpose. The purpose of the Plan is to promote the interests of the
Company by encouraging employees of, and consultants to, the Company and its
Subsidiaries and the directors of the Company who are not also employees of
the Company or a Subsidiary, to acquire or increase their equity interests in
the Company and to provide a means whereby such persons may develop a sense of
proprietorship and personal involvement in the development and financial
success of the Company, and to encourage them to remain with and devote their
best efforts to the business of the Company, thereby advancing the interests
of the Company and its stockholders. The Plan is also contemplated to enhance
the ability of the Company and its Subsidiaries to attract and retain the
services of individuals who are believed to be essential for the growth and
profitability of the Company.
2. Definitions. As used in this Plan:
(a) "Appreciation Right" means a right granted pursuant to Paragraph 5.
(b) "Award" means an Appreciation Right, an Option Right, a Director
Option, Phantom Shares, a Performance Unit, Bonus Stock, Restricted Stock,
or a Cash Tax Right.
(c) "Board" means the Board of Directors of the Company.
(d) "Bonus Stock" means unrestricted shares of Common Stock granted
pursuant to Paragraph 9.
(e) "Cash Tax Right" means a right granted pursuant to Paragraph 10.
(f) "Change in Control" shall be deemed to have occurred upon:
(i) the date of the acquisition by any "person" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
("Exchange Act") and excluding any transfer to any family members or
entities controlled by family members of J. L. Holloway), excluding the
Company or any of its Subsidiaries or affiliates, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
50% or more of either the then outstanding shares of common stock of
the Company, or the then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) the date the individuals who constitute the Board as of the
effective date of this Plan (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the members of the Board,
provided that any person becoming a director subsequent to the
effective date of this Plan whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other
than any individual whose nomination for election to Board membership
was not endorsed by the Company's management prior to, or at the time
of, such individual's initial nomination for election) shall be, for
purposes of this Plan, considered as though such person were a member
of the Incumbent Board;
(iii) the date of consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, or the issuance of shares
of stock of the Company in connection with the acquisition of the stock
or assets of another entity, provided, however, that a Change in
Control shall not occur under this clause (iii) if consummation of the
transaction would result in at least 50% of the total voting power
represented by the voting securities of the Company (or, if not the
Company, the entity that succeeds to all or substantially all of the
Company's business) outstanding immediately after such transaction
being beneficially owned (within
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<PAGE>
the meaning of Rule 13d-3 promulgated pursuant to the Exchange Act) by
at least 50% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting power of
each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the date the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction.
(g) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(h) "Committee" means the Compensation Committee of the Board.
(i) "Common Stock" means the Common Stock, $0.01 par value, of the
Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 14.
(j) "Date of Grant" means (i) with respect to an Award, other than a
Director Option, the date specified by the Committee on which such Award
will become effective (which date will not be earlier than the date on
which the Committee takes action with respect thereto) and (ii) with
respect to a Director Option, the automatic date of grant as provided in
Paragraph 11.
(k) "Director" means a member of the Board.
(l) "Director Option" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 11.
(m) "Dividend Equivalent" means, with respect to an Option or Phantom
Share, an amount equal to the amount of any dividends that are declared and
become payable after the Date of Grant for such Award and on or before the
date such Award is exercised, paid or forfeited, as the case may be.
(n) "Grant Price" means the price per share of Common Stock at which an
Appreciation Right not granted in tandem with an Option Right is granted.
(o) "Management Objectives" means the objectives, if any, established by
the Committee that are to be achieved with respect to an Award granted
under this Plan, which may be described in terms of Company-wide
objectives, in terms of objectives that are related to performance of a
division, Subsidiary, department or function within the Company or a
Subsidiary in which the Participant receiving the Award is employed or in
individual or other terms, and which will relate to the period of time
("Performance Cycle") determined by the Committee. The Management
Objectives intended to qualify under Section 162(m) of the Code shall be
with respect to one or more of the following (i) net earnings; (ii)
operating income; (iii) earnings before interest and taxes ("EBIT"); (iv)
operating income plus depreciation, amortization and non-cash compensation
expenses related to the issuance of stock and stock options to employees
("EBITDA"); (v) earnings before taxes and unusual or nonrecurring items;
(vi) revenue; (vii) return on investment; (viii) return on equity; (ix)
return on total capital; (x) return on assets; (xi) total stockholder
return; (xii) return on capital employed in the business; (xiii) stock
price performance; (xiv) earnings per share growth; and (xv) cash flows.
Determinations of which objectives to use with respect to an Award, the
weighting of the objectives if more than one is used, and whether the
objective is to be measured against a Company-established budget or target,
an index or a peer group of companies, shall be made by the Committee in
its discretion at the time of grant of the Award. A Management Objective
need not be based on an increase or a positive result and may include, for
example, maintaining the status quo or limiting economic losses. The
Committee, in its sole discretion and without the consent of the
Participant, may amend any stock-based Award that is intended to qualify
under section 162(m) of the Code to reflect (1) a change in corporate
capitalization, such as a stock split or dividend, (2) a corporate
transaction, such as a corporate merger, a corporate consolidation, any
corporate separation (including a
E-2
<PAGE>
spinoff or other distribution of stock or property by a corporation), any
corporate reorganization (whether or not such reorganization comes within
the definition of such term in section 368 of the Code), (3) any partial or
complete corporate liquidation, or (4) a change in accounting rules
required by the Financial Accounting Standard Board. With respect to any
Award that is subject to section 162 (m) of the Code, the Committee must
first certify that the Management Objectives have been achieved before the
Award may be paid. The Management Objectives of any other Award may be
amended by the Committee, in its sole discretion and without the consent of
the Participant, to reflect any significant event that the Committee
believes to be appropriate to reflect the original intent of the Award.
(p) "Market Value per Share" means, at any date after the Common Stock
is readily tradeable on a national securities market, the closing sale
price per share of the Common Stock on that date (or, if there are no sales
on that date, the last preceding date on which there was a sale) in the
principal market in which the Common Stock is traded. Prior to such date,
Market Value per Share shall be determined by the Committee, in its good
faith opinion.
(q) "Option Price" means the purchase price per share payable on
exercise of an Option Right or Director Option.
(r) "Option Right" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 4.
(s) "Participant" means an employee of, or consultant to, the Company or
any of its Subsidiaries who is selected by the Committee to receive an
Award under any of Paragraphs 4 through 10 and shall also include a
Director who has received an automatic grant of Director Options pursuant
to Paragraph 11.
(t) "Performance Unit" means a unit equivalent to $100 (or such other
value as the Committee determines) awarded pursuant to Paragraph 8.
(u) "Phantom Shares" means notional shares of Common Stock awarded
pursuant to Paragraph 7.
(v) "Restricted Stock" means shares of Common Stock granted or sold
pursuant to Paragraph 6 as to which neither the ownership restrictions nor
the restriction on transfers referred to therein has expired.
(w) "Spread" means the amount determined by multiplying (i) the excess
of the Market Value per Share on the date when an Appreciation Right is
exercised over the Option Price provided for in the related Option Right
or, if there is no tandem Option Right, the Grant Price provided for in the
Appreciation Right by (ii) the number of shares of Common Stock in respect
of which the Appreciation Right is exercised.
(x) "Subsidiary" means, at any time, any corporation in which at the
time the Company then owns or controls, directly or indirectly, not less
than 50% of the total combined voting power represented by all classes of
stock issued by such corporation.
3. Shares Available Under Plan and Eligibility. (a) The total number of
shares of Common Stock reserved and available for issuance under the Plan shall
be the greater of 1,150,000 shares or 10% of the total number of shares of
Common Stock outstanding (on a fully diluted basis, assuming, if applicable,
the conversion of all warrants and convertible securities into Common Stock),
as such number of outstanding shares changes from time to time. Notwithstanding
the foregoing, the number of shares of Common Stock that may be delivered upon
exercise of an incentive stock option shall not exceed 1,150,000 shares of
Common Stock under the Plan, subject to adjustment in accordance with Paragraph
14. Such shares may be shares of original issuance or treasury shares or a
combination of the foregoing. Upon exercise of any Appreciation Rights or the
payment of any Phantom Shares, there will be deemed to have been delivered
under this Plan for purposes of this Paragraph 3 the number of shares of Common
Stock covered by the Appreciation Rights or equal to the Phantom Shares, as
applicable, regardless of whether such Appreciation Rights or Phantom Shares
were paid in cash or shares of Common Stock. Subject to the provisions of the
preceding sentence, any shares of Common Stock which are subject to Option
Rights, Appreciation Rights, or Phantom Shares awarded or sold as Restricted
Stock that are terminated unexercised, forfeited or surrendered or which expire
for any reason will again be available for issuance under this Plan.
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(b) Directors, employees of the Company and its Subsidiaries, and persons
who provide consulting or other services to the Company or a Subsidiary, are
eligible to be granted Awards under the Plan. In addition, a person who has
been offered employment by the Company or a Subsidiary is eligible to be
granted an Award (other than an incentive stock option) under the Plan,
provided that such Award shall be canceled if such person fails to commence
such employment, and no payment of value may be made in connection with such
Award until such person has commenced such employment.
4. Option Rights. The Committee may from time to time authorize grants to
any employee or consultant (other than a Director) of options to purchase
shares of Common Stock upon such terms and conditions as it may determine in
accordance with the following provisions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains and whether Dividend Equivalents are awarded with respect
to the option and, if awarded, the payment or crediting of such Dividend
Equivalents.
(b) Each grant will specify its Option Price, which Option Price may not
be less than 100% of the Market Value per Share on the Date of Grant except
for any grants made prior to the date of the closing of the initial public
offering of the Company's Common Stock, which grants may have an Option
Price less than the Market Price per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i) in
cash or by check payable and acceptable to the Company or (ii) subject to
the approval of the Committee, which may be evidenced at the Date of Grant
in the grant agreement, (a) by tendering to the Company shares of Common
Stock owned by the optionee (if such shares were acquired pursuant to the
exercise of a Company stock option, such shares must have been held by the
Optionee for at least six months) having an aggregate Market Value Per
Share as of the date of exercise and tender that is not greater than the
full option exercise price for the shares with respect to which the Option
is being exercised and by paying any remaining amount of the option
exercise price as provided in (i) above (provided that the Committee may,
upon confirming that the optionee owns the number of shares being tendered,
authorize the issuance of a new certificate for the number of shares being
acquired pursuant to the exercise of the option less the number of shares
being tendered upon the exercise and return to the optionee (or not require
surrender of) the certificate for the shares being tendered upon the
exercise) or (b) by the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option exercise price and any required tax
withholding amounts; provided that in the event the optionee chooses to pay
the option exercise price as provided in (ii)(b) above, the optionee and
the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure, or (iii) by a combination of such
payment methods. Payment instruments will be received subject to
collection.
(d) Successive grants may be made to the same Participant whether or not
any Option Rights previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods of continuous
service by the Participant with the Company and the Affiliates and/or the
Management Objectives (if any) to be achieved before the Option Rights or
installments thereof will become exercisable, and any grant may provide for
the earlier exercise of the Option Rights in the event of a Change in
Control or other corporate transaction or event or upon termination of the
Participant's employment due to death, disability, retirement or otherwise,
including an involuntary termination other than for cause.
(f) Each grant the exercise of which, or the timing of the exercise of
which, is dependent, in whole or in part, on the achievement of Management
Objectives may specify a minimum level of achievement in respect of the
specified Management Objectives below which no Options Rights will be
exercisable and may set forth a formula or other method for determining the
number of Option Rights that will be exercisable if performance is at or
above such minimum but short of full achievement of the Management
Objectives.
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(g) Option Rights granted under this Plan may be (i) options which are
intended to qualify as incentive stock options under Section 422 of the
Code, provided, however, such options may only be granted to employees of
the Company, its parent corporation and subsidiaries of the Company, (ii)
options which are not intended to so qualify or (iii) combinations of the
foregoing.
(h) Option Rights granted to a Participant who is an officer of the
Company or a Subsidiary may, in the discretion of the Committee, provide
for an automatic "reload" grant upon the exercise of the Option Right, with
such terms and conditions on any such reload grant as the Committee may
choose, provided, however, the Option Price may not be less than 100% of
the Market Value per Share on the Date of Grant of the reload option and
its term may not exceed the remaining term for the exercised option.
(i) Each grant may, in the discretion of the Committee, provide that the
Common Stock acquired upon exercise of the Option Right shall remain
subject to a "substantial risk of forfeiture", within the meaning of
Section 83 of the Code and the regulations thereunder, with such
restrictions as the Committee may determine.
(j) Each grant shall specify the period during which the Option Right
may be exercised, but no Option Right will be exercisable more than ten
years from the Date of Grant.
(k) Each grant of Option Rights will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Participant and containing such terms and provisions, consistent with this
Plan, as the Committee may approve.
(l) Notwithstanding the foregoing, Option Rights may be granted from
time to time in substitution for stock options held by employees of other
corporations who become Employees as the result of a merger or
consolidation of the employing corporation with the Company or any
Subsidiary, or the acquisition by the Company or any Subsidiary of the
assets of the employing corporation, or the acquisition by the Company or
any Subsidiary of stock of the employing corporation as the result of which
it becomes a Subsidiary. The terms and conditions of substitute Option
Rights granted may vary from the terms and conditions set forth above, to
the extent the Committee, at the time of grant, deems it appropriate to
conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
No person may receive Option Rights with respect to more than 250,000
shares during any calendar year.
5. Appreciation Rights. The Committee may from time to time authorize
grants to any employee or consultant (other than a Director) of Appreciation
Rights upon such terms and conditions as it may determine in accordance with
this Paragraph. Appreciation Rights may be granted in tandem with Option
Rights or separate and apart from a grant of Option Rights. An Appreciation
Right will be a right of the Participant granted such Award to receive from
the Company, upon exercise, an amount which will be determined by the
Committee at the Date of Grant and will be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. An Appreciation Right
granted in tandem with an Option Right may be exercised only by surrender of
the related Option Right. Each grant of an Appreciation Right may utilize any
or all of the authorizations, and will be subject to all of the limitations,
contained in the following provisions:
(a) Each grant will state whether it is made in tandem with Option
Rights and, if not made in tandem with any Option Rights, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Option Rights will specify the Option
Price and each grant not made in tandem with Option Rights will specify the
Grant Price, which in either case will not be less than 100% of the Market
Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash or Company check,
(ii) shares of Common Stock having an aggregate Market Value per Share
equal to the Spread or (iii) any combination thereof, as determined by the
Committee in its sole discretion.
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(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at
the Date of Grant (valuing shares of Common Stock for this purpose at their
Market Value per Share at the date of exercise).
(e) Each grant will specify the required period or periods of continuous
service by the Participant with the Company and its Subsidiaries and/or
Management Objectives to be achieved before the Appreciation Rights or
installments thereof will become exercisable. Any grant may provide for the
earlier exercise of the Appreciation Rights in the event of a Change in
Control or other corporate transaction or event or upon the Participant's
termination due to death, disability or retirement, including an
involuntary termination other than for cause.
