UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
Energy Ventures, Inc.
(Name of Issuer)
Common Stock, $1.00 par value
(Title of Class of Securities)
292740 10 7
(CUSIP Number)
William T. Donovan, Christiana Companies, Inc., 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202 (414) 291-9000
Copy to:
Jeffrey H. Lane, Foley & Lardner, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202 (414) 271-2400
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
June 30, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that Section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
Page 1 of __ Pages
Exhibit Index is on Page __
<PAGE>
CUSIP No. 292740 10 7
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Christiana Companies, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wisconsin
7 SOLE VOTING POWER
NUMBER OF
1,948,731
SHARES
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
9 SOLE DISPOSITIVE POWER
EACH
1,948,731
REPORTING
PERSON
10 SHARED DISPOSITIVE POWER
WITH
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,948,731
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [_]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.1
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer
The title of class of equity securities to which this Statement
relates is Common Stock, $1.00 a value per share (the "Shares"), of Energy
Ventures, Inc., a Delaware corporation (the "Company"), the address of
whose principal executive offices is 5 Post Oak Park, Suite 1760, Houston,
Texas 77027.
Item 2. Identity and Background
This Statement is filed by Christiana Companies, Inc., Wisconsin
corporation ("CST"), whose principal business is the provision of
refrigerated warehousing and logistics services. The address of CST's
principal office is 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Certain information about the directors and executive officers of CST is
set forth on Annex A hereto. Sheldon B. Lubar, Chairman and Chief
Executive Officer of CST and a director of CST, is the beneficial owner,
through a voting trust, of 49.9% of the Common Stock of CST. As a result
of such beneficial ownership, Mr. Lubar may be deemed to be a person
controlling CST.
None of Christiana or its executive officers, nor, to its
knowledge, its directors has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) during the last
five years nor has any of them been, during such period, a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a
judgement, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other
Consideration
Of the Shares reported as acquired under Item 5 hereof,
1,035,858 shares were acquired in exchange for CST's shares of Prideco,
Inc., formerly a subsidiary of CST ("Prideco"), in the June 30, 1995
merger of a wholly owned subsiding of the Company with and into Prideco
(the "Merger"), and the remaining Shares were acquired concurrently with
the Merger for an aggregate cash payment of $13,290,552. The source of
funds for the Shares acquired for cash was CST's general funds.
Item 4. Purpose of Transaction
The purpose of the acquisition of the Shares reported hereby was
to combine Prideco with the business of the Company and to increase CST's
investment in the Company beyond the Shares acquired in the Merger. At
the date hereof, CST beneficially owns 13.1% of the outstanding Shares.
CST currently intends to increase its ownership of the Company to 20% of
the outstanding shares, thereby enabling CST to include its share of the
Company's earnings in CST's statement of earnings. Whether CST will
acquire additional Shares will depend on, among other factors, the
price(s) and terms on which Shares can be acquired and alternative uses
for the funds that would be used to acquire additional Shares. Hence,
there can be no assurance that CST will, in fact, acquire any additional
Shares. CST reserves the right not to acquire any additional Shares and
to dispose of all Shares that it owns.
In connection with the Merger, Sheldon B. Lubar, was elected to
the Board of Directors of the Company as a representative of CST. The
Agreement and Plan of Merger, as amended by Amendment No. 1 thereto
(collectively, the "Merger Agreement"), requires the Company to include a
representative of CST in the slate of nominees for directors of the Board
of Directors of the Company at future meetings of stockholders at which
directors are to be elected. The foregoing covenant terminates if CST
ceases to beneficially own at least 8% of the outstanding Shares.
Except as described above, CST has no present plans or proposals
of the type described in Item 4(a)-(j) of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a),(b) CST beneficially owns 1,948,731 Shares, representing
13.1% of the outstanding Shares (based on information regarding the number
of outstanding Shares provided to CST by EVI). None of CST's executive
officers beneficially owns any Shares and, to CST's knowledge, none of its
directors beneficially owns any Shares. As described in Item 5(c), the
Company has granted Sheldon B. Lubar an option to acquire 5,000 Shares
under its Amended and Restated Non-Employee Director Stock Option Plan
(the "Option Plan").
All of the Shares beneficially owned by CST are owned with the
sole voting power. Pursuant to the Merger Agreement, the Company is
holding in escrow (the "Escrow") 155,379 of the Shares beneficially owned
by CST (the "Escrow Shares") as security for the indemnity obligations of
CST under the Merger Agreement, which, at CST's option may be settled in
cash. CST has agreed that it will not sell or transfer the Escrow Shares
while they are held in the Escrow. Under the Merger Agreement, CST has
the right to substitute cash for the Escrow Shares. The Shares in the
Escrow are to be held in the Escrow until July 1, 1996. Subject to the
rights of the Company under the Escrow, all Shares beneficially owned by
CST are beneficially owned with sole dispositive power.
(c) On June 30, 1995, CST acquired in a simultaneous
transaction (i) 1,035,858 Shares in the Merger, (ii) 606,405 Shares from
the Company for a cash payment of $9,000,000 ($14.84 per Share) and (iii)
an aggregate of 306,468 Shares from three individuals who were the other
stockholders of Prideco (which Shares were received by such persons in
exchange for a part of their shares of Prideco in the Merger) for an
aggregate cash payment of $4,290,552 ($14 per Share). No executive
officer of CST, nor to the knowledge of CST, has any director of CST,
engaged in any transaction in the Shares during the past 60 days, except
that on June 30, 1995, the Company granted Sheldon B. Lubar an option to
purchase 5,000 Shares under the Option Plan (the "Option").
(d) Any dividends paid on the Escrow Shares are to be held in
the Escrow. Other than as may arise from the Company's rights under the
Escrow, no person other than CST has the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from sale of, the
Shares beneficially owned by CST.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer
The Merger Agreement provides that CST has demand and
"piggyback" registration rights for the Shares on the terms provided in
the Merger Agreement. As described in Item 4, CST has rights to
representation them on the Board of Directors of the Company and, as
described in Item 5(b), the Escrow Shares are being held in the Escrow.
The Option (see Item 5(c)) is exercisable beginning on June 29, 1996 at
an exercise price of $18 per share. The Option terminates, to the extent
not previously exercised, ten years after the date of grant, subject to
earlier termination if Mr. Lubar ceases to be a member of the Company's
Board of Directors provided in the Option Plan.
Item 7. Material To Be Filed as Exhibits
2.1 Agreement and Plan of Merger, by and among Prideco, Inc.,
Christiana Companies, Inc., William Chunn, Donald Morris, Sandra Hamilton,
Energy Ventures, Inc. and Grant Acquisition Company, dated as of May 22,
1995.
2.2 Amendment No. 1 to the Agreement and Plan of Merger
99.1 Enery Ventures, Inc. Amended and Restated Non-Employee
Director Stock Option Plan (Incorporated by reference to Exhibit A to
the Company's definitive proxy statement, dated April 11, 1995, with
respect to its 1995 annual meeting of shareholders, File No. 0-7265).
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Date: July 10, 1995 CHRISTIANA COMPANIES, INC.
By /s/ William T. Donavan
William T. Donovan
Executive Vice President
<PAGE>
Annex A
Certain information about the directors and executive officers (who
are indicated by an asterisk) of CST is contained in the table below.
Each person listed is a citizen of the United States.
Principal Business
Name Occupation Address
Nicholas F. Brady Chairman of Darby Overseas Darby Advisors, Inc.
Investments, Inc. and P. O. Box 1660
Chairman and President Easton, Maryland 21601
of Darby Advisors, Inc.
P. O. Box 1660
Easton, Maryland 21601
(private investment companies)
Paul A. Cameron Retired business executive c/o Christiana Companies,
Inc.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
William T. Donovan* Executive Vice President and Christiana Companies,
Chief Financial Officer of Inc.
CST 777 East Wisconsin
Avenue
Milwaukee, Wisconsin
53202
Raymond F. Logan* Vice President (real estate)
of CST
David J. Lubar President of Lubar & Co. Lubar & Co. Incorporated
Incorporated 777 East Wisconsin
777 East Wisconsin Avenue Avenue
Milwaukee, Wisconsin 53202 Milwaukee, Wisconsin
(venture capital and 53202
investment)
Sheldon B. Lubar* Chairman and Chief Executive Christiana Companies,
Officer of CST Inc.
777 East Wisconsin
Avenue
Milwaukee, Wisconsin
53202
Albert O. Nicholas Owner and President of Nicholas Company, Inc.
Nicholas Company, Inc. 700 North Water Street
700 North Water Street Suite 1010
Suite 1010 Milwaukee, Wisconsin
Milwaukee, Wisconsin 53202 53202
(registered investment
adviser)
Gary R. Sarner* President and Chief Wiscold, Inc.
Operating Officer of CST 11430 W. Burleigh St.
Wauwatosa, Wisconsin
53226
<PAGE>
Exhibit Index
Statement on Schedule 13D
of
Christiana Companies, Inc.
with respect to
Energy Ventures, Inc.
Exhibit No. Description
2.1 Agreement and Plan of Merger, by and among Prideco,
Inc., Christiana Companies, Inc., William Chunn,
Donald Morris, Sandra Hamilton, Energy Ventures, Inc.
and Grant Acquisition Company, dated as of May 22,
1995
2.2 Amendment No. 1 to the Agreement and Plan of
Merger
99.1 Enery Ventures, Inc. Amended and Restated Non-Employee
Director Stock Option Plan (Incorporated by reference
to Exhibit A to the Company's definitive proxy
statement, dated April 11, 1995, with respect to its
1995 annual meeting of shareholders, File No. 0-7265).
AGREEMENT AND PLAN OF MERGER
by and among
PRIDECO, INC.
CHRISTIANA COMPANIES, INC.
WILLIAM CHUNN
DONALD MORRIS
SANDRA HAMILTON
ENERGY VENTURES, INC.