(f) Each grant the exercise of which, or the timing of the exercise of
which, is dependent, in whole or in part, on the achievement of Management
Objectives may specify a minimum level of achievement in respect of the
specified Management Objectives below which no Appreciation Rights will be
exercisable and may set forth a formula or other method for determining the
number of Appreciation Rights that will be exercisable if performance is at
or above such minimum but short of full achievement of the Management
Objectives.
(g) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant receiving the grant, which agreement will
describe such Appreciation Right, identify any Option Right granted in
tandem with such Appreciation Right, state that such Appreciation Right is
subject to all the terms and conditions of this Plan and contain such other
terms and provisions, consistent with this Plan, as the Committee may
approve.
No person may receive Appreciation Rights with respect to more than 250,000
shares during any calendar year.
6. Restricted Stock. The Committee may from time to time authorize grants or
sales to any employee or consultant (other than a Director) of Restricted Stock
upon such terms and conditions as it may determine in accordance with the
following provisions:
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of
the performance of services, entitling such Participant to voting and other
ownership rights, but subject to the restrictions hereinafter referred to.
Each grant or sale may limit the Participant's dividend rights during the
period in which the shares of Restricted Stock are subject to any such
restrictions.
(b) Each grant or sale will specify the Management Objectives, if any,
that are to be achieved in order for the ownership restrictions to lapse.
Each grant or sale that is subject to the achievement of Management
Objectives will specify a minimum acceptable level of achievement in
respect of the specified Management Objectives below which the shares of
Restricted Stock will be forfeited and may set forth a formula or other
method for determining the number of shares of Restricted Stock with
respect to which restrictions will lapse if performance is at or above such
minimum but short of full achievement of the Management Objectives.
(c) Each such grant or sale may be made without additional consideration
or in consideration of a payment by such Participant that is less than the
Market Value per Share at the Date of Grant.
(d) Each such grant or sale will provide that the shares of Restricted
Stock covered by such grant or sale will be subject, for a period to be
determined by the Committee at the Date of Grant, to one or more
restrictions, including, without limitation, a restriction that constitutes
a "substantial risk of forfeiture" within the meaning of Section 83 of the
Code and the regulations thereunder, and any grant or sale may provide for
the earlier termination of such period in the event of a Change in Control
or other corporate transaction or event or upon termination of the
Participant's employment due to death, disability, retirement or otherwise,
including an involuntary termination other than for cause.
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(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the transferability
of the Restricted Stock will be prohibited or restricted in a manner and to
the extent prescribed by the Committee at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to
continuing restrictions in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve.
(g) Unless otherwise approved by the Committee, certificates
representing shares of Common Stock transferred pursuant to a grant of
Restricted Stock will be held in escrow pursuant to an agreement
satisfactory to the Committee until such time as the restrictions on
transfer have expired or the shares have been forfeited.
No person may receive more than 250,000 shares of Restricted Stock during
any calendar year.
7. Phantom Shares. The Committee may from time to time authorize grants to
any employee or consultant (other than a Director) of Phantom Shares upon such
terms and conditions as it may determine in accordance with the following
provisions:
(a) Each grant will specify the number of Phantom Shares to which it
pertains and the payment or crediting of any Dividend Equivalents with
respect to such Phantom Shares.
(b) Each grant will specify the Management Objectives, if any, that are
to be achieved in order for the Phantom Shares to be earned. Each grant
that is subject to the achievement of Management Objectives will specify a
minimum acceptable level of achievement in respect of the specified
Management Objectives below which the Phantom Shares will be forfeited and
may set forth a formula or other method for determining the number of
Phantom Shares to be earned if performance is at or above such minimum but
short of full achievement of the Management Objectives.
(c) Each grant will specify the time and manner of payment of Phantom
Shares which have been earned, which payment may be made in (i) cash, (ii)
shares of Common Stock or (iii) any combination thereof, as determined by
the Committee in its sole discretion.
(d) Each grant of Phantom Shares will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination due to death, disability or
retirement.
No person may receive more than 250,000 Phantom Shares during any calendar
year.
8. Performance Units. The Committee may from time to time authorize grants
to any employee or consultant (other than a Director) of Performance Units upon
such terms and conditions as it may determine in accordance with the following
provisions:
(a) Each grant will specify the number of Performance Units to which it
pertains.
(b) Each grant will specify the Management Objectives that are to be
achieved in order for the Performance Units to be earned. Each grant will
specify a minimum acceptable level of achievement in respect of the
specified Management Objectives below which no payment will be made and may
set forth a formula or other method for determining the amount of payment
to be made if performance is at or above such minimum but short of full
achievement of the Management Objectives.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an
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aggregate Market Value per Share equal to the aggregate value of the
Performance Units which have become payable or (iii) any combination
thereof, as determined by the Committee in its sole discretion at the time
of payment.
(d) Each grant of a Performance Unit will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination of employment due to death,
disability, retirement or otherwise, including an involuntary termination
other than for cause.
No person may receive Performance Units with a value greater than
$1,000,000 during any calendar year.
9. Bonus Stock. The Committee may from time to time authorize grants to any
employee or consultant (other than a Director) of Bonus Stock, which shall
constitute a transfer of shares of Common Stock, without other payment
therefor, as additional compensation for the Participant's services to the
Company or its Subsidiaries.
10. Cash Tax Rights. (a) The Committee may from time to time authorize
grants to any Participant (other than a Director) of Cash Tax Rights upon such
terms and conditions as it may determine in accordance with this Paragraph.
Cash Tax Rights may be granted in tandem with any Award that is payable in
shares of Common Stock. A Cash Tax Right will entitle the Participant granted
such Award to receive from the Company, upon receipt of shares of Common Stock
pursuant to the tandem Award, an amount of cash, which will be determined by
the Committee at the Date of Grant and will be expressed as a percentage of
the Market Value per Share (not exceeding 100%) of each share of Common Stock
received upon payment of the tandem Award.
(b) Each grant of a Cash Tax Right will (i) identify the Award it is made
in tandem with and will specify the percentage of the Market Value per Share
that shall be payable in cash and (ii) be evidenced by an agreement extended
on behalf of the Company by any officer and delivered to and accepted, by the
Participant and containing such terms and provisions, consistent with this
Plan, as the Committee may approve, including provisions relating to a Change
in Control or other corporate transaction or event or upon the Participant's
termination of employment due to death, disability, retirement or otherwise,
including an involuntary termination other than for cause.
11. Director Options. (a) Each person who is a Director on the effective
date of the Plan, and each person who becomes a Director for the first time
after such date, and who is not an employee of the Company or any of its
subsidiaries, shall automatically receive on the effective date of the Plan
or, if such person first becomes a Director after such date, the date of his
or her becoming a Director, whichever is applicable, a Director Option for
1,000 shares of Common Stock.
(b) On the day following the regular Annual Meeting of the Stockholders of
the Company in each year that this Plan is in effect (commencing with the 1998
Annual Meeting of Stockholders), each Director who is in office on that day,
who is not an employee of the Company or any of its subsidiaries on that day
and who was not elected for the first time at such annual meeting, shall
automatically receive a Director Option for 2,000 shares of Common Stock.
(c) Each Director Option will be subject to all of the limitations
contained in the following provisions:
(i) Each Director Option granted pursuant to subparagraph 11(a) shall be
exercisable in full six (6) calendar months following the Date of Grant.
(ii) Each Director Option granted pursuant to subparagraph 11(b) shall
be exercisable, on a cumulative basis, fifty percent (50%) one year
following the Date of Grant and fifty percent (50%) two (2) years following
the Date of Grant.
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(iii) The Option Price of each Director Option shall be the Market Value
per Share on its Date of Grant.
(iv) Each Director Option that is exercisable may be exercised in full
at one time or in part from time to time by giving written notice to the
Company, stating the number of shares of Common Stock with respect to which
the Director Option is being exercised, accompanied by payment in full of
the Option Price for such shares, which payment may be (1) in cash by check
acceptable to the Company, (2) by tendering to the Company shares of Common
Stock owned by the optionee having an aggregate Market Value Per Share as
of the date of exercise and tender that is not greater than the full option
exercise price for the shares with respect to which the Option is being
exercised and by paying any remaining amount of the option exercise price
as provided in (1) above (provided that the Committee may, upon confirming
that the optionee owns the number of shares being tendered, authorize the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the option less the number of shares being
tendered upon the exercise and return to the optionee (or not require
surrender of) the certificate for the shares being tendered upon the
exercise), (3) by the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option exercise price and any required tax
withholding amounts; provided that in the event the optionee chooses to pay
the exercise price in this manner, the optionee and the broker shall comply
with such procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such payment
procedure or (4) by a combination of such methods of payment. Payment
instruments will be received subject to collection.
(v) Each Director Option shall expire 10 years from the Date of Grant
thereof, but shall be subject to earlier termination immediately upon the
Director ceasing to serve as a director of the Company.
(vi) In the event that the number of shares of Common Stock available
for grants under this Plan is insufficient to make all automatic grants
provided for in this Paragraph 11 on the applicable date, then all
Directors who are entitled to a grant on such date shall share ratably in
the number of shares then available for grant under this Plan, and shall
have no right to receive a grant with respect to the deficiencies in the
number of available shares and all future grants under this Paragraph 11
shall terminate.
(d) Notwithstanding the provisions of this Section 11, the Committee may
grant such other Awards to Directors as are permissible under and are issued in
compliance with applicable federal or state laws or the rules of any stock
exchange or automated quotation system on which the Common Stock may then be
listed or quoted.
12. Acceleration upon a Change in Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating
to the continued performance of services and/or the achievement of Management
Objectives with respect to the exercisability or full entitlement to an Award
shall immediately lapse upon a Change in Control, provided that this Paragraph
12 shall not be applicable with respect to a Participant if it is intended that
the transaction constituting such Change in Control be accounted for as a
pooling of interests under Accounting Principles Board Opinion No. 16 (or any
successor thereto), and operation of this Paragraph 12 with respect to this
Participant would otherwise preclude such accounting treatment.
13. Transferability. (a) Except as provided below, no Award will be
transferable by a Participant other than by will or the laws of descent and
distribution and Director Options, Option Rights or Appreciation Rights will be
exercisable during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative.
(b) The Committee may, in its discretion, adopt rules or guidelines under
which any Award previously granted or to be granted to a Participant (other
than an incentive stock option) may be transferred (in whole or in part) by the
Participant to (i) the spouse, children or grandchildren of the Participant
("Immediate Family
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Members"), (ii) a trust or trusts for the exclusive benefit of the Immediate
Family Members and, if applicable, the Participant or (iii) a partnership in
which such Immediate Family Members and, if applicable, the Participant are the
only partners. Following transfer, any such Awards shall continue to be subject
to the same terms and conditions as were applicable to the Award immediately
prior to transfer; provided, however, that no transferred Award shall be
exercisable or payable, as the case may be, unless arrangements satisfactory to
the Company have been made to satisfy any tax withholding obligations the
Company may have with respect to the Award.
14. Adjustments. The Board may make or provide for such adjustments in the
maximum number of shares specified in Paragraph 3, in the numbers of shares of
Common Stock covered by outstanding Director Options, Option Rights,
Appreciation Rights and Phantom Shares granted hereunder, in the Option Price
or Grant Price applicable to any such Director Options, Option Rights and
Appreciation Rights, and/or in the kind of shares covered thereby (including
shares of another issuer), as the Board, in its sole discretion exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants that otherwise would result from any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, merger, consolidation,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporation transaction or event having an
effect similar to any of the foregoing.
15. Fractional Shares. The Company will not be required to issue any
fractional share of Common Stock pursuant to this Plan. The Committee may
provide for the elimination of fractions for the settlement of fractions in
cash.
16. Taxes. (a) To the extent that the Company is required to withhold any
taxes in connection with any grant or payment made to a Participant or any
other person under this Plan and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
grant or payment that the Participant or such other person make arrangements
satisfactory to the Company for the payment of the balance of the such taxes
required, which arrangements in the discretion the Committee may include
relinquishment of a portion of such Award or payment.
(b) To the extent that the acceleration of vesting or any payment,
distribution or issuance made to a Participant under the Plan (a "Benefit") is
subject to a golden parachute excise tax under Section 4999(a) of the Code (a
"Parachute Tax"), the Company shall pay such Participant an amount of cash (the
"Gross-up Amount") such that the "net" Benefit received by the Participant
under this Plan, after paying all applicable Parachute Taxes (including those
on the Gross-up Amount) and any income taxes on the Gross-up Amount, shall be
equal to the Benefit that such Participant would have received if such
Parachute Tax had not been applicable.
17. Award Forfeiture/Repayment Provisions. Notwithstanding anything in this
Plan to the contrary the Committee, in its sole discretion, may provide with
respect to any Award that such Award shall be immediately forfeited unpaid if
the Participant takes any action contrary to the interests of the Company as
the same may be specified in the Award agreement, which may include, without
limitation, limitations on non-competition, non-disclosure, non-disparagement
and non-solicitation (a "Restriction"). Further, to the extent any Award
containing such a prohibition has been exercised or paid within the one-year
period prior to the date of such violation of a Restriction, the Participant
must repay to the Company in cash an amount equal to the value of the Award at
the time of its prior exercise or payment, as the case may be. The exercise or
payment of such an Award shall be conditioned on the Participant's written
acknowledgment and acceptance of the repayment obligation.
18. Administration of the Plan. (a) This Plan will be administered by the
Committee. A majority of the Committee will constitute a quorum, and the action
of the members the Committee present at any meeting at which a quorum is
present, or acts unanimously approved writing, will be the acts of the
Committee.
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(b) The interpretation and construction by the Committee of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
an Award and any determination by the Committee pursuant to any provision of
this Plan or of any such agreement, notification or documentation will be final
and conclusive. No member of the Committee will be liable for any such action
or determination made in good faith or in the absence of gross negligence or
willful misconduct on the part of such member.
(c) Notwithstanding anything in the Plan or any Award Agreement to the
contrary, with respect to an Award granted to a "covered employee" that is
intended to qualify as "performance-based compensation" for purposes of section
162(m) of the Code, the Committee shall not take any action with respect to the
terms of such Award after its Date of Grant which would cause such Award not to
be deductible under section 162(m).
19. Amendments, Etc. (a)The Board may amend, alter, suspend, discontinue, or
terminate the Plan or the Committee's authority to grant Awards under the Plan
without the consent of stockholders or Participants, except that any such
action shall be subject to the approval of the Company's stockholders at or
before the next annual meeting of stockholders for which the record date is
after such Board action if such stockholder approval is required by any federal
or state law or regulation or the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided, however, that
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to
him. The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate, any Award theretofore granted and any Award
agreement relating thereto; provided, however, that without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under such Award.
(b) This Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant's employment or other
service at any time.
20. Term. This Plan shall be effective as of the date that an underwriting
agreement relating to the initial public offering of the Company's Common Stock
is entered into among the Company and a group of underwriters. In the event
that this Plan is not approved by the stockholders of the Company within twelve
months before or after the date of its adoption by the Board, any Awards made
under this Plan intended to be an incentive stock option shall be automatically
a nonqualified stock option. Unless sooner terminated, this Plan shall
terminate on December 31, 2006, and no further Awards shall be made, but all
outstanding Awards on such date shall remain effective in accordance with their
terms and the terms of this Plan.
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ANNEX F
AMENDMENT NO. 1
TO AMENDED AND RESTATED FRIEDE GOLDMAN 1997 EQUITY INCENTIVE PLAN
Friede & Goldman International Inc., a Mississippi corporation (the
"Company"), hereby amends the Friede Goldman International Inc. Amended and
Restated 1997 Equity Incentive Plan (the "Plan").
1. Paragraph 3(a) of the Plan is hereby amended and restated, in its
entirety, as follows:
(a) The total number of shares of Common Stock reserved and available
for issuance under the Plan shall be the greater of 1,150,000 shares or 15%
of the total number of shares of Common Stock outstanding (on a fully
diluted basis, assuming, if applicable, the conversion of all warrants and
convertible securities into Common Stock), as such number of outstanding
shares changes from time to time. Notwithstanding the foregoing, the number
of shares of Common Stock that may be delivered upon exercise of an
incentive stock option shall not exceed 1,150,000 shares of Common Stock
under the Plan, subject to adjustment in accordance with Paragraph 14. Such
shares may be shares of original issuance or treasury shares or a
combination of the foregoing. Upon exercise of any Appreciation Rights or
the payment of any Phantom Shares, there will be deemed to have been
delivered under this Plan for purposes of this Paragraph 3 the number of
shares of Common Stock covered by the Appreciation Rights or equal to the
Phantom Shares, as applicable, regardless of whether such Appreciation
Rights or Phantom Shares were paid in cash or shares of Common Stock.
Subject to the provisions of the preceding sentence, any shares of Common
Stock which are subject to Option Rights, Appreciation Rights, or Phantom
Shares awarded or sold as Restricted Stock that are terminated unexercised,
forfeited or surrendered or which expire for any reason will again be
available for issuance under this Plan.
2. Paragraph 4(l) of the Plan is hereby amended and restated to read, in its
entirety, as follows:
(l) Notwithstanding the foregoing, Option Rights may be granted from
time to time in substitution for stock options held by employees of other
corporations who become Employees as the result of a merger or
consolidation of the employing corporation with the Company or any
Subsidiary, or the acquisition by the Company or any Subsidiary of the
assets of the employing corporation, or the acquisition by the Company or
any Subsidiary of stock of the employing corporation as the result of which
it becomes a Subsidiary. The terms and conditions of substitute Option
Rights granted may vary from the terms and conditions set forth above, to
the extent the Committee, at the time of grant, deems it appropriate to
conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
No person may receive Option Rights with respect to more than 250,000
shares during any calendar year, except in the case of J. L. Holloway and
John Dane III, who may receive 1,000,000 shares, respectively, and John F.
Alford and Rick S. Rees, who may receive 500,000 shares, respectively, in
the year of the closing of the merger of Halter Marine Group, Inc. with and
into the Company.
3. Defined terms used but not otherwise defined herein shall have the
meanings set forth in the Plan.
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ANNEX G
[Letterhead of Jefferies & Company, Inc.]
September 14, 1999
The Board of Directors
Friede Goldman International Inc.
525 East Capitol Street, 7th Floor
Jackson, MS 39201
Members of the Board:
You have advised us that Friede Goldman International Inc. ("Friede" or the
"Company") proposes to acquire Halter Marine Group, Inc. ("Halter") through a
business combination (the "Combination Transaction") in which outstanding
shares of Halter will be exchanged for or converted into shares of common stock
(the "Purchase Consideration") of Friede (the "Friede Shares"). You have
further advised us that the Combination Transaction will be effected pursuant
to an Agreement and Plan of Merger dated and signed on June 1, 1999 and as
amended by Amendment No. 1 on September 14, 1999 (which, with the exhibits
thereto, is defined herein as the "Agreement") to which each of Friede and
Halter is a party. We have previously furnished you an opinion dated June 1,
1999 with respect to the Combination Transaction. Based on subsequent
negotiations and a change in the Purchase Consideration to be paid in the
Combination Transaction, you have requested our opinion as to the fairness,
from a financial point of view, to the holders of Friede Common Stock (as
defined below), of such Purchase Consideration to be received by holders of
Halter Common Stock (as defined below) pursuant to the Combination Transaction
(the "Opinion"). This Opinion supersedes and replaces the earlier opinion.
As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, upon consummation of the Combination Transaction, each
outstanding share of Halter common stock, US$ 0.01 par value ("Halter Common
Stock"), will be exchanged for or converted into, on a per share basis, 0.57
Friede Shares, US$ 0.01 par value. We understand that the Combination
Transaction will be accounted for as a purchase transaction in accordance with
generally accepted accounting principles.
In our review and analysis and in rendering the Opinion, we have with your
permission assumed and relied upon the accuracy and completeness of all the
financial and other information provided to us by Friede and Halter's
management, as well as publicly available information, and have not verified
any such information. We have not conducted a physical inspection of any of the
properties or facilities of Friede or Halter, nor have we made, been provided
or considered any independent evaluations or appraisals of any of such
properties or facilities. The Purchase Consideration was based on negotiations
between Friede and Halter during which Jefferies & Company, Inc. ("Jefferies")
provided investment banking services to Friede.
In conducting our analysis and rendering our opinion as expressed herein, we
have reviewed and considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the Agreement; (ii) the historical and current financial condition and results
of operations of Friede and Halter, including (a) the Annual Reports on Form
10-K of Friede for the years ended December 31, 1997 and 1998, (b) the
Quarterly Reports on Form 10-Q of Friede for the quarters ended March 31 and
June 30, 1999, (c) the Annual Reports on Form 10-K of Halter for the years
ended March 31, 1997, 1998 and 1999, and (d) the Quarterly Reports on Form 10-Q
of Halter for the quarters ended December 31, 1998 and June 30, 1999; (iii)
certain non-public financial and non-financial information prepared by the
management of Friede and Halter, which data was made available to us in our
role as financial advisor to Friede; (iv) published information regarding the
financial performance and operating characteristics of a selected group of
companies which we deemed comparable; (v) business prospects of Friede and
Halter as projected by the management of Friede and Halter; (vi) the historical
and current market prices for Friede Common Stock and Halter Common Stock and
for the equity securities of certain other companies with
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businesses that we consider relevant to our inquiry; (vii) publicly available
information, including research reports on companies we considered relevant to
our inquiry; and (viii) the nature and terms of other recent acquisition
transactions in the oil service industry. We have met with certain officers and
employees of Friede and Halter to discuss the foregoing as well as other
matters we believed relevant to our opinion. We have also taken into account
general economic, monetary, political, market and other conditions as well as
our experience in connection with similar transactions and securities valuation
generally. Our opinion is based upon all of such conditions as they exist
currently and can be evaluated on the date hereof. Existing conditions are
subject to rapid and unpredictable changes and such changes could impact our
opinion. Our opinion does not constitute a recommendation of the Combination
Transaction over any alternative transactions which may be available to Friede
and does not address Friede's underlying business decision to effect the
Combination Transaction. Finally, we are not opining as to the market value of
the consideration to be received by Halter or the prices at which any of the
securities of Friede may trade following the consummation of the Combination
Transaction.
For purposes of rendering the Opinion and based on your direction and
consent, Jefferies has assumed that, in all material respects to its analysis,
the representation and warranties of Friede and Halter contained in the
Agreement are true and correct, Friede and Halter will each perform all of the
covenants and agreements to be performed by it under the agreement and all
conditions to the obligations of each of Friede and Halter to consummate the
Combination Transaction will be satisfied without any waiver thereof.
Based upon and subject to the foregoing, and upon such other matters as we
consider relevant, we are of the opinion as investment bankers that the
consideration to be paid by Friede to the holders of Halter Common Stock
pursuant to the Combination Transaction is fair, from a financial point of
view, to the holders of Friede Common Stock.
It is understood and agreed that this opinion is provided solely for the use
of the Board of Directors of Friede as one element in the Board's consideration
of the Combination Transaction and may not be used for any other purpose, or
otherwise referred to, relied upon or circulated without our prior written
consent. Without limiting the foregoing, this opinion does not constitute a
recommendation to any shareholder (or any other person) as to how such person
should vote with respect to the Combination Transaction.
Jefferies & Company, Inc. has acted as financial advisor to Friede in
connection with the Combination Transaction and will receive (i) a fee, payable
in cash at the closing of the Combination Transaction, equal to $3.0 million
(the "Success Fee") and (ii) a cash fee of $300,000 upon rendering of the
Opinion which will be creditable against the Success Fee.
Jefferies has previously rendered certain investment banking and financial
advisory services to Friede for which it has received customary compensation.
In addition, in the ordinary course of Jefferies' business, it actively trades
the securities of Friede and Halter for its own account and for the accounts of
its customers, and, accordingly, may at any time hold a long or short position
in such securities. Jefferies has not rendered any investment banking or
financial advisory services to Halter.
Very truly yours,
/s/ Jefferies & Company, Inc.
Jefferies & Company, Inc.
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ANNEX H
[Letterhead of Donaldson, Lufkin & Jenrette Securities Corporation]
September 14, 1999
Board of Directors
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, MS 39503
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Halter Marine Group, Inc. (the "Company") of the
Exchange Ratio (as defined below) pursuant to the terms of the Agreement and
Plan of Merger, dated as of June 1, 1999, as amended by Amendment No.1 thereto,
dated as of September 14, 1999 (as so amended the "Agreement"), between Friede
Goldman International Inc. ("Friede Goldman") and the Company pursuant to which
the Company will be merged with and into Friede Goldman (the "Merger").
Capitalized terms used herein and not otherwise defined shall have the meanings
given such terms in the Agreement.
Pursuant to the Agreement, each share of common stock, par value $.01 per
share of the Company ("Company Common Stock") will be converted, subject to
certain exceptions, into the right to receive 0.57 shares (the "Exchange
Ratio") of common stock, $0.01 par value per share of Friede Goldman ("Friede
Goldman Common Stock"), including the corresponding percentage of a right to
purchase shares of preferred stock, par value $.01 per share of Friede Goldman
pursuant to the Friede Goldman Stockholders Rights Agreement dated as of
December 7, 1998 between Friede Goldman and American Stock Transfer and Trust
Company as Rights Agent.
In arriving at our opinion, we have reviewed the Agreement and the exhibits
thereto, the Voting and Proxy Agreement, and the Stockholder's Agreement. We
also have reviewed financial and other information that was publicly available
or furnished to us by the Company and Friede Goldman including information
provided during discussions with their respective managements. Included in the
information provided during discussions with the respective managements were
certain financial projections of the Company for the period beginning April 1,
1999 and ending March 31, 2001 prepared by the management of the Company,
certain financial projections of Friede Goldman for the period beginning
January 1, 1999 and ending December 31, 2000 prepared by the management of
Friede Goldman and the memorandum dated September 14, 1999 of Ship Construction
Strategies, Inc. relating to estimated completion costs of certain construction
projects (the "Completion Cost Estimate"). We have also reviewed growth rate
assumptions for the Company for the period beginning April 1, 2001 and ending
March 31, 2003 and for Friede Goldman for the period beginning January 1, 2001
and ending December 31, 2002 with the respective managements. In addition, we
have compared certain financial and securities data of the Company and Friede
Goldman with various other companies whose securities are traded in public
markets, reviewed the relative financial contributions made by the Company and
Friede Goldman and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion. We were
not requested to, nor did we, solicit the interest of any other party in
acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and Friede
Goldman or their respective representatives, or that was otherwise reviewed by
us. In particular, we have relied upon the estimates of the management of the
Company of the operating synergies achievable as a result of the Merger and
upon our discussion of such synergies with the management of Friede Goldman.
With respect to the financial projections supplied to us (including the
Completion Cost Estimate), we have relied on representations that they have
been reasonably prepared on a basis reflecting the best currently
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available estimates and judgments (i) of the management of the Company and
Friede Goldman as to the future operating and financial performance of the
Company and Friede Goldman, respectively and (ii) of Ship Construction
Strategies, Inc. with respect to the estimated completion costs of certain
construction projects. With respect to the growth assumptions applied to the
financial projections supplied to us, we have relied on representations that
such assumptions reflect the best currently available estimates and judgments
of the managements of the Company and Friede Goldman as to the growth rates of
the Company and Friede Goldman, respectively, for the periods indicated. We
have not assumed any responsibility for making an independent evaluation of any
assets or liabilities or for making any independent verification of any of the
information reviewed by us. We have assumed the Merger will qualify as a tax-
free reorganization under the Internal Revenue Code. We have relied as to
certain legal matters on advice of counsel of the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We would note that the Agreement contemplates,
as a condition to the obligation of the Company to effect the Merger, that our
opinion shall not have been modified in a material adverse manner or withdrawn
at the time the Proxy Statement is mailed to the Company's stockholders for
approval at a meeting of such stockholders. We are expressing no opinion herein
as to the prices at which Friede Goldman Common Stock will actually trade at
any time. Our opinion does not address the relative merits of the Merger and
any other business strategies that may be considered by the Company's Board of
Directors, nor does it address the Board's decision to proceed with the Merger.
Our opinion does not constitute a recommendation to any stockholder as to how
such stockholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past and
has been compensated for such services. In September 1997, DLJ lead-managed a
$185 million Convertible Subordinated Notes offering for the Company.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Exchange Ratio is fair to the stockholders of the
Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
/s/ J. Kent Sweezey
By:__________________________________
J. Kent Sweezey
Managing Director
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ANNEX I
ARTICLE 13 OF THE MISSISSIPPI BUSINESS CORPORATION ACT
(Dissenters' Rights)
(S)79-4-13.01. Definitions.
In this article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 79-4-13.02 and who exercises that right when
and in the manner required by Sections 79-4-13.20 through 79-4-13.28.
(3) "Fair Value," with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest form the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(S)79-4-13.02. Right to dissent.
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by Section 79-4-
11.03 or the articles of incorporation and the shareholder is entitled to
vote on the merger, or (ii) if the corporation is a subsidiary that is
merged with its parent under Section 79-4-11.04;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one (1) year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affect rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
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(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fraction share so created is to be acquired
for cash under Section 79-4-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent to the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting shareholders are
entitled to dissent and obtain payment for their shares.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of
either (i) making such corporation subject to application of the Mississippi
Control Share Act, or (ii) making such act inapplicable to a control share
acquisition of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
(S)79-4-13.03. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
(S)79-4-13.20. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.
(b) If corporate action creating dissenters' rights under Section 79-4-13.02
is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Section 79-4-13.22.
(S)79-4-13.21. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) must deliver to the corporation before
the vote is taken written notice of his intent to demand payment for his shares
if the proposed action is effectuated, and (2) must not vote his shares in
favor of the proposed action.
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(b) A shareholder who does not satisfy the requirement of subsection (a) is
not entitled to payment for his shares under this article.