and
GRANT ACQUISITION COMPANY
Dated May 22, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
THE MERGER AND RELATED MATTERS . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing and Effective Time . . . . . . . . . . . . . . . . 2
1.3 Conversion of Stock . . . . . . . . . . . . . . . . . . . . 2
1.4 Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Cancellation of Treasury Stock . . . . . . . . . . . . . . 4
1.6 Closing of the Company Transfer Books . . . . . . . . . . . 4
1.7 Shareholders' Representative . . . . . . . . . . . . . . . 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS . . . . . . . . . . . 5
2.1 Corporate Organization . . . . . . . . . . . . . . . . . . 5
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . 5
2.4 Effect of Agreement; Consents . . . . . . . . . . . . . . . 7
2.5 Financial Statements . . . . . . . . . . . . . . . . . . . 7
2.6 Absence of Certain Events . . . . . . . . . . . . . . . . . 8
2.7 Compensation and Benefit Plans . . . . . . . . . . . . . . 8
2.8 Properties, Title and Related Matters . . . . . . . . . . . 10
2.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 11
2.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Material Contracts . . . . . . . . . . . . . . . . . . . . 12
2.12 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 Intellectual Property . . . . . . . . . . . . . . . . . . . 14
2.14 Environmental Matters . . . . . . . . . . . . . . . . . . . 14
2.15 Licenses and Permits . . . . . . . . . . . . . . . . . . . 15
2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 16
2.18 Warranties and Product Liability . . . . . . . . . . . . . 16
2.19 No Implied Representations and Warranties . . . . . . . . . 17
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS . . . . . . . . . . . 17
3.1 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . . 17
3.3 Execution and Delivery . . . . . . . . . . . . . . . . . . 17
3.4 Effect of Agreement . . . . . . . . . . . . . . . . . . . . 18
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Stock Ownership . . . . . . . . . . . . . . . . . . . . . . 18
3.8 Securities Law Matters . . . . . . . . . . . . . . . . . . 18
3.9 Indebtedness and Agreements . . . . . . . . . . . . . . . . 20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
EVI AND GRANT . . . . . . . . . . . . 20
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . 20
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Authorization for EVI Common Stock . . . . . . . . . . . . 21
4.5 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5
COVENANTS . . . . . . . . . . . . . 22
5.1 Conduct of Business Operations . . . . . . . . . . . . . . 22
5.2 Maintain Assets and Operations . . . . . . . . . . . . . . 23
5.3 Litigation and Claims . . . . . . . . . . . . . . . . . . . 24
5.4 Access to Information . . . . . . . . . . . . . . . . . . . 24
5.5 Reasonable Efforts; Notification . . . . . . . . . . . . . 25
5.6 No Solicitation . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Board Representation . . . . . . . . . . . . . . . . . . . 27
5.8 Shareholder Approval; Voting; Restriction on Disposition . 27
5.9 Release . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.10 Further Assurances . . . . . . . . . . . . . . . . . . . . 28
5.11 Limitation on Dispositions . . . . . . . . . . . . . . . . 28
5.12 Purchase of EVI Stock . . . . . . . . . . . . . . . . . . . 29
5.13 Arthur Andersen Opinion . . . . . . . . . . . . . . . . . . 29
ARTICLE 6
REGISTRATION RIGHTS . . . . . . . . . . . 29
6.1 Demand Rights . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Piggyback Rights . . . . . . . . . . . . . . . . . . . . . 30
6.3 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . 33
6.5 Termination . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 7
ESCROW SHARES . . . . . . . . . . . . 34
7.1 Holdback of Escrow Shares . . . . . . . . . . . . . . . . . 34
7.2 Time Period of Holdback . . . . . . . . . . . . . . . . . . 35
7.3 Claims Against Escrow . . . . . . . . . . . . . . . . . . . 35
7.4 Prohibition on Transfer . . . . . . . . . . . . . . . . . . 35
7.5 Voting of Escrow Shares . . . . . . . . . . . . . . . . . . 35
7.6 No Interest . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 8
CONDITIONS TO EVI'S AND GRANT'S OBLIGATIONS . . . . . 36
8.1 Accuracy of Representations and Warranties . . . . . . . . 36
8.2 Performance of Covenants and Agreements . . . . . . . . . . 36
8.3 Working Capital of the Company . . . . . . . . . . . . . . 36
8.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Governmental Approvals . . . . . . . . . . . . . . . . . . 36
8.6 Resignation of Directors and Officers . . . . . . . . . . . 37
8.7 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . 37
8.8 Certificates . . . . . . . . . . . . . . . . . . . . . . . 37
8.9 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 37
8.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 37
8.11 Material Adverse Effect . . . . . . . . . . . . . . . . . . 37
ARTICLE 9
CONDITIONS TO THE COMPANY'S AND THE
SHAREHOLDERS' OBLIGATIONS . . . . . . . . . 37
9.1 Accuracy of Representations and Warranties . . . . . . . . 37
9.2 Performance of Covenants and Agreements . . . . . . . . . . 37
9.3 Governmental Approvals . . . . . . . . . . . . . . . . . . 37
9.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 38
9.6 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 38
9.8 Material Adverse Effect . . . . . . . . . . . . . . . . . . 38
ARTICLE 10
TERMINATION PRIOR TO CLOSING . . . . . . . . . 38
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Effect on Obligations . . . . . . . . . . . . . . . . . . . 39
ARTICLE 11
INDEMNIFICATION . . . . . . . . . . . . 39
11.1 Indemnification by the Shareholders . . . . . . . . . . . 39
11.2 Environmental Indemnification . . . . . . . . . . . . . . 39
11.3 Tax Indemnification . . . . . . . . . . . . . . . . . . . 39
11.4 Products Liability and Warranty Indemnification . . . . . 40
11.5 Working Capital Shortfall . . . . . . . . . . . . . . . . 40
11.6 Indemnification by EVI . . . . . . . . . . . . . . . . . . 41
11.7 Basket . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.8 Limitation. . . . . . . . . . . . . . . . . . . . . . . . 41
11.9 Procedure . . . . . . . . . . . . . . . . . . . . . . . . 42
11.10 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.11 Adjustment of Liability . . . . . . . . . . . . . . . . . 43
11.12 Failure to Pay Indemnification . . . . . . . . . . . . . . 43
11.13 Express Negligence . . . . . . . . . . . . . . . . . . . . 44
11.14 Cooperation . . . . . . . . . . . . . . . . . . . . . . . 44
11.15 Waiver of Breaches . . . . . . . . . . . . . . . . . . . . 44
11.16 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 12
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS,WARRANTIES AND AGREEMENTS . . . . . 44
ARTICLE 13
DEFINITIONS . . . . . . . . . . . . . 45
ARTICLE 14
MISCELLANEOUS . . . . . . . . . . . . 51
14.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . 51
14.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 52
14.3 Successors and Assigns . . . . . . . . . . . . . . . . . . 52
14.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.5 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . 53
14.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 53
14.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.8 Construction and References . . . . . . . . . . . . . . . 53
14.9 Modification and Waiver . . . . . . . . . . . . . . . . . 53
14.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.11 Governing Law; Interpretation . . . . . . . . . . . . . . 55
14.12 Dissenters Rights . . . . . . . . . . . . . . . . . . . . 55
14.13 Attorney-Client Privilege . . . . . . . . . . . . . . . . 55
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (this "Agreement") dated as of May 22,
1995, by and among Prideco, Inc., a Texas corporation (the "Company"),
Christiana Companies, Inc., a Wisconsin corporation ("Christiana"),
William Chunn ("Chunn"), Donald Morris ("Morris"), Sandra Hamilton
("Hamilton", and collectively with Christiana, Chunn and Morris, the
"Shareholders"), Energy Ventures, Inc., a Delaware corporation ("EVI"),
and Grant Acquisition Company, a Texas corporation ("Grant").
W I T N E S S E T H:
WHEREAS, the Shareholders are the holders of all of the issued and
outstanding capital stock of the Company;
WHEREAS, EVI proposes to acquire the Company through a merger of
Grant, a wholly-owned Subsidiary of EVI, with and into the Company
pursuant to which shares of Preferred Stock and Common Stock of the
Company would be converted into EVI Common Stock, on the terms and
conditions set forth herein;
WHEREAS, the parties hereto wish to set forth the representations,
warranties, agreements and conditions under which a merger (the "Merger")
of Grant with and into the Company will occur;
WHEREAS, the parties intend for the Merger to be a tax-free
reorganization under Section 368 of the Code;
WHEREAS, in connection with the Merger, Christiana has agreed to
provide EVI with $9 million in funds to reduce the debt of the Company
immediately following the Merger through a sale of additional shares of
EVI Common Stock to Christiana on the terms and subject to the conditions
set forth herein; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings given to them in Article 13 hereof, unless defined elsewhere in
this Agreement;
NOW, THEREFORE, in consideration of the premises, the
representations, warranties and agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER AND RELATED MATTERS
1.1 Merger.
(a) Upon the terms and subject to the conditions of this
Agreement, Grant shall be merged with and into the Company in accordance
with the TBCA. The Company shall be the surviving corporation in the
Merger (the "Surviving Corporation"). The Surviving Corporation shall
continue to have the name "Prideco, Inc.", continue its corporate
existence under and be organized under and be governed by the TBCA and
possess all the rights and assets of the Company and Grant and be subject
to all of the liabilities and obligations of the Company and Grant in
accordance with the provisions of the TBCA.
(b) The Articles of Incorporation and the Bylaws of the
Company, as in effect immediately prior to the Effective Time, shall be
the Articles of Incorporation and Bylaws, respectively, of the Surviving
Corporation until thereafter amended, except that the Articles of
Incorporation of the Company shall be amended and restated as provided in
the Restated Articles of Incorporation attached hereto as Exhibit 1.1.
(c) The authorized and issued capital stock of the Surviving
Corporation shall consist of 1,000 shares of common stock, $.01 par value.
(d) The directors and officers of Grant immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation and will hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the
manner provided in the Bylaws of the Surviving Corporation, or as
otherwise provided by law.
(e) The Merger shall have the effects set forth in the TBCA.
If at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further assignments or assurances in law
or otherwise are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, all rights, title and
interests in all real estate and other property and all privileges, powers
and franchises of the Company and Grant, the Surviving Corporation and its
proper officers and directors, in the name and on behalf of the Company
and Grant, shall execute and deliver all such proper deeds, assignments
and assurances in law and do all things necessary and proper to vest,
perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and
the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Company or otherwise to take any and all
such action.
1.2 Closing and Effective Time. Subject to the provisions of
Article 8 and Article 9 hereof, the closing (the "Closing") of the Merger
shall take place at 9:00 a.m., Houston time, on the third Business Day
after the day on which the waiting period under the HSR Act expires, at
the offices of Fulbright & Jaworski L.L.P., 1301 McKinney, Suite 5100,
Houston, Texas, or if any of the conditions set forth in Article 8 or
Article 9 hereof have not been satisfied, then as soon as practicable
thereafter, or at such other time and place or such other date as EVI and
the Company shall agree (the "Effective Date"). The Merger shall be
effective when properly executed Articles of Merger (together with any
other documents required by law to effectuate the Merger) shall have been
filed with the Secretary of State of the State of Texas in accordance with
the provisions of the TBCA, which filing shall be made as soon as
practical on or after the Effective Date.
1.3 Conversion of Stock.
(a) Except as provided in this Section 1.3 or in Section 1.5
hereof, at the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any shares of Common Stock or
Preferred Stock or any holder of any shares of Grant Common Stock, each
share of Common Stock and Preferred Stock outstanding immediately prior to
the Effective Time shall be converted into the right to receive, upon the
surrender of the certificates formerly representing such shares pursuant
to Section 1.4 hereof, a fraction of a share of EVI Common Stock per share
of Common Stock or Preferred Stock, as the case may be, determined as
follows (the fraction of a share of EVI Common Stock issuable in exchange
for the shares of Common Stock and Preferred Stock in the Merger shall be
referred to as the "Conversion Rate" with respect to such shares):
(i) if the Market Price is equal to or greater than $12.00
but is less than or equal to $16.00, the Conversion Rate for the
Common Stock shall be .59285 and the Conversion Rate for the
Preferred Stock shall be .15286 (the applicable Conversion Rate for
the Common Stock and the Preferred Stock being referred to as the
"Base Conversion Rate" for such stock);
(ii) if the Market Price is greater than $16.00, (A) the
Conversion Rate for the Common Stock shall be the quotient of (x) the
product of $16.00 multiplied by the Base Conversion Rate for the
Common Stock divided by (y) the Market Price (such quotient to be
carried out to the fifth decimal place) and (B) the Conversion Rate
for the Preferred Stock shall be the quotient of (x) the product of
$16.00 multiplied by the Base Conversion Rate for the Preferred Stock
divided by (y) the Market Price (such quotient to the carried out to
the fifth decimal place); and
(iii) if the Market Price is less than $12.00, (A) the
Conversion Rate for the Common Stock shall be the quotient of (x) the
product of $12.00 multiplied by the Base Conversion Rate for the
Common Stock divided by (y) the Market Price (such quotient to be
carried out to the fifth decimal place) and (B) the Conversion Rate
for the Preferred Stock shall be the quotient of (x) the product of
$12.00 multiplied by the Base Conversion Rate for the Preferred Stock
divided by (y) the Market Price (such quotient to the carried out to
the fifth decimal place).
(b) No fractional shares of EVI Common Stock shall be issued to
any holder of Common Stock or Preferred Stock in the Merger. To the
extent the application of the Conversion Rate to all shares of Common
Stock or Preferred Stock held by a Shareholder would result in a
fractional number of shares of EVI Common Stock being issued to such
holder in the Merger, the number of shares of EVI Common Stock issuable to
such holder in respect of all such shares in the Merger shall be rounded
up to the next whole number of shares of EVI Common Stock.
(c) Each share of Grant Common Stock outstanding immediately
prior to the Effective Time shall be converted into one share of stock in
the Surviving Corporation.
(d) As of and after the Effective Time, no holder of any
certificate that immediately prior to the Effective Time represented
shares of Common Stock or Preferred Stock shall have any rights as a
holder of Common Stock or Preferred Stock other than to receive the shares
of EVI Common Stock issuable to such holder pursuant to the Merger.
(e) The Conversion Rate is based on the assumption that
2,644,775 shares of Common Stock and 1,891,891 shares of Preferred Stock
will be issued and outstanding immediately prior to the Effective Time.
To the extent there are more than such number of shares of Common Stock or
such number of shares of Preferred Stock issued and outstanding
immediately prior to the Effective Time, the Conversion Rate for such
class of stock shall be reduced by multiplying the Conversion Rate by a
fraction the numerator of which shall be the number of shares of the class
set forth above and the denominator of which shall be the issued and
outstanding shares of such class immediately prior to the Effective Time;
provided, however, for purposes of this adjustment only, no increase in
the number of shares of Common Stock shall be deemed to have occurred to
the extent the increase results from the conversion of Preferred Stock
into Common Stock at a conversion rate (determined after giving effect to
the cancellation of any shares of Common Stock which are received on
conversion and contributed to the capital of the Company for no
consideration from the Company no later than immediately prior to the
Effective Time such that the contributed shares of Common Stock are not
considered issued and outstanding for purposes of Section 1.3(a)) of not
more than .25784 shares of Common Stock for each share of Preferred Stock.
(f) In the event of any stock dividend or other distribution to
the holders of EVI Common Stock, stock split, recapitalization,
combination, merger, consolidation or other similar change in
capitalization, an adjustment to the Conversion Rate will be made. Such
adjustment to the Conversion Rate shall be made so that the holder of a
share of Common Stock or Preferred Stock would receive in the Merger for
each share of EVI Common Stock issuable in the Merger such number of
shares of EVI Common Stock and other securities or property as a holder of
a share of EVI Common Stock as of the date hereof would have in respect of
such share of EVI Common Stock as of the Effective Time. The Market Price
and the $12.00 and $16.00 thresholds shall also be appropriately adjusted
in the event of a stock split, reclassification or recapitalization to
reflect the change in the number of shares of EVI Common Stock.
1.4 Exchange.
(a) At the Closing, each Shareholder shall surrender to Grant
the certificates for Common Stock and Preferred Stock owned by such
Shareholder. Until so surrendered, certificates for shares of Common
Stock and Preferred Stock shall represent, after the Effective Time,
solely the right to receive the number of shares of EVI Common Stock
issuable in respect of such shares determined pursuant to Section 1.3
hereof. Share certificates representing the Common Stock and Preferred
Stock that are surrendered to Grant shall be canceled.