(S)79-4-13.22. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty (30) nor more than sixty (60) days
after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
(S)79-4-13.23. Duty to demand payment.
(a) A shareholder sent a dissenters' notice described in Section 79-4-13.22
must demand payment, certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenter's notice
pursuant to Section 79-4-13.22(b)(3), and deposit his certificates in
accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
(S)79-4-13.24. Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(S)79-4-13.25. Payment.
(a) Except as provided in Section 79-4-13.27, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with Section 79-4-13.23 the amount the
corporation estimates to be the fair value of his shares, plus accrued
interest.
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(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand payment under Section
79-4-13.28; and
(5) A copy of this article.
(S)79-4-13.26. Failure to take action.
(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.
(S)79-4-13.27. After-acquired shares.
(a) a corporation may elect to withhold payment required by Section 79-4-
13.25 from a dissenter unless he was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-
13.28.
(S)79-4-13.28. Procedure if shareholder dissatisfied with payment or offer.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate (less any payment under Section 79-4-13.25), or reject the
corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section 79-4-13.25
or offered under Section 79-4-13.27 is less than the fair value of his
shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 79-4-13.25
within sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
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(S)79-4-13.30. Court action.
(a) If a demand for payment under Section 79-4-13.28 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the 60-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery court of
the county where a corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under Section 79-4-13.27.
(S)79-4-13.31. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under Section 79-4-13.30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of Sections 79-4-13.20 through 79-4-13.28; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were
I-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this registration
statement shall have the meanings assigned to them in the prospectus which
forms a part of this registration statement.
Item 20. Indemnification of Directors and Officers.
Subsection (a) of Section 79-4-8.51 ("Section 8.51") of the Mississippi
Business Corporation Act (the "MBCA"), as amended, authorizes corporations to
indemnify an individual made a party to a proceeding because he is a director
against liability incurred in the proceeding if (1) he conducted himself in
good faith, (2) he reasonably believed, in the case of conduct in his official
capacity, that his conduct was in the best interests of the corporation, and in
all other cases, that his conduct was at least not opposed to its best
interests and (3) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. Subsection (d) of Section 8.51
provides that a corporation may not indemnify a director (1) in connection with
a proceeding by or in the right of the corporation, except for reasonable
expenses incurred in connection with a proceeding if it is determined that the
director has met the relevant standard of conduct under subsection (a)
described above, or (2) in connection with any proceeding with respect to
conduct for which he was adjudged liable on the basis that he received a
financial benefit to which he was not entitled, whether or not involving action
in his official capacity.
Section 79-4-8.52 ("Section 8.52") of the MBCA provides that a corporation
shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
was a director of the corporation against reasonable expenses incurred by him
in connection with the proceeding.
Section 79-4-8.54 of the MBCA authorizes a director of the corporation who
is a party to a proceeding to apply for indemnification or an advance of
expenses to the court conducting the proceeding or to another court of
competent jurisdiction. The court may order (1) indemnification if it
determines the director is entitled to mandatory indemnification under Section
8.52, (2) indemnification or advance of expenses if it determines the director
is so entitled under the articles of incorporation, bylaws, resolution of the
corporation or contract approved by the board of directors or shareholders, or
(3) indemnification or advance of expenses if it determines that it is fair and
reasonable.
Section 79-4-8.56 of the MBCA provides that a corporation may indemnify and
advance expenses to an officer of the corporation who is a party to a
proceeding because he is an officer of the corporation to the same extent as to
a director and, if he is an officer but not a director, to such further extent
as provided for in the articles of incorporation, bylaws, resolution of the
board of directors or contract, except for (1) liability in connection with a
proceeding by or in the right of the corporation other than for reasonable
expenses incurred in connection with the proceeding or (2) liability arising
out of conduct that constitutes (A) receipt by him of a financial benefit to
which he is not entitled, (B) an intentional infliction of harm on the
corporation or shareholders, or (C) an intentional violation of criminal law.
Section 79-4-8.57 of the MBCA authorizes a corporation to purchase and
maintain insurance on behalf of an individual who is a director or officer of
the corporation, or who, while a director or officer of the corporation, serves
at the corporation's request as a director, officer, partner, trustee, employee
or agent of another domestic or foreign partnership, joint venture, trust,
employee benefit plan or other entity, against liability asserted against or
incurred by him in that capacity or arising from his status as a director or
officer, whether or not the corporation would have power to indemnify or
advance expenses to him against the same liability under the indemnification
provisions of the MBCA.
II-1
<PAGE>
Section 79-4-2.02(b)(4) of the MBCA, as amended, provides that the articles
of incorporation may contain a provision eliminating or limiting the liability
of a director to the corporation or its shareholders for money damages for any
action taken, or any failure to take any action, as a director, except
liability for (1) the amount of a financial benefit received by a director to
which he is not entitled, (2) an intentional infliction of harm on the
corporation or the shareholders, (3) a violation of Section 79-4-8.33 of the
MBCA dealing with liability for unlawful distributions or (4) an intentional
violation of criminal law.
Article Ninth of the Friede Goldman's Amended and Restated Articles of
Incorporation states that:
No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damages for breach of fiduciary duty by such
director as a director; provided however, that this Article Ninth shall not
eliminate or limit the liability of a director to the extent provided by
applicable law (1) for any breach of the director's duty of loyalty to the
Corporation or its shareholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) under
Section 79-4-8.33 of the MBCA or (4) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal of
this Article Ninth shall apply to, or have any effect on, the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
If the laws of the State of Mississippi are amended to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the laws of the State of
Mississippi, as so amended.
In addition, Article VI of the Friede Goldman's bylaws further provides that
the Friede Goldman shall indemnify its officers, directors and employees to the
fullest extent permitted by law.
Item 21. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
*2.1 Agreement and Plan of Merger, dated as of June 1, 1999 between Friede
Goldman International Inc. and Halter Marine Group, Inc. (included as
Annex A to the Joint Proxy Statement/Prospectus included in this
Registration Statement).
*2.2 Amendment No. 1, dated September 14, 1999, to Agreement and Plan of
Merger, dated June 1, 1999, between Friede Goldman International Inc.
and Halter Marine Group, Inc. (included as Annex B to the Joint Proxy
Statement/Prospectus included in this Registration Statement).
*4.1 Stockholder's Agreement by and between Friede Goldman International
Inc. and J. L. Holloway, dated as of June 1, 1999 (included as Annex C
to the Joint Proxy Statement/Prospectus included in this Registration
Statement).
*4.2 Voting and Proxy Agreement between Halter Marine Group, Inc. and J. L.
Holloway, dated as of June 1, 1999 (included as Annex D to the Joint
Proxy Statement/Prospectus included in this Registration Statement).
*4.3 Registration Rights Agreement among Friede Goldman International Inc.,
J. L. Holloway, Carl M. Crawford, Ronald W. Schnoor, James A. Lowe,
III and John F. Alford.
*4.4 Amendment No. 1 to Registration Rights Agreement among Friede Goldman
International Inc., J. L. Holloway, Carl M. Crawford, Ronald W.
Schnoor, James A. Lowe, III, John F. Alford, Holloway Partners, L.P.,
Carl Crawford Children's Trust and Bodin Children's Trust.
4.5 Indenture dated September 15, 1997 between Halter Marine Group, Inc.
and the United States Trust Company of Texas, N.A., as Trustee for
Halter Marine Group's 4 1/2% Convertible Subordinated Notes due 2004
(incorporated by reference to Exhibit 4.1 to Halter Marine Group's
Registration Statement on Form S-3 (Registration No. 333-38491) filed
on October 22, 1997 with the Securities and Exchange Commission).
4.6 Registration Rights Agreement dated September 15, 1997, among Halter
Marine Group, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(incorporated by reference to Exhibit 4.2 to Halter Marine Group's
Registration Statement on Form S-3 (Registration No. 333-38491) filed
on October 22, 1997 with the Securities and Exchange Commission).
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
*5.1 Opinion of Phelps & Dunbar, L.L.P. regarding legality of the securities
to be registered.
*8.1 Opinion of Andrews & Kurth L.L.P. regarding tax matters.
*8.2 Opinion of Shearman & Sterling regarding tax matters.
*23.1 Consent of Phelps & Dunbar (included in the opinion filed as Exhibit 5.1
to this Registration Statement).
*23.2 Consent of Andrews & Kurth L.L.P. (included in the opinion filed as
Exhibit 8.1 to this Registration Statement).
*23.3 Consent of Shearman & Sterling (included in the opinion filed as Exhibit
8.2 to this Registration Statement).
*23.4 Consent of Arthur Andersen LLP.
*23.5 Consent of Grant Thorton (formerly Doane Raymond).
*23.6 Consent of Ernst & Young LLP.
*24.1 Powers of Attorney (included in the signature pages of this Registration
Statement on Form S-4).
*99.1 Consent of Jefferies & Company, Inc.
*99.2 Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
*99.3 Form of Friede Goldman Proxy.
*99.4 Form of Halter Marine Proxy.
</TABLE>
- --------
* Filed herewith
Item 22. Undertakings.
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 in Item 20 of this registration
statement, 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.
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 prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
II-3
<PAGE>
(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.
(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 (and,
where applicable, each filing of an employee benefit plans' annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this 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;
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934 and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information;
(6) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form;
(7) That every prospectus: (i) that is filed pursuant to paragraph (3)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes 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;
(8) To respond to requests for information that is incorporated by
reference into this joint proxy statement/prospectus pursuant to Items 4,
10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request; and
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-4
<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-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 24th day of September, 1999.
Friede Goldman International Inc.
By: /s/ J. L. Holloway
-----------------------------------
J. L. Holloway
Chairman, President and
Chief Executive Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Friede Goldman International Inc., hereby constitutes and appoints
J. L. Holloway and James A. Lowe, III (with full power to each of them to act
alone) his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any or all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as he himself might or could do, if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on September 24, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<C> <S>
/s/ J. L. Holloway Chairman of the Board, President and Chief
______________________________________ Executive Officer (Principal Executive Officer)
J. L. Holloway
/s/ Jobie T. Melton, Jr. Chief Financial Officer (Principal Financial
______________________________________ Officer and Principal Accounting Officer)
Jobie T. Melton, Jr.
/s/ Alan A. Baker Director
______________________________________
Alan A. Baker
/s/ T. Jay Collins Director
______________________________________
T. Jay Collins
/s/ John A. Corlew Director
______________________________________
John A. Corlew
/s/ Jerome L. Goldman Director
______________________________________
Jerome L. Goldman
/s/ Raymond E. Mabus, Jr. Director
______________________________________
Raymond E. Mabus, Jr.
/s/ Howell W. Todd Director
______________________________________
Howell W. Todd
/s/ Gary L. Kott Director
______________________________________
Gary L. Kott
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
*2.1 Agreement and Plan of Merger, dated as of June 1, 1999 between Friede
Goldman International Inc. and Halter Marine Group, Inc. (included as
Annex A to the Joint Proxy Statement/Prospectus included in this
Registration Statement).
*2.2 Amendment No. 1, dated September 14, 1999, to Agreement and Plan of
Merger , dated June 1, 1999, between Friede Goldman International Inc.
and Halter Marine Group, Inc. (included as Annex B to the Joint Proxy
Statement/Prospectus included in this Registration Statement).
*4.1 Stockholder's Agreement by and between Friede Goldman International
Inc. and J. L. Holloway, dated as of June 1, 1999 (included as Annex C
to the Joint Proxy Statement/Prospectus included in this Registration
Statement).
*4.2 Voting and Proxy Agreement between Halter Marine Group, Inc. and J. L.
Holloway, dated as of June 1, 1999 (included as Annex D to the Joint
Proxy Statement/Prospectus included in this Registration Statement).
*4.3 Registration Rights Agreement among Friede Goldman International Inc.,
J. L. Holloway, Carl M. Crawford, Ronald W. Schnoor, James A. Lowe,
III and John F. Alford.
*4.4 Amendment No. 1 to Registration Rights Agreement among Friede Goldman
International Inc., J. L. Holloway, Carl M. Crawford, Ronald W.
Schnoor, James A. Lowe, III, John F. Alford, Holloway Partners, L.P.,
Carl Crawford Children's Trust and Bodin Children's Trust.
4.5 Indenture dated September 15, 1997 between Halter Marine Group, Inc.
and the United States Trust Company of Texas, N.A., as Trustee for
Halter Marine Group's 4 1/2% Convertible Subordinated Notes due 2004
(incorporated by reference to Exhibit 4.1 to Halter Marine Group's
Registration Statement on Form S-3 (Registration No. 333-38491) filed
on October 22, 1997 with the Securities and Exchange Commission).
4.6 Registration Rights Agreement dated September 15, 1997, among Halter
Marine Group, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(incorporated by reference to Exhibit 4.2 to Halter Marine Group's
Registration Statement on Form S-3 (Registration No. 333-38491) filed
on October 22, 1997 with the Securities and Exchange Commission).
*5.1 Opinion of Phelps & Dunbar, L.L.P. regarding legality of the
securities to be registered.
*8.1 Opinion of Andrews & Kurth L.L.P. regarding tax matters.
*8.2 Opinion of Shearman & Sterling regarding tax matters.
*23.1 Consent of Phelps & Dunbar (included in the opinion filed as Exhibit
5.1 to this Registration Statement).
*23.2 Consent of Andrews & Kurth L.L.P. (included in the opinion filed as
Exhibit 8.1 to this Registration Statement).
*23.3 Consent of Shearman & Sterling (included in the opinion filed as
Exhibit 8.2 to this Registration Statement).
*23.4 Consent of Arthur Andersen LLP.
*23.5 Consent of Grant Thorton (formerly Doane Raymond).
*23.6 Consent of Ernst & Young LLP.
*24.1 Powers of Attorney (included in the signature pages of this
Registration Statement on Form S-4).
*99.1 Consent of Jefferies & Company, Inc.
*99.2 Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
*99.3 Form of Friede Goldman Proxy.
*99.4 Form of Halter Marine Proxy.
</TABLE>
- --------
* Filed herewith
IN-1
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 21,
1997, is by and among J.L. Holloway, Carl M. Crawford, Ronald W. Schnoor, James
A. Lowe, III and John F. Alford (collectively, the "Holders") and Friede Goldman
International Inc., a Delaware corporation (the "Company").
RECITALS:
WHEREAS, the Company intends to sell up to 2,870,000 shares of its common
stock (the "Common Stock") through an initial public offering (the "IPO"); and
in connection with such IPO, the Company has filed a registration statement with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act"); and
WHEREAS, following the IPO, the Common Stock will be registered under
Section 12 of the Securities and Exchange Act of 1934 (the "Exchange Act"); and
under the provisions of the Securities Act and the rules and regulations
promulgated thereunder, the Holders are or may be limited in the manner of the
sale of the shares of Common Stock owned by them, absent registration under the
Securities Act of the sale of such Common Stock or the availability of exemption
from the registration requirements of the Securities Act; and
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereby agree as follows:
<PAGE>
1. Demand Registration.
(A) Request for Registration. As used in this Agreement, "Restricted
Stock" shall mean all shares of Common Stock received by the Holders pursuant to
the Stock Exchange Agreement, dated as of May 21, 1997, by and among the
Company, HAM Marine, Inc., Friede & Goldman, Ltd. and each of the Holders,
together with any securities issued or issuable with respect to any such Common
Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular issued Restricted Stock, such
securities shall cease to be Restricted Stock when (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) such securities shall have been
distributed by the Holders to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) such securities shall have been
otherwise transferred by the Holders, new certificates representing the
transferred securities not bearing a legend restricting further transfer shall
have been delivered by the Company to the transferees thereof the and subsequent
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or any similar state law then in
force, (iv) such securities shall have ceased to be outstanding, or (v) the
Holders thereof shall agree in writing that such Restricted Stock shall no
longer be Restricted Stock. The Holders and any permitted assignee of any of
the Holder's rights and duties hereunder are referred to herein as the "Holders"
and a Holder selling or distributing Restricted Stock pursuant hereto is
referred to herein as a "selling Holder." Subject to the conditions and
limitations set forth in Section 5 of this Agreement, at any time and from time
to time after the limitation period referred to in Section 1,
2
<PAGE>
the Holder or Holders of Restricted Stock holding in the aggregate Twenty
Percent (20%) of the number of shares of Restricted Stock then outstanding may
make a written request for registration under the Securities Act of all or part
of its or their Restricted Stock pursuant to this Section 2 ("Demand
Registration"), provided that the number of shares of Restricted Stock proposed
to be sold or distributed shall be at least Twenty Percent (20%) of the
aggregate number of shares of Restricted Stock then outstanding. Such request
will specify the aggregate number of shares of Restricted Stock proposed to be
sold or distributed and will also specify the intended method of disposition
thereof. Within ten (10) business days after receipt of such request, the
Company will give written notice of such registration request to all other
Holders of Restricted Stock and include in such registration all Restricted
Stock with respect to which the Company has received written requests for
inclusion therein within fifteen (15) business days after the receipt by the
applicable Holder of the Company's notice. Each such request will also specify
the aggregate number of shares of Restricted Stock to be registered and the
intended method of disposition thereof. No other party, including the Company
(but excluding another Holder of Restricted Stock), shall be permitted to offer
securities under any such Demand Registration unless the Holder or Holders
requesting the Demand Registration shall consent thereto in writing.
(B) Priority on Demand Registrations. If the Holders of a majority is
number of shares of the Restricted Stock to be registered in a Demand
Registration so elect, the offering of such Restricted Stock pursuant to such
Demand Registration shall be in the form of an underwritten offering. In such
event, if the managing underwriter or underwriters of such offering advise the
Company and the Holders in writing that in their opinion the aggregate amount of
Restricted Stock requested to be included in such offering is so large that it
will materially and adversely affect
3
<PAGE>
the success of such offering, the Company will include in such registration only
the aggregate number of shares of Restricted Stock which in the opinion of such
managing underwriter or underwriters can be sold without any such material
adverse effect, and such number of shares shall be allocated pro rata among the
Holders of Restricted Stock on the basis of the number of shares of Restricted
Stock requested by such Holders to be included in such registration. To the
extent Restricted Stock so requested to be registered is excluded from the
offering based on the provisions of the foregoing sentence, then the Holders of
such Restricted Stock shall have the right to one additional Demand Registration
under this Section with respect to such Restricted Stock.
(C) Selection of Underwriters and Counsel. If any Demand Registration
is in the form of an underwritten offering, the Holders of a majority in number
of shares of Restricted Stock to be registered will select and obtain the
services of the investment banker or investment bankers and manager or managers
that will administer the offering and the counsel to such investment bankers and
managers; provided that such investment bankers, managers and counsel are
approved by the Company, which approval shall not be unreasonably withheld.
3. Piggyback Registration. If the Company proposes to file a registration
statement under the Securities Act with respect to an offering for its own
account or for the account of any of its respective securityholders of any class
of its equity securities (other than a registration statement on Form S-8 (or
any successor form) or any other registration statement relating solely to an
employee benefit plan or filed in connection with an exchange offer, a
transaction to which Rule 145 under the Securities Act applies or an offering of
securities solely to the Company's existing stockholders), then the Company
shall in each case give written notice of such proposed filing to the Holders of
Restricted Stock as soon as practicable (but no later than ten (10) business
days) before
4
<PAGE>
the anticipated filing date, and such notice shall offer such Holders the
opportunity to register such number of shares of Restricted Stock as each such
Holder may request. Each Holder desiring to have Restricted Stock included in
such registration statement shall so advise the Company in writing within ten
(10) business days after the date of the Company's notice, setting forth the
amount of such Holder's Restricted Stock for which registration is requested. If
the Company's offering is to be an underwritten offering, the Company shall,
subject to the further provisions of this Agreement, use its reasonable efforts
to cause the managing underwriter or underwriters to permit the Holders of the
Restricted Stock requested to be included in the registration for such offering
to include such securities in such offering on the same terms and conditions as
any similar securities of the Company included therein. The right of each Holder
to registration pursuant to this Section 3 shall, unless the Company otherwise
assents, be conditioned upon such Holder's participation as a seller in such
underwriting and its execution of an underwriting agreement with the managing
underwriter or underwriters selected by the Company. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering deliver
a written opinion to the Holders of Restricted Stock that either because of (A)
the kind of securities which the Holders, the Company and any other persons or
entities intend to include in such offering or (B) the size of the offering
which the Holders, the Company and other persons intend to make, the success of
the offering would be materially and adversely affected by inclusion of the
Restricted Stock requested to be included, then (i) in the event that the size
of the offering is the basis of such managing underwriter's opinion, the number
of shares to be offered for the accounts of Holders of Restricted Stock shall be
reduced pro rata on the basis of the number of securities requested by such
Holders to be offered to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by
5
<PAGE>
such managing underwriter or underwriters; provided that if securities are being
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number of
securities intended to be offered by Holders of Restricted Stock than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities they intended to offer; and (ii) in the event that the
kind of securities to be offered is the basis of such managing underwriter's
opinion, (x) the Restricted Stock to be included in such offering shall be
reduced as described in clause (i) above (subject to the proviso in clause (i))
or, (y) if such actions would, in the judgment of the managing underwriter, be
insufficient to substantially eliminate the adverse effect that inclusion of the
Restricted Stock requested to be included would have on such offering, such
Restricted Stock will be excluded entirely from such offering. Any Restricted
Stock excluded from an underwriting shall be withdrawn from registration and
shall not, without the consent of the Company and the managing underwriter, be
transferred in a public distribution or a sale into the public trading markets
prior to the earlier of 120 days (or such other shorter period of time as the
managing underwriter may require) after the effective date of the registration
statement or 180 days after the date the Holders of such Restricted Stock are
notified of such exclusion.
4. Registration Procedures. Whenever, pursuant to Section 2 or 3, the
Holders of Restricted Stock have requested that any Restricted Stock be
registered, the Company will, subject to the provisions of Section 5, use all
reasonable efforts to effect the registration and the sale or distribution of
such Restricted Stock in accordance with the intended method of disposition
thereof as promptly as practicable, and in connection with any such request, the
Company shall:
6
<PAGE>
(A) in connection with a request pursuant to Section 2, prepare and file
with the SEC, not later than 45 days after receipt of such a request, a
registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall
be available for the sale or distribution of such Restricted Stock in
accordance with the intended method of distribution thereof, and use its
reasonable efforts to cause such registration statement to become
effective; provided that if the Board of Directors of the Company has
determined in its good faith judgment that the filing of such registration
statement would materially adversely affect a pending or proposed public
offering of the Company's securities or would otherwise be significantly
disadvantageous to the Company and the Company shall furnish to Holders
making such a request a certificate signed by either the chief executive
officer or the chief financial officer of the Company stating that the
Board of Directors has made such determination, the Company shall have an
additional period of not more than 180 days within which to file such
registration statement (provided that the Company shall be entitled to
furnish such a certificate only once in any 12-month period); and provided
further, (i) that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority in number of shares of the
Restricted Stock covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the
review and comment of such counsel, and (ii) that after the filing of the
registration statement, the Company will promptly notify each selling
Holder of Restricted Stock of any stop order
7
<PAGE>
issued or, to the knowledge of the Company, threatened by the SEC and take
all reasonable actions to prevent the entry of such stop order or to remove
it if entered;
(B) in connection with a registration pursuant to Section 2, prepare and
file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not
less than 180 days or such shorter period as shall terminate when the
distribution of all Restricted Stock covered by such registration statement
shall have terminated (but not before the expiration of the applicable
period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder), and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the selling Holders thereof set forth in such registration
statement;
(C) as soon as reasonably practicable, furnish to such selling Holders,
prior to filing a registration statement, copies of such registration
statement as proposed to be filed, and thereafter furnish to such selling
Holders such number of copies of such registration statement, each
amendment and supplement thereto (in each case, if specified by such
Holders, including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as such selling Holders may reasonably request in order to
facilitate the disposition of the Restricted Stock owned by such selling
Holders;
(D) with reasonable promptness, use its reasonable efforts to register or
qualify such Restricted Stock under such other securities or blue sky laws
of such jurisdictions
8
<PAGE>
within the United States and Canada as any selling Holder reasonably (in
light of such selling Holder's intended plan of distribution) requests and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such selling Holder to consummate the disposition in
such jurisdictions of the Restricted Stock owned by such selling Holder;
provided that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection (D), or (ii) subject itself to taxation in
any such jurisdiction.
(E) with reasonable promptness, use reasonable efforts to cause the
Restricted Stock covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary by virtue of the business and operations of the Company to
enable the selling Holders thereto to consummate the disposition of such
Restricted Stock;
(F) promptly notify each selling Holder of such Restricted Stock, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of any event known to the Company
requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers or recipients of such
Restricted Stock, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
promptly make available to each selling Holder any such supplement or
amendment;
9
<PAGE>
(G) in connection with a request pursuant to Section 2, enter into an
underwriting agreement in customary form, the form and substance of such
underwriting agreement being subject to the reasonable satisfaction of the
Company and the Holders;
(H) with reasonable promptness make available for inspection by any selling
Holder, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such selling Holder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and the properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers and employees to
supply all information reasonably requested for such purpose by any such
Inspector in connection with such registration statement. Each Inspector
that actually reviews Records supplied by the Company that include
information that the Company identifies, in good faith, to be confidential
("Confidential Information") shall be required, prior to any such review,
to execute an agreement with the Company providing that such Inspector
shall not publicly disclose any Confidential Information unless such
disclosure is required by applicable law or legal process. Each selling
Holder of Restricted Stock agrees that Confidential Information obtained by
it as a result of such inspections shall not be used by it as the basis for
any transactions in securities of the Company unless and until such
information is made generally available to the public. Each selling Holder
of Restricted Stock further agrees that it will, upon learning that
disclosure of Confidential Information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent
10
<PAGE>
disclosure of the Confidential Information. Each selling Holder also agrees
that the due diligence investigation made by the Inspectors shall be
conducted in a manner which shall not unreasonably disrupt the operations
of the Company or the work performed by the Company's officers and
employees;
(I) in the event such sale is pursuant to an underwritten offering, use its
reasonable efforts to obtain a comfort letter or letters from the Company's
independent public accountants in customary form and covering such matters
of the type customarily covered by comfort letters as the managing
underwriter reasonably requests;
(J) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
a period of twelve months, beginning within three months after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act; and
(K) with reasonable promptness, use its reasonable efforts to cause all
such Restricted Stock to be listed on each securities exchange on which the
Common Stock of the Company is then listed, provided that the applicable
listing requirements are satisfied.
Each selling Holder of Restricted Stock agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in subsection (F) hereof, such selling Holder will forthwith discontinue
disposition of Restricted Stock pursuant to the registration statement
covering such Restricted Stock until such selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subsection
(F) hereof. In the event the Company shall give any such notice, the
Company shall extend the
11
<PAGE>
period during which such registration statement shall be maintained
effective pursuant to this Agreement (including the period referred to in
subsection (B)) by the number of days during the period from and including
the date of the giving of such notice pursuant to subsection (F) hereof to
and including the date when each selling Holder of Restricted Stock covered
by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by subsection (F) hereof.
Each selling Holder also agrees to notify the Company if any event relating
to such selling Holder occurs which would require the preparation of a
supplement or amendment to the prospectus so that such prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
5. Conditions and Limitations.
(A) The Company's obligations under Section 2 shall be subject to the
following limitations:
(i) the Company need not file a registration statement either (x)
during the period starting with the date 60 days prior to the Company's
estimated date of filing of, and ending 90 days after the effective
date of, any registration statement pertaining to securities of the
Company (other than a registration statement on Form S-8 (or any
successor form) or any other registration statement relating solely to
employee benefit plans or filed in connection with an exchange offer, a
transaction to which Rule 145 under the Securities Act applies or an
offering of securities solely to the Company's existing stockholders),
provided that if such Company registration statement is not filed
within 90 days after the first date on which the Company notifies a
Holder of Restricted Stock that it will delay a Demand Registration
12
<PAGE>
pursuant to this clause (x), the Company may not further postpone such
Demand Registration pursuant to this clause; or (y) during the period
specified in the first proviso of subparagraph (A) of Section 4;
(ii) except as provided in Section 2(B), the Company shall not be
required to file more than three Demand Registrations. A registration
statement will not count as a Demand Registration until it has become
effective and the Holder or Holders have sold or distributed Restricted
Stock thereunder; and
(iii) the Company shall have received the information and documents
specified in Section 6 and each selling Holder shall have observed or
performed its other covenants and conditions contained in such Section and
Section 8.
(B) The Company's obligation under Section 3 shall be subject to the
limitations and conditions specified in such Section and in clause (iii) of
subsection (A) of this Section 5, and to the condition that the Company may at
any time terminate its proposal to register its shares and discontinue its
efforts to cause a registration statement to become or remain effective.
6. Information From and Certain Covenants of Holders of Restricted Stock.
Notices and requests delivered to the Company by Holders from whom Restricted
Stock is to be registered pursuant to this Agreement shall contain such
information regarding the Restricted Stock to be so registered, the Holder and
the intended method of disposition of such Restricted Stock as shall reasonably
be required in connection with the action to be taken. Any Holder whose
Restricted Stock is included in a registration statement pursuant to this
Agreement shall execute all consents, powers of attorney, registration
statements and other documents reasonably required to be signed by it in order
to cause such registration statement to become effective.
13
<PAGE>
Each selling Holder covenants that, in disposing of such Holder's shares, such
Holder shall comply with Rules 10b-2, 10b-5 and Regulation M of the SEC adopted
pursuant to the Exchange Act (and any successor rules thereto).
7. Registration Expenses. All Registration Expenses (as defined herein)
will be borne by the Company. Underwriting discounts and commissions applicable
to the sale of Restricted Stock shall be borne by the Holder of the Restricted
Stock to which such discount or commission relates, and each selling Holder
shall be responsible for the fees and expenses of any legal counsel, accountants
or other agents retained by such selling Holder and all other out-of-pocket
expenses incurred by such selling Holder in connection with any registration
under this Agreement.