(b) At the Closing, certificates representing 85% of the shares
of EVI Common Stock, rounded to the nearest whole share, that are issuable
to the Shareholders in accordance with Section 1.3 hereof shall be
delivered to the Shareholders and certificates representing the remainder
of the shares of EVI Common Stock, rounded to the nearest whole share,
that are issuable to the Shareholders in accordance with Section 1.3
hereof shall be retained by the Company in escrow (the "Escrow Shares") to
be held pursuant to this Section 1.4 and Article 7 hereof.
1.5 Cancellation of Treasury Stock. At the Effective Time, all
shares of Common Stock and Preferred Stock that are owned directly or
indirectly by the Company as treasury stock shall be canceled without any
consideration being payable therefor.
1.6 Closing of the Company Transfer Books. At the Effective Time,
the share transfer books of the Company shall be closed and no transfers
of shares of Common Stock or Preferred Stock shall thereafter be made.
1.7 Shareholders' Representative. Each Shareholder agrees, by
virtue of the Merger and without any action on the part of the
Shareholder, at the Effective Time, that Christiana shall become the
"Shareholders' Representative" and in such capacity shall have full power
and authority to defend, compromise and settle, in its absolute
discretion, on behalf of the Shareholders all claims for indemnification
made by EVI, Grant and the Surviving Corporation and each of their
respective Affiliates, officers, directors, employees, agents,
shareholders and controlling Persons and their respective successors and
assigns under Article 11 to the extent such indemnification is for the
claim for which the Shareholders are jointly and severally obligated.
Execution of this Agreement by the Shareholders constitutes an irrevocable
appointment of Christiana as the Shareholders' Representative. Any action
taken by the Shareholders' Representative on account of such a claim shall
be final and binding with respect to each Shareholder for all purposes
hereof and no Shareholder shall have any claim against Christiana on
account thereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS
The Company and each of the Shareholders hereby jointly and
severally represent and warrant to EVI and Grant as follows:
2.1 Corporate Organization.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and has
all requisite corporate power and authority to conduct its business as
currently conducted and to own, operate and lease the Assets it now owns,
operates or holds under lease. The Company is duly qualified or licensed
to do business and is in good standing as a foreign corporation in every
jurisdiction in which the conduct of its business or the ownership or
leasing of its Assets requires it to be so qualified or licensed, except
as set forth in Schedule 2.1(a) or where the failure to be so qualified or
licensed would not have a Material Adverse Effect on the Company.
(b) The Company has previously delivered to EVI true and
correct copies of the Articles of Incorporation and Bylaws of the Company
as in effect on the date hereof. The minute books of the Company
previously made available to EVI and Grant are complete and accurately
reflect all action taken prior to the date of this Agreement by its board
of directors and shareholders, in their capacities as such.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists solely
of 12,608,109 authorized shares of Common Stock, par value $.10 per share,
of which 2,644,775 shares are issued and outstanding and 1,891,891 shares
of Preferred Stock, par value of $.05 per share, all of which are issued
and outstanding. All of the outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued and are fully
paid and non-assessable and were not issued in violation of any preemptive
rights or other preferential rights of subscription or purchase of any
Person.
(b) The Shareholders own of record the Common Stock and the
Preferred Stock in the respective amounts set forth in Schedule 2.2
hereto.
(c) Except for the rights of the holders of Preferred Stock to
convert into the Common Stock at the rate of 1.17647 shares of Common
Stock for each share of Preferred Stock, there are no outstanding options,
warrants, convertible securities, calls, rights, commitments, preemptive
rights, agreements, arrangements or understandings of any character
obligating the Company (i) to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of the
Company or any securities or obligations convertible into or exchangeable
for such shares or (ii) to grant, extend or enter into any such option,
warrant, convertible security, call, right, commitment, preemptive right,
agreement, arrangement or understanding described in clause (i) above.
2.3 Subsidiaries and Affiliates.
(a) Set forth in Schedule 2.3(a) hereto is the name and
description of each corporation, partnership, joint venture, association
or other entity in which the Company owns any equity or other similar
ownership interests and a description of such interests. Except as set
forth on Schedule 2.3(a) hereto, such interests are owned by the Company
free and clear of all Encumbrances and restrictive agreements, including,
without limitation, voting trusts or stockholders agreements.
(b) Set forth in Schedule 2.3(b) hereto is a list of each
Subsidiary of the Company.
(i) The Company's Subsidiaries that are corporations are
corporations duly organized, validly existing and in good standing
under the laws of their respective jurisdictions of incorporation and
have the requisite corporate power and authority to carry on their
respective businesses as they are now being conducted, and to own,
operate and lease the assets they now own, operate or hold under
lease. Each of the Company's Subsidiaries that is not a corporation
is duly organized under the laws of its jurisdiction of organization
and has all requisite power and authority to carry on its business as
it is now being conducted, and to own, operate and lease the assets
that it now owns, operates or holds under lease. The Company's
Subsidiaries are duly qualified to do business and are in good
standing in each jurisdiction in which the conduct of their
respective businesses or the ownership or leasing of their respective
assets require them to be so qualified, except where the failure to
be so qualified or in good standing would not have a Material Adverse
Effect on the Company.
(ii) The Company has previously delivered to EVI true and
correct copies of the Articles of Incorporation and Bylaws, or other
similar corporate documents, of the Company's Subsidiaries as in
effect on the date hereof. The minute books of the Company's
Subsidiaries previously made available to EVI and Grant are complete
in all material respects and reflect all action taken prior to the
date of this Agreement by their board of directors and shareholders,
in their capacities as such.
(iii) All the outstanding shares of capital stock of
the Company's Subsidiaries that are corporations have been duly
authorized and validly issued and are fully paid and non-assessable
and were not issued in violation of any preemptive rights or other
preferential rights of subscription or purchase of any person. All
of the Company's direct or indirect ownership interests in the
Company's Subsidiaries that are not corporations have been duly
authorized and validly issued or vested, were not issued in violation
of any preemptive rights or other preferential rights of subscription
or purchase of any person, are fully paid and, except as set forth in
the organizational documents of such Subsidiaries, are non-
assessable. Except as set forth on Schedule 2.3(a) hereto, all such
stock and ownership interests are owned of record and beneficially by
the Company, either directly or indirectly, free and clear of all
Encumbrances and restrictive agreements, including, without
limitation, voting trusts or shareholder agreements.
(iv) There are no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive
rights, agreements, arrangements or understandings of any character
obligating the Company's Subsidiaries (A) to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of
capital stock of such Subsidiary or any securities or obligations
convertible into or exchangeable for such shares or (B) to grant,
extend or enter into any such option, warrant, convertible security,
call, right, commitment, preemptive right, agreement, arrangement or
understanding described in clause (A) above.
(v) Prideco Europe Limited, a Scottish corporation and
wholly-owned Subsidiary of the Company, had no revenues for the year
ended March 31, 1995. Except as set forth in Schedule 2.3(b),
neither the Company nor its wholly-owned Subsidiary, Prideco
Holdings, Inc., a Delaware Corporation, has any continuing
obligations or liabilities with respect to Prideco de Venezuela,
S.A., a joint venture which is 49% owned by Prideco Holdings, Inc.
2.4 Effect of Agreement; Consents.
(a) The Company has all requisite corporate power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. Subject to obtaining the Shareholder approval required under
the TBCA, the execution and delivery of this Agreement by the Company and
the performance of its obligations hereunder have been duly authorized by
all necessary corporate action on its part. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by or subject
to (i) any bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) Except for filings under the HSR Act, the approval of the
Merger by the Shareholders as required by the TBCA, the filing and
recordation of Articles of Merger as required by the TBCA and as set forth
in Schedule 2.4(b) hereto and in the case of clauses (i), (iii) and (iv)
below, those matters that would not have a Material Adverse Effect on the
Company, the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby (i) do not require the consent, approval, clearance,
waiver, order or authorization of any Person, (ii) do not violate any
provision of the Articles of Incorporation or Bylaws of the Company,
(iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or
any order, judgment, award or decree of any court or other Governmental
Entity to which the Company is subject or any of its Assets is bound and
(iv) do not conflict with, or result in any breach of, or default or loss
of any right under (or an event or circumstance that, with notice or the
lapse of time, or both, would result in a default), or the creation of an
Encumbrance pursuant to, or cause or permit the acceleration prior to
maturity or "put" right with respect to, any obligation under, any
indenture, mortgage, deed of trust, lease, loan agreement or other
agreement or instrument to which the Company is a party or to which any of
the Assets are subject (such consents, approvals, clearances, waivers,
orders, authorizations and other matters hereinafter referred to as the
"Material Consents").
(c) Except as set forth on Schedule 2.4(c) hereto, the
execution, delivery and performance of this Agreement by the Company will
not result in the loss of any material governmental license, franchise or
permit possessed by the Company or give a right of acceleration or
termination to any party to any material agreement or other instrument to
which the Company is a party or by which any of the Assets are bound, or
result in the loss of any right or benefit under such agreement or
instrument.
2.5 Financial Statements. True and correct copies of the audited
balance sheet of the Company as of June 30, 1994 and 1993, statement of
cash flows for each of the two years ended June 30, 1994 and 1993, and the
statement of income for each of the years ended June 30, 1994, 1993 and
1992, and the unaudited condensed balance sheet of the Company at
March 31, 1995, statement of cash flows for the nine months ended March
31, 1995, and the statement of income for the nine months ended March 31,
1995 (collectively, the "Financial Statements"), have been previously
delivered to EVI and Grant. The Financial Statements fairly present the
financial position of the Company as at the dates thereof and the cash
flows and results of operations for the periods covered thereby, and have
been prepared in accordance with generally accepted accounting principles
consistently applied by the Company, except for normal year-end
adjustments for interim periods and as set forth in Schedule 2.5 hereto.
Except as set forth in Schedule 2.5 hereto, as of March 31, 1995, the
Company did not have any liability of any kind or manner, either direct,
accrued, absolute or otherwise, that is not reflected or disclosed in the
Financial Statements and that was required under generally accepted
accounting principles, as consistently applied by the Company, to have
been reflected or disclosed in such Financial Statements.
2.6 Absence of Certain Events. Except as set forth on Schedule 2.6
hereto, since March 31, 1995, there has not been (a) any Material Adverse
Effect on the Company through the date hereof, (b) any declaration,
setting aside or payment of any dividend (whether in cash, stock or
property) with respect to any of the Company's capital stock, (c) (i) any
granting by the Company to any executive officer of the Company of any
increase in compensation, (ii) any granting by the Company to any
executive officer of any increase in severance or termination pay, or
(iii) any entry by the Company into any employment, severance or
termination agreement with any executive officer, (d) any damage,
destruction or loss, whether or not covered by insurance, that has or
could reasonably be expected to have a Material Adverse Effect on the
Company, (e) any change in accounting methods, principles or practices by
the Company materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally accepted
accounting principles, (f) any event prior to the execution of this
Agreement which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 5.1 hereof, (g) any
condition, event or occurrence through the date hereof which, individually
or in the aggregate, could reasonably be expected to prevent, hinder or
delay in any material respect the ability of the Company to consummate the
transactions contemplated by this Agreement or (h) any agreement, in
writing or otherwise, by the Company or any corporate action by the
Company with respect to the foregoing.
2.7 Compensation and Benefit Plans.
(a) Schedule 2.7 hereto contains a list and brief description
of all "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) (sometimes referred to herein as "Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans maintained, or contributed to, by the Company for the
benefit of any present or former officers or employees of the Company.
The Company has delivered to EVI true, complete and correct copies of
(i) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) the most recent three annual reports on
Form 5500 filed with the IRS with respect to each Benefit Plan, (if any
such report was required), (iii) the most recent IRS determination letter
and all rulings or determinations requested subsequent to the date of that
letter, (iv) the most recent actuarial report for each Benefit Plan for
which an actuarial report is required, (v) the most recent summary plan
description for each Benefit Plan for which such summary plan description
is required and each summary of material modifications prepared after the
last summary plan description, (vi) each trust agreement and group annuity
contract relating to any Benefit Plan and (vii) all material
correspondence for the last three years with the IRS or Department of
Labor relating to plan qualification, filing of required forms, or
pending, contemplated or announced plan audits.
(b) Except as set forth in Schedule 2.7 hereto, all Pension
Plans have been the subject of determination letters from the IRS to the
effect that such Pension Plans are qualified and exempt from Federal
income taxes under Section 401(a) and 501(a), respectively, of the Code
and no such determination letter has been revoked nor, to the Knowledge of
the Company and the Shareholders, has revocation been threatened, nor has
any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs. The
Company has paid all premiums (including any applicable interest, charges
and penalties for late payment) due the PBGC with respect to each Pension
Plan for which premiums are required. No Pension Plan maintained by the
Company has been terminated under circumstances which would result in
liability to the PBGC.
(c) Each Benefit Plan which has been or is sponsored,
participated in or contributed to by the Company: (i) is in compliance in
all material respects with all reporting and disclosure requirements of
ERISA, including, but not limited to, Part 1 of Subtitle B of Title I of
ERISA, (ii) has had the appropriate Form 5500 filed timely for each year
of its existence, (iii) has at all times complied with the bonding
requirements of Section 412 of ERISA and (iv) has no issue pending (other
than the payment of benefits in the normal course) nor any issue resolved
adversely to the Company which may subject the Company to the payment of
any penalty, interest, tax or other obligation.
(d) All voluntary employee benefit associations have been
submitted to and approved as exempt from Federal income tax under
Section 501(c)(9) of the Code by the IRS.
(e) The execution of this Agreement or the consummation of the
transactions contemplated by this Agreement will not give rise to any, or
trigger any, change of control, severance or other similar provision in
any Benefit Plan.
(f) The Company does not provide employee post-retirement
medical or health coverage or contribute to or maintain any employee
welfare benefit plan which provides for health benefit coverage following
termination of employment except as is required by Section 4980B(f) of the
Code or other applicable statute, nor has it made any representations,
agreements, covenants or commitments to provide that coverage.
(g) No Pension Plan that the Company maintains, or to which the
Company is obligated to contribute, other than any Pension Plan that is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of
ERISA, collectively, the "Multiemployer Pension Plans"), had, as of the
respective annual valuation date for each such Pension Plan, an "unfunded
benefit liability" (as such term is defined in Section 4001(a)(18) of
ERISA), based on actuarial assumptions which have been furnished to EVI.
None of the Pension Plans has an "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived. To the Knowledge of the Company and the
Shareholders, none of the Company, any officer of the Company or any of
the Benefit Plans which are subject to ERISA, including the Pension Plans,
or any trusts created thereunder, or any trustee or administrator thereof,
has engaged in a "prohibited transaction" (as such term is defined in
Section 406, 407 or 408 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could subject the Company or any
officer of the Company to the tax or penalty on prohibited transactions
imposed by such Section 4975 or to any liability under
Section 502(i)(1) of ERISA. Neither any of such Benefit Plans nor any of
such trusts have been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of ERISA) with respect to
which the 30-day notice requirement has not been waived and neither the
Company nor any of the Shareholders has Knowledge of any other reportable
events with respect thereto during the last five years. The Company has
not suffered or otherwise caused a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) since the effective date of such Sections 4203 and
4205 with respect to any of the Multiemployer Pension Plans.
(h) With respect to any Benefit Plan that is an employee
welfare benefit plan, (i) no such Benefit Plan includes a welfare benefits
fund, as such term is defined in Section 419(e) of the Code, (ii) each
such Benefit Plan that is a group health plan, as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements
of Section 4980B(f) of the Code and (iii) each such Benefit Plan
(including any such Plan covering retirees or other former employees) may
be amended or terminated without material liability to the Company on or
at any time after the consummation of the Merger.
2.8 Properties, Title and Related Matters.
(a) There is set forth on Schedule 2.8(a) hereto a description
of each item of personal property, excluding inventory, owned by the
Company that has a book value greater than $25,000. The Company has good
and marketable title to all of its personal property that is material to
the Company's business, results of operations, financial condition or
Assets (including, without limitation, those items of personal property
set forth on Schedule 2.8(a) hereto), free and clear of all Encumbrances,
except for Permitted Encumbrances and those Encumbrances set forth on
Schedule 2.8(a) hereto.
(b) There is set forth on Schedule 2.8(b) hereto a description
of each item of personal property leased by the Company for which the
annual rent payable under the applicable lease or contract exceeds $5,000.
The Company has good title to all the leasehold estates pursuant to which
the personal property set forth on Schedule 2.8(b) hereto is leased, free
and clear of all Encumbrances, except for Permitted Encumbrances and those
Encumbrances set forth on Schedule 2.8(b). The Company has not breached
any provision of and is not in default (and no event or circumstance
exists that with notice, or the lapse of time or both, would constitute a
default by the Company) under the terms of any lease or other agreement
pursuant to which the personal property set forth on Schedule 2.8(b)
hereto is leased, except for a default or breach that would not have a
Material Adverse Effect on the Company. To the Knowledge of the Company
and the Shareholders, all of such leases or other agreements are in full
force and effect, except for any failure that would not have a Material
Adverse Effect on the Company. There are no pending or, to the Knowledge
of the Company and the Shareholders, threatened disputes with respect to
any lease or other agreement pursuant to which the personal property set
forth on Schedule 2.8(b) is leased and, to the Knowledge of the Company
and the Shareholders, the lessor thereunder has not breached any provision
of and is not in default (and no event or circumstance exists that with
notice, or the lapse or time or both, would constitute a default by the
lessor) under the terms of any such lease or other agreement, except for
any dispute, breach or default that would not have a Material Adverse
Effect on the Company.
(c) There is set forth on Schedule 2.8(c) hereto the legal
description of all real property owned by the Company. The Company has
good and marketable title to all of the real property set forth on
Schedule 2.8(c) hereto, in fee simple absolute, free and clear of all
Encumbrances, except for Permitted Encumbrances and as set forth in
Schedule 2.8(c) hereto. No parcel of the real property set forth on
Schedule 2.8(c) hereto is subject to any governmental decree or is being
condemned, expropriated or otherwise taken by any public authority, with
or without payment of compensation therefor, and, to the Knowledge of the
Company and the Shareholders, no such condemnation, expropriation or
taking has been proposed; provided, however, immaterial easements and
condemnations after the date of this Agreement that do not adversely
affect the operations of the Company in the ordinary course of business or
the value or use of the Company's material assets shall not constitute a
violation of this Section 2.8(c).
(d) There is set forth on Schedule 2.8(d) hereto a list of all
leases of the Company with respect to real property leased by the Company
for which the annual rent payable under the applicable lease or contract
exceeded $10,000. The Company has good title to all the leasehold estates
pursuant to which the real property set forth on Schedule 2.8(d) hereto is
leased, free and clear of all Encumbrances, except for Permitted
Encumbrances. The Company has not breached any provision of and is not in
default (and no event or circumstance exists that with notice, or the
lapse of time or both, would constitute a default by the Company) under
the terms of any lease or other agreement pursuant to which the real
property set forth on Schedule 2.8(d) hereto is leased. To the Knowledge
of the Company and the Shareholders, all of such leases or other
agreements are in full force and effect, except for any failure that would
not have a Material Adverse Effect on the Company. There are no pending
or, to the Knowledge of the Company and the Shareholders, threatened
disputes with respect to any lease or other agreement pursuant to which
the real property set forth on Schedule 2.8(d) hereto is leased and, to
the Knowledge of the Company and the Shareholders, the lessor thereunder
has not breached any provision of and is not in default (and no event or
circumstance exists that with notice, or the lapse of time or both, would
constitute a default by the lessor) under the terms of any such lease or
other agreement, except for any dispute, breach or default that would not
have a Material Adverse Effect on the Company.
(e) There is no (i) change which the Company or any of the
Shareholders have Knowledge of contemplated in any law, statute,
ordinance, rule, regulation, order or determination of any Governmental
Entity, (ii) law, statute, ordinance, rule, regulation, order or
determination of any Governmental Entity or any restrictive covenant or
deed restriction affecting the real property described in Section 2.8(c)
and (d) hereof, including without limitation any zoning ordinances,
building codes, flood disaster laws, wetlands regulations, health laws or
environmental laws, (iii) judicial or administrative action, (iv) action
by adjacent landowners, (v) administrative action, (vi) natural or
artificial conditions on or about the real property identified in
Section 2.8(c) and (d) hereof or (vii) significant adverse fact or
condition relating to such real property or its use that would, in each
case, prevent, limit, impede or render more costly the ownership,
operation or maintenance of such real property compared to the cost at the
date hereof if the same would have a Material Adverse Effect on the
Company.
2.9 Legal Proceedings. Except as set forth in Schedule 2.9 hereto,
there is no legal, judicial, administrative, governmental, arbitration or
other action or proceeding or governmental investigation pending or, to
the Knowledge of the Company or the Shareholders, threatened against the
Company or affecting any of its Assets, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company that would, in any such case, prevent the
Company from consummating the transactions contemplated by this Agreement
or that would have a Material Adverse Effect on the Company. The Company
is not in violation of or default under any laws, ordinances, regulations,
judgments, injunctions, orders or decrees (including, without limitation,
any immigration laws or regulations) of any court or other Governmental
Entity applicable to its business if such violation or default would have
a Material Adverse Effect on the Company. Except as set forth in
Schedule 2.9 hereto as of the date hereof, there are no judgments, orders,
injunctions or decrees of any Governmental Entity in which the Company is
a named party or any of its Assets are identified and subject.
2.10 Insurance. Schedule 2.10 hereto sets forth all existing
insurance policies held by the Company relating to the business, Assets,
employees or agents of the Company. Each such policy is in full force and
effect and is with insurance carriers believed by the Company to be
responsible. There is no dispute with respect to such policies and all
claims arising from events or circumstances occurring prior to the date
hereof have been paid in full or adequate reserves therefor are recorded
in the Financial Statements. All retroactive premium adjustments for any
period ended on or before March 31, 1995, under any worker's compensation
policy or any other insurance policies of the Company have been recorded
in accordance with generally accepted accounting principles and are
reflected in the Financial Statements. Except for such policies which are
identified in writing by the Company to EVI not later than 20 days from
the date hereof, none of such policies will terminate as a result of the
transactions contemplated by this Agreement.
2.11 Material Contracts.
(a) Except as set forth in Schedule 2.11(a) hereto and as
permitted by Section 5.1 of this Agreement for contracts, agreements,
commitments or leases entered into after the date hereof, the Company is
not a party to or bound by:
(i) any agreement, indenture or other instrument which
contains restrictions with respect to the payment of dividends or any
other distribution in respect of its capital stock or the purchase,
redemption or other acquisition of capital stock,
(ii) other than expenditures regularly made in the ordinary
course of business of the Company for items that are not property,
plant or equipment, any agreement, contract or commitment relating to
any expenditure or a series of related expenditures in excess of
$50,000,
(iii) any outstanding loan or advance by the Company
to, or investment by the Company in, any Person, or any agreement,
contract, commitment or understanding relating to the making of any
such loan, advance or investment (excluding trade receivables, and
advances to employees for expenses not to exceed $20,000 in the
aggregate at any one time, arising in the ordinary course of
business),
(iv) any contract, agreement, indenture, note or other
instrument relating to (A) the borrowing of money by the Company or
the granting of any Encumbrance or (B) any guarantee or other
contingent liability (identifying the primary contract or agreement
to which such guarantee or contingent liability relates or the
agreement pursuant to which such guarantee was delivered) in respect
of any indebtedness, commitment, liability or obligation of any
Person (other than the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business),
(v) any management service, consulting or any other
similar type of contract or agreement,
(vi) any agreement, contract or commitment limiting the
freedom of the Company or any Affiliate of the Company to engage in
any line of business, to own, operate, sell, transfer, pledge or
otherwise dispose of or encumber any Asset or to compete with any
Person or to engage in any business or activity in any geographic
area,
(vii) any agreement, lease, contract or commitment or
series of related agreements, leases, contracts or commitments not
entered into in the ordinary course of business that is not
cancelable under the terms of such agreement, lease, contract or
commitment without penalty to the Company within 30 days,
(viii) any agreement, contract or commitment requiring
the payment for goods or services whether or not such goods or
services are actually provided or the provision of goods or services
at a price less than the Company's cost of producing such goods or
providing such services,
(ix) any agreement or contract obligating the Company or
that would obligate or require any subsequent owner of the business
currently conducted by the Company or any of the Assets to provide
for indemnification or contribution with respect to any matter (other
than customary indemnification provisions in leases of property
leased by the Company),
(x) any sales, distributorship or similar agreement
relating to the products sold or services provided by the Company,
(xi) any license, royalty or similar agreement; or
(xii) any agreement, contract or commitment that the
Company expects to have a Material Adverse Effect on the Company.
Schedule 2.11(a) hereto sets forth with respect to each mortgage, security
agreement, letter of credit or guaranty, a cross reference to the
principal agreement, instrument or document referred to in Schedule
2.11(a) pursuant to which such mortgage, security agreement, letter of
credit or guaranty was executed or to which such mortgage, security
agreement, letter of credit or guaranty relates.
(b) Schedule 2.11(b) hereto sets forth (i) the aggregate
outstanding principal as of March 31, 1995, with respect to each loan,
credit or other agreement, instrument or document listed in
Schedule 2.11(a) hereto relating to the borrowing of money by the Company
and (ii) the amount of available borrowings as of March 31, 1995, with
respect to each such loan, credit or other agreement, instrument or
document.
(c) Neither the Company nor, to the Knowledge of the Company
and the Shareholders, the other contracting parties thereto have breached
any provision of or are in default (and no event or circumstance exists,
to the Knowledge of the Company and the Shareholders with respect to other
parties, that with notice, or the lapse of time or both, would constitute
a default) under the terms of any agreement listed in Schedule 2.11(a)
hereto. All contracts, agreements, indentures, leases and other
instruments listed in Schedule 2.11(a) hereto are in full force and
effect, except where the failure to be in full force and effect would not
have a Material Adverse Effect on the Company. There are no pending or,
to the Knowledge of the Company and the Shareholders, threatened disputes
with respect to the contracts, agreements, indentures, leases or
instruments described in Schedule 2.11(a) hereto. The Company is not
obligated to pay any liquidated damages under any of the contracts,
agreements, indentures, leases or other instruments described in
Schedule 2.11(a) hereto and neither the Company nor any of the
Shareholders is aware of any facts or circumstances that could reasonably
be expected to result in an obligation of the Company to pay any such
liquidated damages.