As used herein, the term Registration Expenses means all expenses incident
to the Company's performance of or compliance with this Agreement (whether or
not the registration in connection with which such expenses are incurred
ultimately becomes effective), including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Restricted Stock), rating agency fees, printing
expenses, messenger and delivery expenses incurred by the Company, internal
expenses incurred by the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, NASD fees (including filing
fees and reasonable fees and disbursements of counsel in connection with
compliance with NASD rules and regulations), and fees and disbursements of
counsel for the Company and its independent certified public accountants
(including the expenses of any special
14
<PAGE>
audit or comfort letters required by or incident to such performance),
securities act liability insurance (if the Company elects to obtain such
insurance), the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration and the fees and expenses of
other persons retained by the Company in connection with such registration.
8. Indemnification; Contribution.
(A) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each selling Holder of Restricted Stock from and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of counsel) (i) arising out of or based upon (1) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Restricted Stock or in any amendment or
supplement thereto or in any preliminary prospectus relating to the Restricted
Stock, or (2) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the Company
by such selling Holder, or (ii) arising out of or based upon any violation of
any Federal or state securities laws or rules or regulations thereunder
committed by the Company in connection with the performance of its obligations
hereunder. The Company also agrees to include in any underwriting agreement with
any underwriters of the Restricted Stock provisions indemnifying and providing
for contribution to such underwriters and their officers and directors and each
person who controls such underwriters on substantially the same basis as the
provisions of this Section 8 indemnifying and providing for contribution to the
selling Holders.
15
<PAGE>
(B) Indemnification by Holders of Restricted Stock. Each selling Holder
agrees to indemnify and hold harmless the Company, its officers, directors and
agents and each person (other than a selling Holder), if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of counsel) (i) arising out
of or based upon (1) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Restricted Stock or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Stock, or (2) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) arising out
of or based upon any violation of any Federal or state securities laws or rules
or regulations thereunder committed by such Holder in connection with the
disposition of such Holder's Restricted Stock, provided (x) that such losses,
claims, damages, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by such selling Holder or upon such selling
Holder's behalf expressly for use therein, and (y) that no selling Holder shall
be liable for any indemnification under this Section 8 in an aggregate amount
which exceeds the total net proceeds received by such selling Holder from the
offering. Each selling Holder also agrees to include in any underwriting
agreement with underwriters of the Restricted Stock provisions indemnifying and
providing for contribution to such underwriters, their officers and directors
and each person who controls such underwriters on substantially the same basis
as the provisions of this Section 8 indemnifying and providing for contribution
to the Company.
16
<PAGE>
(C) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or any claim shall
be asserted against any indemnified party in respect of which indemnity may be
sought from an indemnifying party, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and shall assume the payment of all expenses incurred in
connection with the defense thereof; provided, that the indemnifying party may
require such indemnified party to undertake to reimburse all such fees and
expenses if it is ultimately determined that such indemnified party is not
entitled to indemnification or advancement of expenses hereunder. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding and to employ counsel reasonably satisfactory to
such indemnified party, or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party, and such indemnified party shall have been advised
in writing by counsel that there may be one or more legal defenses available to
such indemnified party which are different from or additional to those available
to the indemnifying party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or proceeding or
separate but substantially similar or
17
<PAGE>
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel, subject to the indemnifying party's approval of counsel, which
approval shall not be unreasonably withheld) at any time for such indemnified
party. The indemnifying party shall not be liable for any settlement of any such
action, claim or proceeding effected without its written consent (such consent
which shall not be unreasonably withheld), but if settled with its written
consent, or if there is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party agrees to indemnify and hold harmless such
indemnified party from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(D) Contribution. If the indemnification provided for in this Section 8
is unavailable to the Company or the selling Holders in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments, in such proportion
as is appropriate to reflect the relative fault of each such party in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of each such party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been taken or made by, or relates to
information supplied by, such indemnifying or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.
18
<PAGE>
The Company and the selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 8(D) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claims. Notwithstanding the provisions of this Section 8(D), no
selling Holder shall be required to contribute an amount in excess of the amount
by which the total price at which the Restricted Stock of such selling Holder
was offered to the public exceeds the amount of any damages which such selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Amendments. This Agreement may be amended or modified upon the written
consent thereto of the Company and the Holders of a majority in number of shares
of Restricted Stock.
10. Assignments. This Agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties hereto. Without
the written consent of the Company, a Holder may not assign any rights hereunder
except to a transferee of such Holder of Restricted Stock aggregating Ten
Percent (10%) or more of the Restricted Stock then outstanding, provided that
19
<PAGE>
the foregoing will not prevent any successor by merger, consolidation or
transfer of substantially all the assets of such Holder from succeeding to a
Holder's rights hereunder.
11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
12. Notices. Any notice, request, instruction, correspondence or other
documents to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by telecopier, as follows:
If to J.L. Holloway:
J.L . Holloway
525 E. Capital Street, Suite 402
Jackson, Mississippi 39201
Telecopier No.: (601) 352-0588
If to Carl M. Crawford:
Carl M. Crawford
3500 Port Authority Road
Pascagoula, Mississippi 39567
Telecopier No.: (601) 769-1826
If to Ronald W. Schnoor:
Ronald W. Schnoor
3500 Port Authority Road
Pascagoula, Mississippi 39567
Telecopier No.: (601) 769-1826
If to James A. Lowe, III:
James A. Lowe III
525 E. Capital Street, Suite 402
Jackson, Mississippi 39201
Telecopier No.: (601) 352-0588
20
<PAGE>
If to John F. Alford:
John F. Alford
525 E. Capital Street, Suite 402
Jackson, Mississippi 39201
Telecopier No.: (601) 352-0588
If to the Company:
Friede Goldman International Inc.
525 E. Capital Street, Suite 402
Jackson, Mississippi 39201
Attention: James A. Lowe, III
Telecopier No. (601) 352-0588
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telecopier shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change of
address.
13. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
14. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
15. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
21
<PAGE>
IN WITNESS WHEREOF, the Holders and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized.
By: /s/ J. L. Holloway
-------------------------------
J.L. Holloway
By: /s/ Carl M. Crawford
-------------------------------
Carl M. Crawford
By: /s/ Ronald W. Schnoor
-------------------------------
Ronald W. Schnoor
By: /s/ James A. Lowe, III
-------------------------------
James A. Lowe, III
By: /s/ John F. Alford
-------------------------------
John F. Alford
FRIEDE GOLDMAN INTERNATIONAL INC.
By: /s/ J. L. Holloway
-------------------------------
J.L. Holloway Chairman of the Board,
President and Chief Executive Officer
22
<PAGE>
AMENDMENT NO. 1
TO
REGISTRATION RIGHTS AGREEMENT
Amendment No. 1 to Registration Rights Agreement (this "Amendment"), dated
as of May 21, 1997, is by and among J.L. Holloway, Carl M. Crawford, Ronald W.
Schnoor, James A. Lowe, III, John F. Alford, Holloway Partners, L.P., Crawford
Children's Trust, and Bodin Children's Trust, and Friede Goldman International
Inc. (the "Company").
RECITALS
WHEREAS, the Company, J.L. Holloway, Carl M. Crawford, Ronald W. Schnoor,
James A. Lowe, III and John F. Alford desire to amend the Registration Rights
Agreement, dated as of May 21, 1997, by and among such parties (the
"Registration Rights Agreement") to include Holloway Partners, L.P., Crawford
Children's Trust and Bodin Children's Trust within the definition of "Holders"
therein;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the parties hereto hereby agree as follows:
1. The Registration Rights Agreement is hereby amended by changing the
definition of "Holders" to include J.L. Holloway, Carl M. Crawford, Ronald W.
Schnoor, James A. Lowe, III, John F. Alford, Holloway Partners, L.P.,
Crawford Children's Trust and Bodin Children's Trust.
2. Section 12 of the Registration Rights Agreement is hereby amended to
include the following in the list of recipients for notice:
If to Holloway Partners, L.P.:
J.L. Holloway
525 E. Capital Street
Jackson, Mississippi 39201
Telecopier No.: (601) 352-0588
If to Crawford Children's Trust or Bodin Children's Trust:
Mr. Joe Dick
Trust Officer and Vice President
Trustmark National Bank
Post Office Box 291
Jackson, Mississippi 39205
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to
be signed on the date first above written.
FRIEDE GOLDMAN INTERNATIONAL INC.
By: /s/ J. L. Holloway
-------------------------------
Name: J. L. Holloway
Title: Chairman of the Board, President
and Chief Executive Officer
/s/ J. L. Holloway
-----------------------------------
J. L. Holloway
/s/ Carl M. Crawford
------------------------------------
Carl M. Crawford
/s/ Ronald W. Schnoor
-----------------------------------
Ronald W. Schnoor
/s/ James A. Lowe, III
-----------------------------------
James A. Lowe, III
/s/ John F. Alford
-----------------------------------
John F. Alford
HOLLOWAY PARTNERS, L.P.
By: /s/ J. L. Holloway
-------------------------------
Name: J. L. Holloway
Title: General Partner
CRAWFORD CHILDREN'S TRUST
By: /s/ Joe Dick
-------------------------------
Name: Joe Dick
Title: VP & TO
BODIN CHILDREN'S TRUST
By: /s/ Joe Dick
-------------------------------
Name: Joe Dick
Title: VP & TO
<PAGE>
EXHIBIT 5.1
[PHELPS DUNBAR LETTERHEAD]
September 24, 1999
Board of Directors
Friede Goldman International Inc.
525 East Capital Street, 7th Floor
Jackson, Mississippi 39201
Gentlemen:
We have acted as counsel to Friede Goldman International Inc., a
Mississippi corporation ("Friede Goldman"), in connection with the proposed
issuance by Friede Goldman of up to 18,143,021 shares (the "Shares") of common
stock, par value $.01 per share, of Friede Goldman. The Shares are proposed to
be offered to holders of common stock of Halter Marine Group, Inc., a Delaware
corporation ("Halter Marine"), in connection with the merger of Friede Goldman
with and into Halter Marine with Friede Goldman as the surviving corporation,
pursuant to the Agreement and Plan of Merger dated as of June 1, 1999 between
Friede Goldman and Halter Marine, as amended (the "Merger Agreement"). This
opinion is being delivered in connection with Friede Goldman's Registration
Statement on Form S-4 (the "Registration Statement") relating to the
registration of the offering and sale of the Shares under the Securities Act of
1933, as amended, pursuant to the Merger Agreement.
As the basis for the opinion hereinafter expressed, we have examined such
statutes, regulations, corporate records and documents, certificates of
corporate and public officials, and other instruments as we have deemed
necessary or advisable for the purposes of this opinion. In such examination,
we have assumed the authenticity of all documents submitted to us as originals
and the conformity with the original documents of all documents submitted to us
as copies.
Based on the foregoing and having due regard for such legal considerations
as we deem relevant, we are of the opinion that the Shares to be issued by
Friede Goldman to shareholders of Halter Marine as described in the Merger
Agreement have been validly authorized and, when issued and delivered in
accordance with the Merger Agreement, will be validly issued, fully paid and
non-assessable.
The foregoing opinion is limited to the laws of the State of Mississippi
and the federal laws of the United States of America in effect on the date
hereof. We express no opinion as to matters under, involving or governed by
the laws of any other jurisdiction.
EX 5.1 - Page 1
<PAGE>
Board of Directors
Friede Goldman International Inc.
September 24, 1999
Page 2
We have assumed the genuineness of all signatures and the legal capacity of
all natural persons on the documents reviewed.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Registration Statement.
Very truly yours,
PHELPS DUNBAR, L.L.P
/s/ Phelps Dunbar, L.L.P.
By: E. Clifton Hodge, Jr.
Partner
EX 5.1 - Page 2
<PAGE>
EXHIBIT 8.1
[ANDREWS & KURTH LETTERHEAD]
September 24, 1999
Friede Goldman International Inc.
523 East Capitol Street, 7th Floor
Jackson, Mississippi 39201
TAX OPINION
Ladies and Gentlemen:
We have acted as counsel for Friede Goldman International Inc., a
Mississippi corporation ("Friede Goldman"), in connection with the Agreement and
Plan of Merger, dated as of June 1, 1999 as amended September 14, 1999 (the
"Merger Agreement"), by and between Friede Goldman and Halter Marine Group,
Inc., a Delaware corporation ("Halter Marine"), pursuant to which Halter Marine
will be merged with and into Friede Goldman.
At your request, in connection with the filing of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger. In connection with rendering our opinion, we have
reviewed the Merger Agreement, including the Exhibits thereto, the Proxy
Statement/Prospectus constituting part of the Registration Statement on Form S-4
filed with the Securities and Exchange Commission on the date hereof, and such
other documents and corporate records as we have deemed necessary or appropriate
as a basis therefor. We have assumed that the representations and warranties
contained in the Merger Agreement were true, correct and complete when made and
will continue to be true, correct and complete through the Effective Time, and
that the parties have complied with and, if applicable, will continue to comply
with the covenants contained in the Merger Agreement. We also have assumed that
statements as to factual matters contained in the Proxy Statement/Prospectus are
true, correct and complete, and will continue to be true, correct and complete
through the Effective Time. Finally, we have assumed that the representations
and covenants to be made by Halter Marine and by Friede Goldman contained in tax
certificates substantially in the form of Appendices A and B attached hereto
will be provided to us at the Effective Time, and we have assumed that such
representations will be true, correct and complete through the Effective Time
and that such covenants will be complied with in all material respects.
All statements of legal conclusions attributable to us in the
discussion under the caption "Material U.S. Federal Income Tax Consequences" in
the Proxy Statement/Prospectus included in the Registration Statement on Form S-
4 of Friede Goldman filed in respect of the transactions contemplated in the
Merger Agreement are our opinion with respect to the matters set forth therein.
EX 8.1 - Page 1
<PAGE>
We hereby consent to the references to our firm and this opinion
contained in the joint proxy statement/prospectus included in the Registration
Statement. We will deliver to Friede Goldman, at the Effective Time of the
Merger, the opinion required by Section 7.02(c) of the Merger Agreement.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
1216:1117
EX 8.1 - Page 2
<PAGE>
APPENDIX A
FRIEDE GOLDMAN INTERNATIONAL INC.
523 EAST CAPITOL STREET, 7TH FLOOR
JACKSON, MISSISSIPPI 39201
[DATE]
Andrews & Kurth L.L.P.
600 Travis
Suite 4200
Houston, Texas 77002
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
7.02(c) and 7.03(d) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated June 1, 1999 as amended September 14, 1999, by and between
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), and Friede
Goldman International Inc., a Mississippi corporation ("Friede Goldman"), with
respect to the merger of Halter Marine with and into Friede Goldman (the
"Merger"), the undersigned officer of Friede Goldman does hereby make the
following certification and representations on behalf of Friede Goldman as of
the date hereof. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement or Proxy Statement/Prospectus of Friede
Goldman, Registration No. 333-________.