2.12 Brokerage. Except for Wertheim Schroder & Co., whose fees shall
be paid by the Company and included as a current liability in the Working
Capital, no investment banker, broker or finder has acted directly or
indirectly for the Company or any Shareholder in connection with this
Agreement or the transactions contemplated hereby. Except as set forth on
Schedule 2.12 hereto, no investment banker, broker, finder or other Person
is entitled to any brokerage or finder's fee or similar commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company or any Shareholder.
2.13 Intellectual Property. Except as set forth on Schedule 2.13
hereto, the Company owns, or is licensed or otherwise has the right to use
all Intellectual Property that is material to the condition (financial or
otherwise) or conduct of the business and operations of the Company. To
the Knowledge of the Company and the Shareholders, (a) the use of the
Intellectual Property by the Company does not infringe on the rights of
any person, subject to such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of the Company which
could have a Material Adverse Effect on the Company and (b) no Person is
infringing on any right of the Company with respect to any Intellectual
Property. No claims are pending or, to the Knowledge of the Company and
the Shareholders, threatened that the Company is infringing or otherwise
adversely affecting the rights of any person with regard to any
Intellectual Property. To Knowledge of the Company and the Shareholders,
no Person is infringing the rights of the Company with respect to any
Intellectual Property. Except as set forth on Schedule 2.13 hereto, all
of the Intellectual Property that is owned by the Company is owned free
and clear of all Encumbrances (other than Permitted Encumbrances) and was
not misappropriated from any Person. All of the Intellectual Property
that is licensed by the Company is licensed pursuant to valid and existing
license agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss of any Intellectual Property.
2.14 Environmental Matters.
(a) Except as set forth in Schedule 2.14 hereto, the Company
has at all times operated in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and
obligations of Environmental Laws and related orders of any court or other
Governmental Entity, except where the failure to so operate in compliance
would not have a Material Adverse Effect on the Company.
(b) Except as set forth in Schedule 2.14 hereto, there are no
existing, pending or, to the Knowledge of the Company and the
Shareholders, threatened actions, suits, claims, investigations, inquiries
or proceedings by or before any court or any other Governmental Entity
directed against the Company or its Assets which pertain or relate to
(i) any remedial obligations under any applicable Environmental Law, (ii)
violations of any Environmental Law, (iii) personal injury or property
damage claims relating to the release of chemicals or Waste Materials or
(iv) response, removal or remedial costs under CERCLA or any similar state
law.
(c) Except as set forth in Schedule 2.14 hereto, all notices,
permits, licenses or similar authorizations required to be obtained or
filed by the Company under all applicable Environmental Laws in connection
with its current and previous operation or use of the Assets, any other
assets or properties currently or previously leased or owned by the
Company or the current and previous conduct of its business have been duly
obtained or filed and are in full force and effect, except where the
failure to do so would not have a Material Adverse Effect on the Company.
(d) Neither the Company nor the Shareholders has received
notice that any permit, license or similar authorization is to be revoked
or suspended by any Governmental Entity.
(e) The Company does not own or operate any underground storage
tanks.
(f) No portion of the Assets or any other assets or properties
currently or previously leased or owned by the Company is part of a
Superfund site under CERCLA or any similar ranking or listing under any
similar state law.
(g) All Waste Materials generated by the Company have been
transported, stored, treated and disposed of by carriers, storage,
treatment and disposal facilities authorized and maintaining valid permits
under all applicable Environmental Laws, except where the failure to do so
would not have a Material Adverse Effect on the Company.
(h) No Person has disposed or released any Waste Materials on
or under the Assets or any other asset or property currently or previously
leased or owned by the Company and the Company has not disposed or
released Waste Materials on or under the Assets or any other asset or
property currently or previously leased or owned by the Company, except
(i) in compliance with all Environmental Laws and (ii) where such disposal
or release would not have a Material Adverse Effect on the Company.
(i) No facts or circumstances exist which could reasonably be
expected to result in any liability to any Person with respect to the
current or past business and operations of the Company, the Assets or any
other assets or properties currently or previously leased or owned by the
Company in connection with (i) any release, transportation or disposal of
any Waste Materials, hazardous substance or solid waste or (ii) action
taken or omitted that was not in full compliance with or was in violation
of any applicable Environmental Law, except for such facts and
circumstances that would not have a Material Adverse Effect on the
Company.
2.15 Licenses and Permits. Except as set forth in Schedule 2.15
hereto, the Company has all material federal, state, local and foreign
governmental licenses and permits necessary to the conduct of the
operations of the Company's business as currently conducted, such licenses
and permits are in full force and effect, no material violations currently
exist in respect of any thereof and no proceeding is pending or, to the
Knowledge of the Company and the Shareholders, threatened to revoke or
limit any thereof. Schedule 2.15 hereto contains a true, complete and
accurate list of (a) all such governmental licenses and permits, (b) all
consents, orders, decrees and other compliance agreements under which the
Company is operating or bound, copies of all of which have been furnished
to EVI and Grant, and (c) all material governmental licenses and permits
applied for but not yet received by the Company. The Company has not
received and is not aware of any reports of inspections under the United
States Occupational Safety and Health Act, or under any other applicable
federal, state or local health and safety laws and regulations relating to
the Company, the Assets or the operation of the Company's business. There
are no safety, health, anti-competitive or discrimination claims that have
been made or are pending or, to the Knowledge of the Company and the
Shareholders, that are threatened relating to the business or employment
practices of the Company.
2.16 Taxes. Except as set forth in Schedule 2.16 hereto:
(a) all Tax Returns of or relating to any Taxes that are
required to be filed on or before the Effective Date, subject to any
allowable extension periods, for, by, on behalf of or with respect to the
Company, including, but not limited to, those relating to the income,
business, operations or property of the Company (whether on a separate,
consolidated, affiliated, combined, unitary or any other basis), have been
or will be timely filed with the appropriate foreign, federal, state and
local authorities, and all Taxes shown to be due and payable on such Tax
Returns or related to such Tax Returns have been or will be paid in full
on or before the Effective Date, except where the failure to file or to
timely file Tax Returns and to pay Taxes would not have a Material Adverse
Effect on the Company;
(b) all such Tax Returns and the information and data contained
therein have been or will be properly and accurately compiled and
completed in all material respects, fairly present or will fairly present
the information purported to be shown therein, and reflect or will reflect
all liabilities for Taxes for the periods covered by such Tax Returns, net
of any applicable reserves;
(c) none of such Tax Returns are under audit or examination by
any foreign, federal, state or local authority and there are no
agreements, waivers or other arrangements providing for an extension of
time with respect to the assessment or collection of any Tax or deficiency
of any nature against the Company or with respect to any such Tax Return,
or any suits or other actions, proceedings, investigations or claims now
pending or, to the Knowledge of the Company and the Shareholders,
threatened against the Company with respect to any Tax, or any matters
under discussion with any foreign, federal, state or local authority
relating to any Tax, or any claims for any additional Tax asserted by any
such authority;
(d) all Taxes assessed and due and owing from or against the
Company on or before the Effective Date (including, but not limited to, ad
valorem Taxes relating to any property of the Company) have been or will
be timely paid in full on or before the Effective Date;
(e) all withholding Tax, Tax deposit and estimated Tax payment
requirements imposed on the Company for any and all periods ending on or
before the Effective Date, or through and including the Effective Date for
periods that have not ended on or before the Effective Date, have been or
will be timely satisfied in full on or before the Effective Date or
reserves adequate for the payment of such withholding, deposit and
estimated Taxes have been or will be established in the financial
statements of the Company on or before the Effective Date; and
(f) the Financial Statements reflect and include adequate
charges, accruals, reserves and provisions for the payment in full of any
and all Taxes payable with respect to any and all periods ending on or
before the respective dates thereof.
2.17 Labor Matters. There are no collective bargaining or other
labor union agreements to which the Company is a party or by which it is
bound. At the date hereof, there are no disputes with employees in
general to which the Company is a party. At the date hereof, there are no
strikes, slowdowns or picketing against the Company (or, to the Knowledge
of the Company and the Shareholders, against any material supplier of
goods or services to the Company) pending or, to the Knowledge of the
Company and the Shareholders, threatened. At the date hereof, the Company
has not received notice from any union or employees setting forth demands
for representation, elections or for present or future changes in wages,
terms of employment or working conditions.
2.18 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and
(ii) warranties disclosed on Schedule 2.18 hereto, the Company has not
given or made any warranties in connection with the sale or rental of
goods or services, including, without limitation, warranties covering the
customer's consequential damages. To the Knowledge of the Company and the
Shareholders, there is no state of facts or occurrence of any event
forming the basis of any present claim against the Company with respect to
warranties relating to products manufactured, sold or distributed by the
Company or services performed by or on behalf of the Company that could
reasonably be expected to materially exceed the reserves therefor.
(b) To the Knowledge of the Company and the Shareholders, there
is no state of facts or any event forming the basis of any present claim
against the Company not fully covered by insurance, except for deductibles
and self-insurance retentions, for personal injury or property damage
alleged to be caused by products shipped or services rendered by or on
behalf of the Company that would, if adversely determined, have a Material
Adverse Effect on the Company.
2.19 No Implied Representations and Warranties. It is the explicit
intent of the parties hereto that neither the Company nor any Shareholder
is making any representation or warranty whatsoever, express or implied,
beyond those expressly given in Articles 2 and 3 of this Agreement,
including, but not limited to, any implied warranty or representation as
to condition, merchantability or suitability as to any of the Assets. IT
IS UNDERSTOOD THAT, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE
HEREIN, EVI AND GRANT WILL ACQUIRE THE ASSETS OF THE COMPANY "AS IS" AND
"WHERE IS".
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder severally and not jointly covenants with respect to
Sections 3.1(b), 3.8 and 3.9 and severally and not jointly represents and
warrants to EVI and Grant with respect to the Company and with respect to
such Shareholder but not with respect to any other Shareholder as follows:
3.1 Tax Matters.
(a) Except as set forth on Schedule 3.1 hereto, such
Shareholder has no present plan or intention to engage in a sale,
exchange, transfer, reduction of risk of ownership or other direct or
indirect disposition of (i) shares of EVI Common Stock to be issued to him
in the Merger, which shares have an aggregate fair market value, as of the
Effective Time, in excess of 50% of the aggregate fair market value,
immediately prior to the Merger, of the outstanding Common Stock of the
Company or (ii) more than 50% of the shares of EVI Common Stock to be
received by such Shareholder in the Merger.
(b) Other than in the ordinary course of its business, the
Company has made (and will make) no transfer of any of its assets in
contemplation of the Merger or during the period ending at the Effective
Time and beginning with the commencement of negotiations (whether formal
or informal) with EVI regarding the Merger (or any other form of
disposition of the assets or stock of the Company other than in the
ordinary course of business). For the purposes of this Section 3.1(b), a
transfer of assets includes any distribution of assets with respect to
stock or in redemption of stock.
(c) Pursuant to the Merger, at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the
gross assets held by the Company immediately prior to the Merger will
continue to be held by the Surviving Corporation immediately subsequent to
the Merger.
3.2 Power and Authority. Such Shareholder has the requisite legal
capacity and full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
3.3 Execution and Delivery. Such Shareholder has duly executed and
delivered this Agreement. This Agreement constitutes a legal, valid and
binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability
may be limited by or subject to (a) any bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
3.4 Effect of Agreement. The execution, delivery and performance by
such Shareholder of this Agreement, the consummation by such Shareholder
of the transactions contemplated hereby and the compliance by such
Shareholder with the provisions hereof will not conflict with, or result
in any violation of or default by such Shareholder (with or without notice
or lapse of time, or both) under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which such Shareholder
is a party or by which such Shareholder or any of such Shareholder's
assets or properties may be bound, or any statute or any judgment, decree,
order, rule or regulation of any Governmental Entity to which such
Shareholder is a party or by which any Shareholder or any of the assets or
properties of such Shareholder may be bound.
3.5 Consents. Except for filings under the HSR Act and as set forth
in Schedule 3.5 hereto, no consents, approvals or authorizations of any
Person (other than those which have been obtained) are required on the
part of such Shareholder in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
3.6 Litigation. There is no legal, judicial, administrative,
governmental, arbitration or other action or proceeding pending or, to the
Knowledge of such Shareholder, threatened against such Shareholder that
could reasonably be expected to affect the ability of such Shareholder to
perform such Shareholder's obligations under this Agreement.
3.7 Stock Ownership. Such Shareholder is the record and beneficial
owner of the shares of Common Stock and Preferred Stock as described in
Schedule 2.2 hereto, and has full authority to vote all of such shares as
contemplated by this Agreement and, except as set forth on Schedule 2.2
hereto, the shares of Common Stock and Preferred Stock owned by such
Shareholder as set forth in Schedule 2.2 hereto are owned free and clear
of all Encumbrances and restrictive agreements, including, without
limitation, voting trusts or stockholders agreements. Except as set forth
on Schedule 2.2 hereto, such Shareholder has full authority to transfer
pursuant to the Merger all of the shares of Common Stock owned by such
Shareholder free and clear of all Encumbrances and restrictive agreements,
including, without limitation, voting trusts or stockholders agreements.
3.8 Securities Law Matters.
(a) Such Shareholder recognizes and understands that the EVI
Common Stock to be issued to such Shareholder pursuant to the Merger (the
"securities") will not be registered under the Securities Act, or under
the securities laws of any state (the "securities laws"). The securities
are not being so registered in reliance upon exemptions from the
Securities Act and the securities laws which are predicated, in part, on
the representations, warranties and agreements of the Shareholders
contained herein.
(b) Such Shareholder represents and warrants as to such
Shareholder that (i) such Shareholder (with the exception of Sandra
Hamilton, whose business knowledge and experience is based both on her and
her husband, Al Hamilton, jointly) has business knowledge and experience,
such experience being based on actual participation therein, (ii) such
Shareholder is capable of evaluating the merits and risks of an investment
in the EVI Common Stock and the suitability thereof as an investment
therefor, (iii) the EVI Common Stock to be acquired by such Shareholder in
connection with the Merger will be acquired solely for investment and not
with a view toward resale or redistribution in violation of the securities
laws, (iv) such Shareholder's residence and domicile, in the case of each
Shareholder that is a natural person is in the State of Texas and the
principal corporate offices of Christiana are in the State of Wisconsin,
(v) in connection with the transactions contemplated hereby, no assurances
have been made concerning the future results of the Company or EVI or as
to the value of the EVI Common Stock and (vi) such Shareholder is an
"accredited investor" within the meaning of Regulation D promulgated by
the Commission pursuant to the Securities Act. Such Shareholder
understands that none of EVI, Grant or the Company is under any obligation
to file a registration statement or to take any other action under the
securities laws with respect to any such securities except as expressly
set forth in Article 6 hereof.
(c) Such Shareholder has consulted with such Shareholder's own
counsel in regard to the securities laws and is fully aware (i) of the
circumstances under which such Shareholder is required to hold the
securities, (ii) of the limitations on the transfer or disposition of the
securities, (iii) that the securities must be held indefinitely unless the
transfer thereof is registered under the securities laws or an exemption
from registration is available and (iv) that no exemption from
registration is likely to become available for at least two years from the
date of acquisition of the securities. Such Shareholder has been advised
by such Shareholder's counsel as to the provisions of Rules 144 and 145 as
promulgated by the Commission under the Securities Act and has been
advised of the applicable limitations thereof. Such Shareholder
acknowledges that EVI, Grant and the Company are relying upon the truth
and accuracy of the representations and warranties in this Section 3.8 by
such Shareholder in consummating the transactions contemplated by this
Agreement without registering the securities under the securities laws.
(d) Such Shareholder has been furnished with (i) the definitive
proxy statement filed with the Commission in connection with the annual
meeting of shareholders of EVI to be held on May 19, 1995 and (ii) copies
of EVI's Annual Report on Form 10-K for the year ended December 31, 1994,
and Quarterly Report on Form 10-Q for the quarter ended March 31, 1995,
filed with the Commission under the Exchange Act. Such Shareholder has
been furnished with the complete financial statements of the Company for
the fiscal years ended December 31, 1992, 1993 and 1994, and the three
months ended March 31, 1994 and 1995. Such Shareholder has been furnished
with a summary description of the terms of the EVI Common Stock and EVI,
the Company and Grant have made available to such Shareholder the
opportunity to ask questions and receive answers concerning the terms and
conditions of the transactions contemplated by this Agreement and to
obtain any additional information which they possess or could reasonably
acquire for the purpose of verifying the accuracy of information furnished
to the Shareholders as set forth herein or for the purpose of considering
the transactions contemplated hereby. EVI has offered to make available
to such Shareholder upon request at any time all exhibits filed by EVI
with the Commission as part of any of the reports filed therewith.
(e) Each Shareholder agrees that the certificates representing
his EVI Common Stock to be acquired pursuant to the Merger will be
imprinted with the following legend, the terms of which are specifically
agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION REQUIREMENTS. WITHOUT SUCH
REGISTRATION, SUCH SHARES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR
TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS
MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE,
PLEDGE, HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER.
Each Shareholder understands and agrees that appropriate stop transfer
notations will be placed in the records of EVI and with its transfer
agents in respect of the securities which are to be issued to the
Shareholders in the Merger.
3.9 Indebtedness and Agreements. Immediately subsequent to the
Effective Time, the Surviving Corporation will have no indebtedness
outstanding that is payable to any Shareholder or any of their respective
Affiliates, except for benefits pursuant to Benefit Plans listed on the
schedules hereto. Immediately subsequent to the Effective Time, except
for this Agreement, there will be no agreements, contracts, leases,
arrangements or other understandings (either written or oral) between such
Shareholder and the Surviving Corporation, except for benefits pursuant to
Benefit Plans listed on the schedules hereto.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
EVI AND GRANT
EVI and Grant hereby jointly and severally represent and warrant to
and covenant and agree with the Company and each Shareholder as follows:
4.1 Corporate Organization. EVI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Grant is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. EVI and Grant have
all requisite corporate power and authority to carry on their respective
businesses as now being conducted and to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of Agreement.
(a) The execution, delivery and performance by EVI and Grant of
this Agreement and the consummation by EVI and Grant of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of EVI and Grant. This Agreement has been duly and
validly executed and delivered by EVI and Grant and constitutes the legal,
valid and binding obligation of EVI and Grant, enforceable against each of
them in accordance with its terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and (ii) is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(b) Except as set forth in Schedule 4.3 hereto, the execution,
delivery and performance of this Agreement by EVI and Grant and the
consummation by EVI and Grant of the transactions contemplated hereby will
not violate any provision of, or constitute a default under, (i) any
contract or other agreement to which EVI or Grant is a party or by which
either of them is bound, (ii) conflict with its charter or bylaws, or
(iii) conflict with or violate any permit, concession, grant, franchise,
statute, law, rule or regulation of any Governmental Entity or any order,
judgment, award or decree of any court or other Governmental Entity to
which EVI or Grant is subject or any of their Assets is bound, other than,
with respect to clauses (i) and (iii), violations, defaults or conflicts
that would not materially and adversely affect the ability of EVI or Grant
to consummate the transactions contemplated by this Agreement.
4.3 Consents. Except as set forth in Schedule 4.3 hereto, the
listing on the NYSE of the shares of EVI Common Stock issuable pursuant to
this Agreement, for filings under the HSR Act, the filing and recordation
of Articles of Merger as required by the TBCA, and those matters that
would not have a Material Adverse Effect on EVI and its Subsidiaries taken
as a whole, there is no consent, approval, clearance, waiver, order, or
authorization of, or exemption by, or filing with, any Governmental Entity
or any Person required in connection with the execution, delivery or
performance by EVI and Grant of this Agreement or the taking of any other
action contemplated hereby that has not heretofore been made and obtained.
4.4 Authorization for EVI Common Stock. EVI has taken all necessary
action to permit it to issue the number of shares of EVI Common Stock
required to be issued pursuant to the terms of this Agreement. The shares
of EVI Common Stock issued pursuant to the terms of this Agreement will,
when issued, be validly issued, fully paid and nonassessable and not
subject to preemptive rights. The EVI Common Stock issuable pursuant to
this Agreement will, when issued, be listed on the NYSE.
4.5 Brokerage. No investment banker, broker, finder or other Person
is entitled to any brokerage or finder's fee or similar commission in
respect of this Agreement or the transactions contemplated hereby based in
any way on agreements, arrangements or understandings made by or on behalf
of Grant or any Affiliate of Grant.
4.6 SEC Documents. EVI has provided to the Company and the
Shareholders its Annual Report on Form 10-K for the year ended
December 31, 1994, its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, and its proxy statement with respect to the Annual Meeting
of Stockholders to be held on May 19, 1995 (such documents collectively
referred to herein as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial
statements of EVI included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of EVI and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (except in the case of interim
period financial information, for normal year-end adjustments).
ARTICLE 5
COVENANTS
The parties covenant and agree as follows:
5.1 Conduct of Business Operations.
(a) Except as expressly contemplated by this Agreement, the
Company shall not without the prior written consent of EVI:
(i) increase the rate or form of compensation payable to
any employee or increase any employee benefits or adopt or amend
(other than amendments that reduce the amounts payable by the Company
or are required by law to preserve the qualified status of a plan or
contract) in any respect any Benefit Plan, other than increases in
the ordinary course of business of the Company for persons who are
not officers of the Company, or enter into any employment, severance
or similar contract with any Person (including, without limitation,
contracts with management of the Company that might require that
payments be made upon the consummation of the transactions
contemplated hereby) or amend any such existing contracts to increase
any amounts payable thereunder or benefits provided thereunder;
(ii) sell, lease or otherwise dispose of any Assets or any
interests therein, or enter into, or consent to the entering into of,
any agreement granting to any third Person a right to purchase, lease
or otherwise acquire any Assets or interests therein, except in each
case in the ordinary course of business;
(iii) amend its Articles of Incorporation or Bylaws;
(iv) enter into any agreement or incur any obligation, the
terms of which would be violated by the consummation of the
transactions contemplated by this Agreement;
(v) organize, invest in or acquire an equity interest in
any corporation, partnership, joint venture, association or other
entity or organization;
(vi) except for borrowings in the ordinary course of
business under the BankAmerica Business Credit Facility listed on
Schedule 2.11(a) hereto, create, incur, assume, guarantee or
otherwise become liable or obligated with respect to any indebtedness
for monies borrowed, or make any loan or advance to any Person (other
than trade receivables, and advances to employees for expenses not to
exceed $20,000 in the aggregate at any one time, in the ordinary
course of business);
(vii) (A) enter into any new line of business,
(B) except for capital expenditures contemplated on Schedule 5.1
hereto, incur or commit to any capital expenditures or financing
which individually, or in the aggregate with respect to a series of
related capital expenditures or financing, exceed $200,000, or exceed
$1,000,000 in the aggregate for all such capital expenditures or
financings, (C) acquire or agree to acquire by merging or
consolidating with, or acquire or agree to acquire by purchasing all
or substantially all of the assets of, or in any manner, any Person,
(D) other than in the ordinary course of business and such
acquisitions otherwise permitted under this Section 5.1, otherwise
acquire or agree to acquire any assets for a total consideration in
the aggregate in excess of $50,000, or (E) waive any right under or
cancel any contract, debt or claim listed in Schedule 2.11(a) hereto,
which waiver or cancellation would have a Material Adverse Effect on
the Company;
(viii) except for the conversion of outstanding
Preferred Stock into Common Stock at a conversion rate of not more
than .25784 shares of Common Stock for each share of Preferred Stock
(such conversion rate to be determined as provided in and subject to
the provisions of Section 1.3(e) hereof), issue, deliver, sell or
authorize the issuance, delivery or sale of any stock appreciation
rights or of any shares of its capital stock or other ownership
interests of any class, or any securities convertible into or
exchangeable for, or rights, warrants or options to acquire, any such
shares, interests or convertible or exchangeable securities or enter
into any agreement or understanding or offer or propose to do any of
the foregoing or take any preliminary action with respect to such
matters;
(ix) enter into any contract, commitment or arrangement (or
amend, modify, supplement or otherwise alter the terms of any
existing contract, agreement or instrument set forth in
Schedule 2.11(a) hereto with any Person or enter into a contract,
commitment or arrangement with respect to any sales, agency or other
contract in each case (A) for personal services with any Person
providing for payments in excess of $5,000 (other than the hiring or
employees in the ordinary course of business) or (B) requiring
payment for any goods or services whether or not such goods or
services are provided; or
(x) maintain its books of account other than in accordance
with past practice or, except as required by generally accepted
accounting principles, make any change in any of its accounting
methods or practices.
(b) Other than conversion of outstanding Preferred Stock into
Common Stock at the rate of not more than .25784 shares of Common Stock
for each share of Preferred Stock (such conversion rate to be determined
as provided in and subject to the provisions of Section 1.3(e) hereof),
the Company shall not without the prior written consent of EVI,
(i) declare or pay any dividend on or make any other distribution in
respect of any of its capital stock, (ii) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of, its
capital stock, (iii) purchase, redeem or otherwise acquire any shares of
its capital stock or (iv) except as contemplated by this Agreement, enter
into any agreement or other transaction with a Shareholder or an Affiliate
of a Shareholder. Christiana agrees that if it converts its shares of
Preferred Stock into shares of Common Stock, it shall contribute to the
Company such number of shares of Common Stock as shall be necessary to
result in it holding immediately prior to the Effective Time a number of
shares of Common Stock with respect to its shares of Preferred Stock that
would not be greater than the number of shares of Common Stock it would
have held had its shares of Preferred Stock been converted into Common
Stock at a rate of .25784 shares of Common Stock for each share of
Preferred Stock. Such conversion shall be without any payment or other
additional consideration paid to Christiana for such contribution.
Christiana agrees that it will not convert its shares of Preferred Stock
into Common Stock if the contribution contemplated hereby would result in
the Company recognizing any income for Tax purposes or would otherwise
have an adverse effect on the Company.