1. I certify to you that I am the ________________________________
of Friede Goldman. I am familiar with the transactions contemplated by,
and the terms and provisions of, the Merger Agreement, I have personal
knowledge of the matters covered by the representations made herein, and I
am authorized to make these representations on behalf of Friede Goldman.
2. The fair market value of the Friede Goldman Common Stock and cash
in lieu of fractional shares of Friede Goldman Common Stock, if any,
received by each Halter Marine stockholder in the Merger will be
approximately equal to the fair market value of the Halter Marine Common
Stock surrendered in the exchange.
EX 8.1 - Page 3
<PAGE>
3. Except for fractional share interests, Friede Goldman has no plan
or intention to redeem or reacquire, or cause any person related to Friede
Goldman to acquire, any of the shares of Friede Goldman Common Stock issued
in the Merger. To the best of the knowledge of the management of Friede
Goldman, no person related to Friede Goldman and no person acting as an
intermediary for Friede Goldman or such a related person has a plan or
intention to acquire any of the Friede Goldman Common Stock issued in the
Merger. For purposes of this representation, and the following
representations, a person is related to Friede Goldman if such person and
Friede Goldman would be treated as related persons within the meaning of
Treasury Regulation Section 1.368-1(e)(3), (4) and (5).
4. Friede Goldman has no plan or intention to sell or otherwise
dispose of any of the assets of Halter Marine acquired in the Merger,
except for dispositions made in the ordinary course of business or
transfers described in Treasury Regulations Section 1.368-2(k)(1).
5. Following the Merger, Friede Goldman will continue the historic
business of Halter Marine or use a significant portion of Halter Marine's
historic business assets in a business within the meaning of Treasury
Regulation Section 1.368-1(d). For purposes of this representation, Friede
Goldman will be deemed to satisfy this requirement if (a) the members of
Friede Goldman's qualified group (as defined in Treasury Regulation Section
1.368-1(d)(4)(ii)), in the aggregate, continue the historic business of
Halter Marine or use a significant portion of Halter Marine's historic
business assets in a business, or (b) the foregoing activities are
undertaken by a partnership in which (i) the members of Friede Goldman's
qualified group, in the aggregate, own at least a 33 1/3 percent capital
and/or profits interest, or (ii) one or more members of the qualified group
has active and substantial management functions as a partner with respect
to the partnership business and the members of the qualified group, in the
aggregate, own at least a 20 percent capital and/or profits interest in the
partnership.
6. Friede Goldman, Halter Marine and the Halter Marine stockholders
will pay their respective expenses, if any, incurred in connection with the
Merger.
7. There is no intercorporate indebtedness existing between Friede
Goldman and Halter Marine that was issued, acquired or will be settled at a
discount.
8. Friede Goldman is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The fair market value of the assets of Halter Marine transferred
to Friede Goldman will equal or exceed the sum of the liabilities assumed
by Friede Goldman plus the amount of liabilities, if any, to which the
transferred assets are subject.
EX 8.1 - Page 4
<PAGE>
10. Except for the payment of cash in lieu of issuing fractional
shares of Friede Goldman Common Stock, neither Friede Goldman nor a person
related to Friede Goldman will, in connection with the Merger, acquire
Halter Marine Common Stock with consideration other than Friede Goldman
Common Stock. For purposes of this representation, Halter Marine Common
Stock redeemed for cash or other property furnished by Friede Goldman will
be considered as acquired by Friede Goldman. Further, no liabilities of
Halter Marine stockholders will be assumed by Friede Goldman, nor will any
Halter Marine Common Stock be subject to any liabilities.
11. The payment of cash in lieu of issuing fractional shares of
Friede Goldman Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Friede Goldman of issuing fractional shares
and does not represent separately bargained-for consideration. The total
cash consideration that will be paid in the Merger to Halter Marine
stockholders instead of issuing fractional shares of Friede Goldman Common
Stock will not exceed one percent of the total consideration that will be
issued in the Merger to Halter Marine stockholders in exchange for their
shares of Halter Marine Common Stock. The fractional share interests of
each Halter Marine stockholder will be aggregated and no Halter Marine
stockholder will receive cash in an amount equal to or greater than the
value of one full share of Friede Goldman Common Stock.
12. None of the compensation received by any stockholder-employees of
Halter Marine will be separate consideration for, or allocable to, any of
their shares of Halter Marine Common Stock to be surrendered in the Merger.
None of the shares of Friede Goldman Common Stock to be received by any
stockholder-employee will be separate consideration for, or allocable to,
any employment agreement, and the compensation paid to any stockholder-
employee will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for similar
services.
I understand, and Friede Goldman understands, that Andrews & Kurth
L.L.P. and Shearman & Sterling will rely on these representations and assume
them to be accurate as of the Effective Time, without further inquiry on their
part, in rendering their opinions with respect to the Merger and that the
inaccuracy of any of these representations may negatively affect those opinions,
and I hereby commit to inform them if, for any reason, any of the foregoing
representations ceases to be true at or prior to the Effective Time.
Very truly yours,
Friede Goldman International Inc.
By: ______________________________
Name: ____________________________
Title: ___________________________
EX 8.1 - Page 5
<PAGE>
APPENDIX B
HALTER MARINE GROUP, INC.
13085 INDUSTRIAL SEAWAY ROAD
GULFPORT, MISSISSIPPI 39503
[DATE]
Andrews & Kurth L.L.P.
600 Travis
Suite 4200
Houston, Texas 77002
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
7.02(c) and 7.03(d) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated June 1, 1999 as amended September 14, 1999, by and between
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), and Friede
Goldman International Inc., a Mississippi corporation ("Friede Goldman"), with
respect to the merger of Halter Marine with and into Friede Goldman (the
"Merger"), the undersigned officer of Halter Marine does hereby make the
following certification and representations on behalf of Halter Marine as of the
date hereof. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement or Proxy Statement/Prospectus of Friede
Goldman, Registration No. 333-________.
1. I certify to you that I am the ________________________________
of Halter Marine. I am familiar with the transactions contemplated by, and
the terms and provisions of, the Merger Agreement, I have personal
knowledge of the matters covered by the following representations, and I am
authorized to make the following representations on behalf of Halter
Marine.
2. The fair market value of the Friede Goldman Common Stock and cash
in lieu of fractional shares of Friede Goldman Common Stock, if any,
received by each Halter Marine stockholder in the Merger will be
approximately equal to the fair market value of the Halter Marine Common
Stock surrendered in the exchange.
EX 8.1 - Page 6
<PAGE>
3. Prior to and in connection with the Merger, (i) none of the Halter
Marine Common Stock will be redeemed, (ii) no extraordinary distribution
will be made with respect to Halter Marine Common Stock, and (iii) none of
the Halter Marine Common Stock will be acquired by a person related (within
the meaning of Treasury Regulations Section 1.368-1(e)(3), (4) and (5)) to
Halter Marine.
4. The liabilities of Halter Marine assumed by Friede Goldman and the
liabilities to which the transferred assets of Halter Marine are subject
were incurred by Halter Marine in the ordinary course of its business.
5. Friede Goldman, Halter Marine and the Halter Marine stockholders
will pay their respective expenses, if any, incurred in connection with the
Merger.
6. There is no intercorporate indebtedness existing between Friede
Goldman and Halter Marine that was issued, acquired or will be settled at a
discount.
7. Halter Marine is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
8. Halter Marine is not under the jurisdiction of a court in a Title
11 case or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
9. The fair market value of the assets of Halter Marine transferred
to Friede Goldman will equal or exceed the sum of the liabilities assumed
by Friede Goldman plus the amount of liabilities, if any, to which the
transferred assets are subject.
10. The payment of cash in lieu of issuing fractional shares of
Friede Goldman Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Friede Goldman of issuing fractional shares
and does not represent separately bargained-for consideration. The total
cash consideration that will be paid in the Merger to Halter Marine
stockholders instead of issuing fractional shares of Friede Goldman Common
Stock will not exceed one percent of the total consideration that will be
issued in the Merger to Halter Marine stockholders in exchange for their
shares of Halter Marine Common Stock. The fractional share interests of
each Halter Marine stockholder will be aggregated and no Halter Marine
stockholder will receive cash in an amount equal to or greater than the
value of one full share of Friede Goldman Common Stock.
11. None of the compensation received by any stockholder-employees of
Halter Marine will be separate consideration for, or allocable to, any of
their shares of Halter Marine Common Stock to be surrendered in the Merger.
None of the shares of
EX 8.1 - Page 7
<PAGE>
Friede Goldman Common Stock to be received by any stockholder-employee will
be separate consideration for, or allocable to, any employment agreements,
and the compensation paid to any stockholder-employee will be for services
actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
I understand, and Halter Marine understands, that Andrews & Kurth
L.L.P. and Shearman & Sterling will rely on these representations and assume
them to be accurate as of the Effective Time, without further inquiry on their
part, in rendering their opinions with respect to the Merger and that the
inaccuracy of any of these representations may negatively affect those opinions,
and I hereby commit to inform them if, for any reason, any of the foregoing
representations ceases to be true at or prior to the Effective Time.
Very truly yours,
Halter Marine Group, Inc.
By: _______________________________
Name: _____________________________
Title: ____________________________
EX 8.1 - Page 8
<PAGE>
EXHIBIT 8.2
[SHEARMAN & STERLING LETTERHEAD]
September 24, 1999
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Agreement and Plan of Merger between
Friede Goldman International Inc. and Halter Marine Group, Inc.
dated as of June 1, 1999, as amended September 14, 1999
Ladies and Gentlemen:
You have requested our opinion as to certain United States federal
income tax consequences of the merger (the "Merger") of Halter Marine Group,
Inc., a Delaware corporation ("Halter Marine"), with and into Friede Goldman
International Inc., a Mississippi corporation ("Friede Goldman"). The Merger is
being consummated pursuant to the Agreement and Plan of the Merger, dated as of
June 1, 1999, as amended September 14, 1999, between Friede Goldman and Halter
Marine (the "Merger Agreement"). Unless otherwise defined, capitalized terms
used herein have the meanings assigned to them in the Merger Agreement. At your
request, in connection with the filing of the Registration Statement, we are
rendering our opinion concerning certain federal income tax consequences of the
Merger.
In connection with rendering our opinion, we have reviewed the Merger
Agreement, including the Exhibits thereto, the Proxy Statement/Prospectus
constituting part of the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on the date hereof, and such other documents
and corporate records as we have deemed necessary or appropriate as a basis
therefor. We have assumed that the representations and warranties contained in
the Merger Agreement were true, correct and complete when made and will continue
to be true, correct and complete through the Effective Time, and that the
parties have complied with and, if applicable, will continue to comply with the
covenants contained in the Merger Agreement. We also have assumed that
statements as to factual matters contained in the Proxy Statement/Prospectus are
true, correct and complete, and will continue to be true, correct and complete
through the Effective Time. Finally, we have assumed that the representations
and covenants to be made by Halter Marine and by Friede Goldman contained in tax
certificates substantially in the form of Appendices A and B
EX 8.2 - Page 1
<PAGE>
attached hereto will be provided to us at the Effective Time, and we have
assumed that such representations will be true, correct and complete through the
Effective Time and that such covenants will be complied with in all material
respects.
Based upon the foregoing, in reliance thereon and subject thereto, and
based upon the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury Regulations promulgated thereunder, judicial decisions, revenue rulings
and revenue procedures of the Internal Revenue Service, and other administrative
pronouncements, all as in effect on the date hereof, and assuming that the
Merger and related transactions will be consummated in accordance with the terms
of the Merger Agreement and that the Merger will qualify as a statutory merger
under applicable state law, it is our opinion that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Halter Marine and Friede Goldman will be a party to such reorganization
within the meaning of Section 368(b) of the Code. Furthermore, we hereby
confirm that the discussion set forth under the caption "Material U.S. Federal
Income Tax Consequences" in the Proxy Statement/Prospectus, insofar as such
discussion constitutes statements of United States federal income tax law or
legal conclusions, subject to the assumptions, limitations and qualifications
set forth therein, accurately reflects our opinion of the material United States
federal income tax consequences of the Merger.
No opinion is expressed as to any matter not specifically addressed
above, including the accuracy of the representations or reasonableness of the
assumptions relied upon by us in rendering the opinion set forth above. Our
opinion is based on current United States federal income tax law and
administrative practice and we do not undertake to advise you as to any future
changes in United States federal income tax law or administrative practice that
may affect our opinion unless we are specifically retained to do so. We consent
to the use of this opinion as an Exhibit to the Proxy Statement/Prospectus, and
to the references to Shearman & Sterling under the captions "Material U.S.
Federal Income Tax Consequences" and "Legal Matters" in the Proxy
Statement/Prospectus.
Very truly yours,
/s/ Shearman & Sterling
MKW/CMLP
EX 8.2 - Page 2
<PAGE>
APPENDIX A
FRIEDE GOLDMAN INTERNATIONAL INC.
523 EAST CAPITOL STREET, 7TH FLOOR
JACKSON, MISSISSIPPI 39201
[DATE]
Andrews & Kurth L.L.P.
600 Travis
Suite 4200
Houston, Texas 77002
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
7.02(c) and 7.03(d) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated June 1, 1999 as amended September 14, 1999, by and between
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), and Friede
Goldman International Inc., a Mississippi corporation ("Friede Goldman"), with
respect to the merger of Halter Marine with and into Friede Goldman (the
"Merger"), the undersigned officer of Friede Goldman does hereby make the
following certification and representations on behalf of Friede Goldman as of
the date hereof. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement or Proxy Statement/Prospectus of Friede
Goldman, Registration No. 333-________.
1. I certify to you that I am the ________________________________
of Friede Goldman. I am familiar with the transactions contemplated by,
and the terms and provisions of, the Merger Agreement, I have personal
knowledge of the matters covered by the representations made herein, and I
am authorized to make these representations on behalf of Friede Goldman.
2. The fair market value of the Friede Goldman Common Stock and cash
in lieu of fractional shares of Friede Goldman Common Stock, if any,
received by each Halter Marine stockholder in the Merger will be
approximately equal to the fair market value of the Halter Marine Common
Stock surrendered in the exchange.
EX 8.2 - Page 3
<PAGE>
3. Except for fractional share interests, Friede Goldman has no plan
or intention to redeem or reacquire, or cause any person related to Friede
Goldman to acquire, any of the shares of Friede Goldman Common Stock issued
in the Merger. To the best of the knowledge of the management of Friede
Goldman, no person related to Friede Goldman and no person acting as an
intermediary for Friede Goldman or such a related person has a plan or
intention to acquire any of the Friede Goldman Common Stock issued in the
Merger. For purposes of this representation, and the following
representations, a person is related to Friede Goldman if such person and
Friede Goldman would be treated as related persons within the meaning of
Treasury Regulation Section 1.368-1(e)(3), (4) and (5).