5.2 Maintain Assets and Operations. The Company shall (a) carry on
its business in the ordinary course consistent with past practices and in
compliance with all applicable laws, rules and regulations, except where
the failure to be in such compliance would not have a Material Adverse
Effect on the Company, (b) use its reasonable efforts to collect its
accounts receivable, (c) use its reasonable efforts to preserve its
business organization, maintain its rights and franchises, keep available
the services of its officers and employees and preserve the goodwill and
its relationships with customers, suppliers and others having business
dealings with it, (d) use its reasonable efforts to preserve in full force
and effect all leases, operating agreements, easements, rights-of-way,
permits, licenses, contracts and other agreements which relate to the
Assets (other than those expiring by their terms and those whose failure
to preserve would not have a Material Adverse Effect on the Company),
(e) use its reasonable efforts to perform or cause to be performed all of
its obligations in or under any of such leases, agreements and contracts,
except where the failure to perform would not have a Material Adverse
Effect on the Company) and (f) consistent with past practices, use its
reasonable efforts to safeguard and maintain secure all engineering data,
reports and other confidential data in the possession of the Company
relating to the Assets, including the Intellectual Property.
5.3 Litigation and Claims.
(a) The Company and the Shareholders shall promptly inform EVI
in writing of any litigation, or any claim or controversy or contingent
liability of which the Company or any Shareholder has Knowledge of that
might reasonably be expected to become the subject of litigation, against
the Company or affecting any of its Assets, in each case in an amount in
controversy in excess of $25,000, or that is seeking to prohibit or
restrict the transactions contemplated hereby.
(b) EVI shall promptly inform the Company of any litigation,
claim or controversy or governmental investigation or proceeding that
would be required to be disclosed by EVI pursuant to Item 103 of
Regulation S-K promulgated by the Securities and Exchange Commission.
5.4 Access to Information.
(a) Except to the extent otherwise required by United States
regulatory considerations and any applicable confidentiality arrangements,
the Company and EVI shall, and shall cause each of their respective
officers and employees to, afford to the other, and to the other's
accountants, counsel, financial advisors and other representatives,
reasonable access during the period from the date hereof to the Effective
Time to the Company's and EVI's properties, books, contracts, commitments
and records and, during such period, the Company and EVI shall, and shall
cause each of their respective officers and employees to, furnish promptly
to the other all information concerning its business, properties,
financial condition, operations and personnel as the other may from time
to time reasonably request.
(b) The Company agrees to advise EVI of all developments with
respect to the Company and its assets and liabilities from the date hereof
to the Effective Time that to the Knowledge of the Company and the
Shareholders would have a Material Adverse Effect on the Company.
(c) EVI agrees to advise the Company of all developments with
respect to EVI, its assets and liabilities during the period from the date
hereof to the Effective Time that to the Knowledge of EVI would have a
Material Adverse Effect on the business, results of operations, financial
condition or Assets of EVI and its Subsidiaries, taken as a whole.
(d) Except as required by law, each of the Company, EVI and the
Shareholders shall hold, and cause its respective directors, officers,
employees, accountants, counsel, financial advisors and representatives
and affiliates to hold, any nonpublic information in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement. Any investigation by any party of the assets
and business of the other party and its Subsidiaries shall not affect any
representations and warranties hereunder or either party's right to
terminate this Agreement as provided in Article 10 hereof.
(e) The Company shall also promptly notify EVI of any notices
from or investigations by Governmental Entities that it becomes aware of
that could reasonably be expected to materially affect the Company's
business or assets. EVI will promptly notify the Company of any notices
from or investigations by Governmental Entities that it becomes aware of
that could reasonably be expected to materially affect the consummation of
the Merger. In the event of the termination of this Agreement, each party
promptly will deliver to the other party (and destroy all electronic data
reflecting the same) all documents, work papers and other material (and
any reproductions or extracts thereof and any notes or summaries thereto)
obtained by such party or on its behalf from such other party or its
Subsidiaries as a result of this Agreement or in connection therewith so
obtained before or after the execution hereof.
5.5 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (i) the obtaining
of all necessary actions or nonactions, waivers, consents and approvals
from Governmental Entities and the making of all necessary registrations
and filings (including filings with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental
Entity, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties and (iii) the execution and delivery of any additional
instruments (including any required supplemental indentures) necessary to
consummate the transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to EVI, and EVI or
Grant shall give prompt notice to the Company, of (i) any representation
or warranty made by it contained in this Agreement that, to its Knowledge,
has become untrue or inaccurate in any respect or (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
representations or warranties or covenants or agreements of the parties or
the conditions to the obligations of the parties hereunder.
(c) (i) EVI and Christiana shall file a premerger notification
and report form under the HSR Act with respect to the Merger as
promptly as reasonably possible following execution and delivery of
this Agreement. Each of the parties agrees to use reasonable efforts
to promptly respond to, and fully address, any inquiry or request for
information by a Governmental Entity of the transactions contemplated
hereby.
(ii) The Company and Christiana will furnish to EVI and
Grant copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof (collectively, "Company
HSR Documents")) between the Company or Christiana, or any of its
respective representatives, on the one hand, and any Governmental
Entity, or members of the staff of such agency or authority, on the
other hand, with respect to this Agreement or the Merger; provided,
however, that (A) with respect to documents and other materials filed
by or on behalf of the Company with the Antitrust Division of the
Department of Justice, the Federal Trade Commission or any state
attorneys general that are available for review by EVI and Grant,
copies will not be required to be provided to EVI and Grant, (B) the
Company may redact all revenue figures relating to any service not
provided or any product not manufactured or sold by EVI or any of its
Subsidiaries (according to the EVI HSR Documents) from any Company
HSR Documents and may further redact from such documents all
information about the Company's "ultimate parent entity" (for
purposes of the HSR Act) and (C) with respect to any Company HSR
Documents (1) that contain any information which, in the reasonable
judgment of Foley & Lardner, should not be furnished to EVI or Grant
because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of the Company to furnish any such Company HSR Documents
to EVI and Grant shall be satisfied by the delivery of such Company
HSR Documents on a confidential basis to Fulbright & Jaworski L.L.P.
pursuant to the confidentiality agreement previously entered into by
Foley & Lardner, on behalf of the Company, and Fulbright & Jaworski
L.L.P., on behalf of EVI and Grant. Except as otherwise required by
United States regulatory considerations, EVI and Grant will furnish
to the Company copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof
(collectively, "EVI HSR Documents")) between EVI, Grant or any of
their respective representatives, on the one hand, and any
governmental agency or authority, on the other hand, with respect to
this Agreement or the Merger; provided, however, that (A) with
respect to documents and other materials filed by or on behalf of EVI
or Grant with the Antitrust Division of the Department of Justice,
the Federal Trade Commission or any state attorneys general that are
available for review by the Company, copies will not be required to
be provided to the Company, (B) EVI and Grant may redact all revenue
figures relating to any service not provided, any product not
manufactured or sold by the Company (according to the Company HSR
Documents) from any EVI HSR Documents furnished to the Company or
Foley & Lardner, and (C) with respect to any EVI HSR Documents
(1) that contain information which, in the reasonable judgment of
Fulbright & Jaworski L.L.P., should not be furnished to the Company
because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of EVI and Grant to furnish any such EVI HSR Documents to
the Company shall be satisfied by the delivery of such EVI HSR
Documents on a confidential basis to Foley & Lardner pursuant to the
confidentiality agreement referred to above.
(iii) Notwithstanding the foregoing provisions in this
Section 5.5, nothing contained in this Agreement shall be construed
so as to require EVI, Grant or the Company, or any of their
respective Subsidiaries or affiliates, to sell, license, dispose of
or hold separate, or to operate in any specified manner, any assets
or businesses of EVI, Grant, the Company or the Surviving Corporation
(or to require EVI, Grant, the Company or any of their respective
Subsidiaries or affiliates to agree to any of the foregoing). The
obligations of each party under Section 5.5(a) hereto to use
reasonable efforts with respect to antitrust matters shall be limited
to compliance with the reporting provisions of the HSR Act and with
its obligations under this Section 5.5(c).
5.6 No Solicitation. Neither the Company nor any Shareholder shall
authorize or permit any officer, director or employee or any investment
bank, attorney or other advisor or representative of the Company or any
Affiliate of the Company to, solicit or initiate any proposal (other than
any proposal by Grant or any of its Affiliates) for the acquisition of the
stock or a substantial portion of the Assets of the Company or any
proposal or offer (other than a proposal or offer by Grant or any of its
Affiliates) to acquire in any manner, directly or indirectly, an equity
interest in the Company, any voting securities of the Company or a
substantial portion of the Assets of the Company.
5.7 Board Representation. At the Effective Time, the Board of
Directors of EVI shall elect as a director of EVI Sheldon B. Lubar or
another person specified by Christiana who is reasonably satisfactory to
the Board of Directors of EVI. EVI agrees that Mr. Lubar, or such other
representative of Christiana as may be reasonably satisfactory to the
Board of Directors of EVI (each a "Christiana Representative"), shall be
included in the slate of nominees by the Board of Directors of EVI at
future meetings of the stockholders of EVI at which directors are to be
elected. If a specific Christiana Representative is not reasonably
satisfactory to EVI, Christiana shall have the right to propose an
alternative person to be a Christiana Representative. A Christiana
Representative shall be considered reasonably satisfactory to EVI unless
the Board of Directors of EVI, after consultation with counsel, shall have
determined that the nomination of such Christiana Representative as a
nominee to the Board of Directors of EVI would involve a potential breach
of fiduciary duty of the members of the Board of Directors of EVI. If EVI
shall merge or consolidate with another corporation or other entity and
the stockholders of EVI immediately prior to such merger or consolidation
shall hold at least 66 % in voting and value of the surviving corporation
or entity or ultimate parent thereof (a "Survivor"), the Survivor shall be
subject to the provisions of this Section 5.7. If a Christiana
Representative serving on the Board of Directors of EVI ceases to be on
the Board of Directors of EVI, EVI agrees to appoint a successor
Christiana Representative to serve until the next election of directors by
the stockholders of EVI. The covenants set forth in this Section 5.7
shall terminate if at any time Christiana shall cease to beneficially own
at least 8% of the outstanding shares of EVI Common Stock or the common
equity of the Survivor.
5.8 Shareholder Approval; Voting; Restriction on Disposition.
(a) The Company and the Shareholders shall take such additional
action as may be necessary under the TBCA to approve the Merger.
(b) EVI shall take such additional action as the sole
shareholder of Grant to approve the Merger in accordance with the TBCA.
(c) Each Shareholder hereby agrees to execute a consent in
accordance with Article 9.10A of the TBCA with respect to all shares of
Common Stock and Preferred Stock which such Shareholder now or hereafter
may own, beneficially or of record, in favor of the adoption of this
Agreement and the transactions contemplated hereby and not to dissent or
seek any appraisal rights on account of the Merger. Such consents by the
Shareholders shall be executed and delivered to the Company by the
Shareholders contemporaneously with the execution and delivery hereof or
as otherwise directed by EVI or Grant.
(d) Except as contemplated by this Agreement and the Merger
Agreement, prior to the earlier of the Effective Time or the termination
of this Agreement as provided for herein, each of the Shareholders agrees
that such Shareholder will not contract to sell, sell, encumber or
otherwise transfer or dispose of any shares of Common Stock or any
interest therein, or grant any option or other right in respect thereof,
or grant any voting rights with respect thereto, without the prior written
consent of EVI, Grant and the Company.
5.9 Release.
(a) As of the Effective Time, each of the Shareholders does
hereby for itself and for himself or his heirs, executors, administrators
and legal representatives remise, release, acquit and forever discharge
the Company and its respective controlled Affiliates, partners, officers,
directors and employees, in their capacities as such, and successors and
assigns of and from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action and obligations of every
nature whatsoever, liquidated or unliquidated, known or unknown, matured
or unmatured, fixed or contingent, which each of such Shareholders now
has, owns or holds or has at any time previously had, owned or held
against the Company, or such Person in such capacity, including without
limitation all liabilities created as a result of the negligence, gross
negligence and willful acts of the Company and its employees and agents,
existing as of the Effective Time or relating to any matter that occurred
on or prior to the Effective Time; provided, however, that any claims,
liabilities, debts or causes of action that may arise in the connection
with the failure of any of the parties hereto to perform any of their
obligations hereunder or under any other agreement relating to the
transactions contemplated hereby or from any breaches by any of them of
any representations or warranties herein or in connection with any of such
other agreements shall not be released or discharged pursuant to this
Agreement; and provided further any liabilities under Benefit Plans listed
on the schedules hereto shall not be released.
(b) Each of the Shareholders represents and warrants that he
has not previously assigned or transferred, or purported to assign or
transfer, to any Person or entity whatsoever all or any part of the
claims, demands, liabilities, responsibilities, disputes, causes of action
or obligations released herein. Each of the Shareholders covenants and
agrees that he will not assign or transfer to any Person or entity
whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations to be released
herein. Each of the Shareholders represents and warrants that he has read
and understands all of the provisions of this Section 5.9 and that he has
been represented by legal counsel of his own choosing in connection with
the negotiation, execution and delivery of this Agreement.
5.10 Further Assurances.
(a) If at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any further assignments or
assurances in law or otherwise are necessary or desirable to vest, perfect
or confirm, of record or otherwise, in the Surviving Corporation, all
rights, title and interests in all real estate and other property and all
privileges, powers and franchises of the Company and Grant, the Surviving
Corporation and its proper officers and directors, in the name and on
behalf of the Company and Grant, shall execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary and
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this
Agreement, and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of the Company or otherwise
to take any and all such action.