4. Friede Goldman has no plan or intention to sell or otherwise
dispose of any of the assets of Halter Marine acquired in the Merger,
except for dispositions made in the ordinary course of business or
transfers described in Treasury Regulations Section 1.368-2(k)(1).
5. Following the Merger, Friede Goldman will continue the historic
business of Halter Marine or use a significant portion of Halter Marine's
historic business assets in a business within the meaning of Treasury
Regulation Section 1.368-1(d). For purposes of this representation, Friede
Goldman will be deemed to satisfy this requirement if (a) the members of
Friede Goldman's qualified group (as defined in Treasury Regulation Section
1.368-1(d)(4)(ii)), in the aggregate, continue the historic business of
Halter Marine or use a significant portion of Halter Marine's historic
business assets in a business, or (b) the foregoing activities are
undertaken by a partnership in which (i) the members of Friede Goldman's
qualified group, in the aggregate, own at least a 33 1/3 percent capital
and/or profits interest, or (ii) one or more members of the qualified group
has active and substantial management functions as a partner with respect
to the partnership business and the members of the qualified group, in the
aggregate, own at least a 20 percent capital and/or profits interest in the
partnership.
6. Friede Goldman, Halter Marine and the Halter Marine stockholders
will pay their respective expenses, if any, incurred in connection with the
Merger.
7. There is no intercorporate indebtedness existing between Friede
Goldman and Halter Marine that was issued, acquired or will be settled at a
discount.
8. Friede Goldman is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The fair market value of the assets of Halter Marine transferred
to Friede Goldman will equal or exceed the sum of the liabilities assumed
by Friede Goldman plus the amount of liabilities, if any, to which the
transferred assets are subject.
EX 8.2 - Page 4
<PAGE>
10. Except for the payment of cash in lieu of issuing fractional
shares of Friede Goldman Common Stock, neither Friede Goldman nor a person
related to Friede Goldman will, in connection with the Merger, acquire
Halter Marine Common Stock with consideration other than Friede Goldman
Common Stock. For purposes of this representation, Halter Marine Common
Stock redeemed for cash or other property furnished by Friede Goldman will
be considered as acquired by Friede Goldman. Further, no liabilities of
Halter Marine stockholders will be assumed by Friede Goldman, nor will any
Halter Marine Common Stock be subject to any liabilities.
11. The payment of cash in lieu of issuing fractional shares of
Friede Goldman Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Friede Goldman of issuing fractional shares
and does not represent separately bargained-for consideration. The total
cash consideration that will be paid in the Merger to Halter Marine
stockholders instead of issuing fractional shares of Friede Goldman Common
Stock will not exceed one percent of the total consideration that will be
issued in the Merger to Halter Marine stockholders in exchange for their
shares of Halter Marine Common Stock. The fractional share interests of
each Halter Marine stockholder will be aggregated and no Halter Marine
stockholder will receive cash in an amount equal to or greater than the
value of one full share of Friede Goldman Common Stock.
12. None of the compensation received by any stockholder-employees of
Halter Marine will be separate consideration for, or allocable to, any of
their shares of Halter Marine Common Stock to be surrendered in the Merger.
None of the shares of Friede Goldman Common Stock to be received by any
stockholder-employee will be separate consideration for, or allocable to,
any employment agreement, and the compensation paid to any stockholder-
employee will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for similar
services.
I understand, and Friede Goldman understands, that Andrews & Kurth L.L.P.
and Shearman & Sterling will rely on these representations and assume them to be
accurate as of the Effective Time, without further inquiry on their part, in
rendering their opinions with respect to the Merger and that the inaccuracy of
any of these representations may negatively affect those opinions, and I hereby
commit to inform them if, for any reason, any of the foregoing representations
ceases to be true at or prior to the Effective Time.
Very truly yours,
Friede Goldman International Inc.
By: ________________________________
Name: ______________________________
Title: _____________________________
EX 8.2 - Page 5
<PAGE>
APPENDIX B
HALTER MARINE GROUP, INC.
13085 INDUSTRIAL SEAWAY ROAD
GULFPORT, MISSISSIPPI 39503
[DATE]
Andrews & Kurth L.L.P.
600 Travis
Suite 4200
Houston, Texas 77002
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
7.02(c) and 7.03(d) of the Agreement and Plan of Merger (the "Merger
Agreement"), dated June 1, 1999 as amended September 14, 1999, by and between
Halter Marine Group, Inc., a Delaware corporation ("Halter Marine"), and Friede
Goldman International Inc., a Mississippi corporation ("Friede Goldman"), with
respect to the merger of Halter Marine with and into Friede Goldman (the
"Merger"), the undersigned officer of Halter Marine does hereby make the
following certification and representations on behalf of Halter Marine as of the
date hereof. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement or Proxy Statement/Prospectus of Friede
Goldman, Registration No. 333-________.
1. I certify to you that I am the ________________________________
of Halter Marine. I am familiar with the transactions contemplated by, and
the terms and provisions of, the Merger Agreement, I have personal
knowledge of the matters covered by the following representations, and I am
authorized to make the following representations on behalf of Halter
Marine.
2. The fair market value of the Friede Goldman Common Stock and cash
in lieu of fractional shares of Friede Goldman Common Stock, if any,
received by each Halter Marine stockholder in the Merger will be
approximately equal to the fair market value of the Halter Marine Common
Stock surrendered in the exchange.
EX 8.2 - Page 6
<PAGE>
3. Prior to and in connection with the Merger, (i) none of the Halter
Marine Common Stock will be redeemed, (ii) no extraordinary distribution
will be made with respect to Halter Marine Common Stock, and (iii) none of
the Halter Marine Common Stock will be acquired by a person related (within
the meaning of Treasury Regulations Section 1.368-1(e)(3), (4) and (5)) to
Halter Marine.
4. The liabilities of Halter Marine assumed by Friede Goldman and the
liabilities to which the transferred assets of Halter Marine are subject
were incurred by Halter Marine in the ordinary course of its business.
5. Friede Goldman, Halter Marine and the Halter Marine stockholders
will pay their respective expenses, if any, incurred in connection with the
Merger.
6. There is no intercorporate indebtedness existing between Friede
Goldman and Halter Marine that was issued, acquired or will be settled at a
discount.
7. Halter Marine is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
8. Halter Marine is not under the jurisdiction of a court in a Title
11 case or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
9. The fair market value of the assets of Halter Marine transferred
to Friede Goldman will equal or exceed the sum of the liabilities assumed
by Friede Goldman plus the amount of liabilities, if any, to which the
transferred assets are subject.
10. The payment of cash in lieu of issuing fractional shares of
Friede Goldman Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Friede Goldman of issuing fractional shares
and does not represent separately bargained-for consideration. The total
cash consideration that will be paid in the Merger to Halter Marine
stockholders instead of issuing fractional shares of Friede Goldman Common
Stock will not exceed one percent of the total consideration that will be
issued in the Merger to Halter Marine stockholders in exchange for their
shares of Halter Marine Common Stock. The fractional share interests of
each Halter Marine stockholder will be aggregated and no Halter Marine
stockholder will receive cash in an amount equal to or greater than the
value of one full share of Friede Goldman Common Stock.
11. None of the compensation received by any stockholder-employees of
Halter Marine will be separate consideration for, or allocable to, any of
their shares of Halter Marine Common Stock to be surrendered in the Merger.
None of the shares of Friede Goldman Common Stock to be received by any
stockholder-employee will be separate consideration for, or allocable to,
any employment agreements, and the compensation paid
EX 8.2 - Page 7
<PAGE>
to any stockholder-employee will be for services actually rendered and will
be commensurate with amounts paid to third parties bargaining at arm's
length for similar services.
I understand, and Halter Marine understands, that Andrews & Kurth
L.L.P. and Shearman & Sterling will rely on these representations and assume
them to be accurate as of the Effective Time, without further inquiry on their
part, in rendering their opinions with respect to the Merger and that the
inaccuracy of any of these representations may negatively affect those opinions,
and I hereby commit to inform them if, for any reason, any of the foregoing
representations ceases to be true at or prior to the Effective Time.
Very truly yours,
Halter Marine Group, Inc.
By: ___________________________
Name: _________________________
Title: ________________________
EX 8.2 - Page 8
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm incorporated by reference in or made a part of
this registration statement.
/s/ ARTHUR ANDERSEN L.L.P
New Orleans, Louisiana
September 24, 1999
EX 23.4 - Page 1
<PAGE>
EXHIBIT 23.5
[GRANT THORTON LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Form S-4 Registration
Statement of our report on the financial statements of Newfoundland Ocean
Enterprises Limited dated May 12, 1997, which appears in Exhibit 99.3 of the
Report on Form 8-K/A dated as of March 17, 1998.
/s/ Grant Thorton
St. John's, Newfoundland, Canada
September 24, 1999 Chartered Accountants
EX 23.5 - Page 1
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference t our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Friede Goldman
International Inc. for the registration of its common stock and to the
incorporation by reference therein of our report dated May 12, 1999 (except for
Note 17, as to which the date is June 1, 1999), 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, 1999, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young L.L.P.
New Orleans, Louisiana
September 24, 1999
EX 23.6 - Page 1
<PAGE>
EXHIBIT 99.1
[JEFFERIES & COMPANY INC. LETTERHEAD]
CONSENT OF JEFFERIES & COMPANY INC.
We hereby consent to the use of our opinion letter to the Board of
Directors of Friede Goldman International Inc., which is included as an exhibit
to this Registration Statement, and all references to our firm and such opinion
letter included in the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 and the rules and regulations promulgated thereunder (the
"Securities Act"), and we do not thereby admit that we are experts with respect
to any part of this Registration Statement under the meaning of the term
"expert" as used in the Securities Act.
JEFFERIES & COMPANY INC.
By: /s/ Jay M. Courage
------------------------------
Name: Jay M. Courage
Title: Senior Management Director
Houston, Texas
September 24, 1999
EX 99.1 - Page 1
<PAGE>
EXHIBIT 99.2
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated
September 14, 1999, to the Board of Directors of Halter Marine Group, Inc. (the
"Company" or "Halter Marine") as Annex H to the Proxy Statement/Prospectus of
the Company relating to merger between Halter Marine Group, Inc. and Friede
Goldman International Inc. and (ii) all references to DLJ in the Proxy
Statement/Prospectus including the summary and sections captioned Opinions of
Financial Advisory -- Halter Marine's Financial Advisor of the Joint Proxy
Statement of Halter Marine and Friede Goldman International Inc. which forms a
part of this Registration Statement on Form S-4. In giving such consent, we do
not admit that we come within the category of persons whose consent is required
under, and we do not admit that we are "experts" for purposes of, the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ J. Kent Sweezey
--------------------------------
J. Kent Sweezey
Managing Director
New York, New York
September 24, 1999
EX 99.2 - Page 1
<PAGE>
EXHIBIT 99.3
FORM OF PROXY CARD
FRIEDE GOLDMAN INTERNATIONAL INC.
PROXY FOR
SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned stockholder of Friede Goldman International Inc., a Mississippi
corporation ("Friede Goldman"), hereby appoints J. L. Holloway and James A.
Lowe, or either of them, as proxies, each with power to act without the other
and with full power of substitution, for the undersigned to vote the number of
shares of common stock of Friede Goldman that the undersigned would be entitled
to vote if personally present at the Special Meeting of Stockholders of Friede
Goldman to be held on Thursday, October 28, 1999, at 10:00 a.m., local time, at
The Crowne Plaza, 200 East Amite Street, Jackson, Mississippi 39201, and at any
adjournment or postponement thereof, on the following matters that are more
particularly described in the joint proxy statement/prospectus dated September
27, 1999:
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1, 2, 3 AND 4. Receipt of the joint proxy
statement/prospectus dated September 27, 1999, is hereby acknowledged.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the board of directors' recommendation. The proxies cannot vote
your shares unless you sign and return this card.
(1) Proposal to approve and adopt the Agreement and Plan of Merger dated as of
June 1, 1999, as amended, between Friede Goldman and Halter Marine Group,
Inc., a Delaware corporation ("Halter Marine"), relating to the merger of
Halter Marine with and into Friede Goldman, with Friede Goldman surviving
the merger;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) Proposal to approve, subject to completion of the merger, an increase in
the number of authorized directors of the Friede Goldman board of directors
to 11;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Proposal to amend, subject to the completion of the merger, the provision
of Friede Goldman's charter relating to the indemnification of officers and
directors of Friede Goldman to make it as favorable as the indemnification
provided to the current officers and directors of Halter Marine under the
Halter Marine charter;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to amend, subject to the completion of the merger, the Friede
Goldman 1997 equity incentive plan (a) to increase the number of shares
available for grant from 10% to 15% of the total number of shares of common
stock outstanding and (b) to increase the number of options which may be
granted to some executive officers of Friede Goldman and Halter Marine
pursuant to the transactions contemplated by the merger agreement; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To consider and take action upon any other matter which may properly come
before the meeting or any adjournment or postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on other side)
EX 99.3 - Page 1
<PAGE>
(Continued from other side.)
-----------------------------
-----------------------------
Signature of Stockholder(s)
Please sign your name exactly
as it appears hereon. Joint
owners must each sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give your full title as it
appears thereon.
Date: ________________ , 1999
PLEASE MARK, SIGN, DATE AND RETURN USING THE ENCLOSED ENVELOPE.
EX 99.3 - Page 2
<PAGE>
EXHIBIT 99.4
FORM OF PROXY CARD
HALTER MARINE GROUP, INC.
PROXY FOR
SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned stockholder of Halter Marine Group, Inc., a Delaware corporation
("Halter Marine"), hereby appoints Rick S. Rees and Kenneth W. Lewis, or either
of them, as proxies, each with power to act without the other and with full
power of substitution, for the undersigned to vote the number of shares of
common stock of Halter Marine that the undersigned would be entitled to vote if
personally present at the Special Meeting of Stockholders of Halter Marine to be
held on Thursday, October 28, 1999, at 10:00 a.m. local time, at the Great
Southern Club, One Hancock Plaza, Harbor View Room, Gulfport, Mississippi 39501,
and at any adjournment or postponement thereof, on the following matters that
are more particularly described in the joint proxy statement/prospectus dated
September 27, 1999:
(1) Proposal to approve and adopt the Agreement and Plan of Merger dated as of
June 1, 1999, as amended, between Friede Goldman International Inc., a
Mississippi corporation ("Friede Goldman"), and Halter Marine, relating to
the merger of Halter Marine with and into Friede Goldman, with Friede
Goldman surviving the merger; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) To consider and take action upon any other matter which may properly come
before the meeting or any adjournment or postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on other side)
(Continued from other side.)
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE AND THIS PROXY IS
SIGNED AND RETURNED, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1. Receipt of the
joint proxy statement/ prospectus dated September 27, 1999, is hereby
acknowledged.
------------------------------
------------------------------
Signature of Stockholder(s)
Please sign your name exactly
as it appears hereon. Joint
owners must each sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give your
full title as it appears
thereon.
Date: _________________, 1999
PLEASE MARK, SIGN, DATE AND RETURN USING THE ENCLOSED ENVELOPE.
EX 99.4 - Page 1