(b) The Shareholders shall execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered to EVI and Grant such
assignments or other instruments of transfer, assignment and conveyance,
in form and substance reasonably satisfactory to counsel of EVI and Grant,
as shall be necessary to vest in EVI and Grant all of the right, title and
interest in and to the Common Stock and Preferred Stock free and clear of
all Encumbrances.
5.11 Limitation on Dispositions. The Shareholders jointly and
severally agree that, for a period of one year from the Effective Date,
they will not transfer, sell or dispose of more than 50% of the EVI Common
Stock issued to them in the Merger other than (a) in a tender offer or
exchange offer for EVI Common Stock or (b) pursuant to a merger or other
transaction that occurs as a result of a vote or consent of the
stockholders of EVI. It is understood that transfers and dispositions
that occur as a result of the death or incompetency of a Shareholder shall
not be prohibited nor shall any transfer or disposition be deemed to occur
as a result of the acquisition of the stock or assets of Christiana.
5.12 Purchase of EVI Stock.
(a) At the Closing, Christiana shall purchase from EVI, and EVI
shall sell to Christiana, 642,857 shares of EVI Common Stock for
$9,000,000 payable in immediately available funds; provided, however, (i)
if the Market Price is greater than $17.00, the number of shares of EVI
Common Stock to be purchased and sold shall be equal to the quotient
obtained by dividing $10,928,569 by the Market Price, or (ii) if the
Market Price is less than $12.00, the number of shares of EVI Common Stock
to be purchased and sold shall be equal to the quotient obtained by
dividing $7,714,284 by the Market Price; provided, however, that if the
aggregate number of shares of EVI Common Stock issuable pursuant to the
Merger and this Section 5.12 (the "Total Shares") would be equal to or
greater than 20% of the total number of issued and outstanding shares of
EVI Common Stock immediately prior to the Merger, then (i) the number of
shares of EVI Common Stock issuable pursuant to this Section 5.12 shall be
reduced to an amount that would result in the Total Shares being equal to
100 shares of EVI Common Stock less than 20% of the total number of issued
and outstanding shares of EVI Common Stock immediately prior to the Merger
and (ii) the purchase price for the EVI Common Stock issuable pursuant to
this Section 5.12 shall be reduced from $9,000,000 to an amount equal to
$9,000,000 less the product of the number of shares of EVI Common Stock so
reduced and either (x) $14.00 if the Market Price is between $12.00 and
$17.00 and (y) the Market Price if the Market Price is less than $12.00 or
greater than $17.00. The $12.00 and $17.00 thresholds shall be adjusted
in the same manner as the $12.00 and $16.00 thresholds are adjusted in
Section 1.3(f) hereof.
(b) EVI will not purchase any shares of EVI Common Stock, other
than in connection with its employee benefit plans consistent with past
practices or pursuant to indemnification or similar arrangements, within
30 trading days prior to the Effective Date.
5.13 Arthur Andersen Opinion. EVI agrees to provide Arthur Andersen
LLP with the representations set forth in Schedule 5.13, which
representations shall be considered representations of EVI to the
Shareholders herein and, in the case of paragraph 9 of Schedule 5.13,
shall be considered a covenant of EVI. The Company and the Shareholders,
however, acknowledge and agree that no representation, express or implied,
is being provided by EVI or Grant with respect to the tax consequences of
the Merger or the other transactions contemplated hereby and that the
Shareholders shall be responsible for all Taxes that may be incurred by
them in connection with the Merger and the other transactions contemplated
hereby. In addition, to the extent the representations set forth in
Schedule 5.13 are qualified as to the current plans or intentions of EVI,
the Shareholders acknowledge and agree that such representations are only
intended to reflect the plans and intentions of EVI as they may exist as
of the date of this Agreement and the Merger and that facts and
circumstances may change following the Merger such that no representation
or warranty or covenant is being given as to such matters as of any time
subsequent to the date of the Merger.
ARTICLE 6
REGISTRATION RIGHTS
6.1 Demand Rights.
(a) Commencing one year after the Effective Date, Christiana,
individually, and Chunn, Morris and Hamilton, as a group, may each request
EVI to register under the Securities Act all or any portion of the shares
of EVI Common Stock (and references in this Article 6 to "EVI Common
Stock" shall be deemed to include any securities received by the
Shareholders on account of any stock split, stock dividend,
recapitalization, other distribution, share exchange or merger of EVI)
issued to such Shareholder pursuant to the Merger or Section 5.12 hereof
pursuant to a plan of distribution to be described in such notice;
provided that, unless otherwise agreed to by EVI, such request may not be
for a continuous or "shelf" registration made pursuant to Rule 415
promulgated under the Securities Act or any similar or successor rule.
EVI shall be obligated to register the EVI Common Stock issued to each of
Christiana, individually, and Chunn, Morris and Hamilton, as a group,
pursuant to this Section 6.1(a) on one occasion only for each such group;
provided, however, in the event Christiana elects to dispose of all of its
EVI Common Stock pursuant to this Section 6.1(a) and is not able to
dispose of all of such EVI Common Stock pursuant to such plan of
distribution or in the event such disposition is not completed as a result
of a default by EVI under the underwriting agreement relating to such plan
of distribution, Christiana shall be entitled to one additional
registration pursuant to this Section 6.1(a).
(b) Within ten Business Days following receipt of a notice from
such Shareholder pursuant to this Section 6.1, EVI shall notify the other
Shareholders of the receipt of such notice and shall use its best efforts
to register under the Securities Act, for public sale pursuant to such
distribution, the shares of EVI Common Stock as specified in the notice
from such Shareholder (and if the notice under Section 6.1(a) hereof was
given by a Shareholder other than Christiana, any shares of EVI Common
Stock issued to the other Shareholders in the Merger as specified in any
notices given by the other Shareholders no later than the tenth Business
Day after receipt of the notice sent by EVI).
(c) Notwithstanding anything to the contrary contained in this
Section 6.1, EVI shall not be obligated to prepare and file any
registration statement pursuant to this Section 6.1, or prepare or file
any amendment or supplement thereto, at any time when EVI, in the good
faith judgment of its Board of Directors, expressed by resolution
specifying the reason therefor, reasonably believes that the filing
thereof at the time requested, or the offering of securities pursuant
thereto, would materially and adversely affect a pending or proposed
public offering of securities by EVI, an acquisition, merger,
recapitalization, consolidation, reorganization or similar transaction
relating to EVI or negotiations, discussions or pending proposals with
respect thereto or require premature disclosure of information not
otherwise required to be disclosed to the potential detriment of EVI.
(d) The filing of a registration statement, or any amendment or
supplement thereto, by EVI may not be deferred pursuant to the provisions
of Section 6.1(c) hereof for more than 30 days after the abandonment or
consummation (but such period shall be 60 days after the completion of the
distribution of securities in the case of a public offering) of any of the
foregoing proposals or transactions or, in any event, for more than
120 days after EVI's receipt of notice from any Shareholder under this
Section 6.1.
6.2 Piggyback Rights.
(a) If, at any time after one year from the Effective Date, EVI
proposes to register any of the EVI Common Stock under the Securities Act
for sale pursuant to an underwritten public offering of the EVI Common
Stock (except with respect to registration statements filed on Form S-4 or
such other forms as shall be prescribed under the Securities Act for the
same purposes as such form), it will at each such time, prior to the
filing of any such registration statement, give written notice to all of
the Shareholders of its intention so to do and, upon the written request
(which must specify the number of shares of EVI Common Stock to
participate in such underwritten offering) of any of the Shareholders
delivered to EVI within five Business Days of receipt of EVI's notice, EVI
will use its best efforts to cause any EVI Common Stock issued to such
requesting Shareholder pursuant to the Merger or Section 5.12 hereof as to
which registration shall have been so requested to be included in the
shares to be covered by the registration statement proposed to be filed by
EVI for sale in such offering, all to the extent requisite to permit the
sale or other disposition (in accordance with the written request of the
Shareholders as aforesaid) by such of the Shareholders of such EVI Common
Stock in such offering as have so requested such registration. Nothing
contained in this Section 6.2 shall, however, limit EVI's right to cancel,
postpone or withdraw any such proposed registration for any reason.
(b) Any request by the Shareholders pursuant to this
Section 6.2 to register EVI Common Stock for sale in the underwriting
shall be on the same terms and conditions as the shares of EVI Common
Stock to be registered, if any, and sold through underwriters under such
registration; provided, however, that as a condition to such inclusion the
requesting Shareholders shall execute an underwriting agreement acceptable
to the underwriters and, if requested, a custody agreement, in each case
having such customary terms as the underwriters shall request, including
indemnification (with the terms of such agreements being no less favorable
to the Shareholders than to the holders, if any, of Other Common Stock),
and if the managing underwriter determines and advises in writing that the
inclusion in the underwriting of all EVI Common Stock proposed to be
included by the requesting Shareholders and any other shares of EVI Common
Stock sought to be registered by any other Shareholder of EVI exercising
rights comparable to those of the Shareholders under this Agreement (the
"Other Common Stock") would, in its reasonable and good faith judgment,
interfere with the successful marketing of the securities proposed to be
registered for underwriting by EVI or by any holder of EVI Common Stock
having the right to require EVI to file a registration statement to
register such EVI Common Stock, then the number of shares of EVI Common
Stock and Other Common Stock requested to be included in the underwriting
shall be reduced pro rata among the Shareholders and the holders of Other
Common Stock requesting such registration and inclusion in the
underwriting to the extent necessary to avoid such interference in the
judgment of such managing underwriter as provided above, including,
consistent with pro rata reduction, reduction to zero.
6.3 Procedure. If and whenever EVI is required by the provisions of
this Agreement to use its best efforts to effect the registration of any
EVI Common Stock under the Securities Act, EVI will, subject to the
provisions of Sections 6.1, 6.2 and 6.5 hereof:
(a) as expeditiously as reasonably practicable, prepare and
file with the Commission a registration statement on the appropriate form
with respect to such EVI Common Stock and seek to cause such registration
statement to become and remain effective;
(b) as expeditiously as reasonably practicable, prepare and
file with the Commission 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 and to
comply with the provisions of the Securities Act with respect to the
disposition of such EVI Common Stock covered by such registration
statement in accordance with the intended method of distribution set forth
in such registration statement;
(c) as expeditiously as reasonably practicable, furnish to each
of the Shareholders selling EVI Common Stock registered, or to be
registered under the Securities Act, and to each underwriter, if any, of
such EVI Common Stock such number of copies of prospectuses and
preliminary prospectuses in conformity with the requirements of the
Securities Act, and such other documents as such seller may reasonably
request, in order to facilitate the public sale or other disposition of
such EVI Common Stock owned by such seller;
(d) as expeditiously as reasonably practicable, furnish, at the
request of the Shareholders requesting registration pursuant to this
Agreement, on the date that such EVI Common Stock is to be delivered to
the underwriters for sale pursuant to such registration or, if such EVI
Common Stock is not being sold through underwriters, on the date the
registration statement with respect to such EVI Common Stock becomes
effective (i) an opinion, dated such date, of the independent counsel
representing EVI for the purposes of such registration, addressed to the
underwriters, if any, and to the Shareholders making such request, stating
that such registration statement has become effective under the Securities
Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness of such registration statement has been
instituted or is pending or contemplated under the Securities Act; (B) the
registration statement, the related prospectus, and each amendment or
supplement thereto, including all documents incorporated by reference
therein, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements or other financial or statistical or reserve data
contained or incorporated by reference therein); and (C) no facts have
come to the attention of such counsel that caused such counsel to believe
(with customary qualifications) that either the registration statement or
the prospectus, or any amendment or supplement thereto, including all
documents incorporated by reference therein, contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except that such
counsel need express no belief as to financial statements or other
financial or statistical or reserve data contained or incorporated by
reference therein or as to any information provided by the Shareholders or
any underwriter for inclusion therein); and (ii) a letter, dated such
date, from the independent certified public accountants of EVI, addressed
to the Shareholders making such request, stating that they are independent
certified public accountants within the meaning of the Securities Act and
that in the opinion of such accountants, the financial statements and
other financial data of EVI included in the registration statement or the
prospectus, or any amendment or supplement thereto, including all
documents incorporated by reference therein, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act. Such letter from the independent certified public
accountants shall additionally cover such other customary financial
matters (including information as to the period ending not more than five
business days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as such
underwriters, if any, or the Shareholders making such request may
reasonably request;
(e) as expeditiously as practicable, use its best efforts to
register or qualify EVI Common Stock covered by such registration
statement under such other securities laws of such United States
jurisdictions as such underwriters, if any, or the Shareholders making
such request shall reasonably request (considering the nature and size of
the offering) and do any and all other acts and things which may be
necessary or desirable to enable the Shareholders making such request to
consummate the public sale or other disposition in such jurisdictions of
EVI Common Stock owned by such Shareholders; provided, however, that the
Company shall not be required to qualify to transact business as a foreign
corporation in any jurisdiction in which it would otherwise not be
required to be so qualified or to take any action which would subject it
to general service of process in any jurisdiction in which it is not then
so subject;
(f) in the case of a registration pursuant to Section 6.1
hereof, enter into an underwriting or purchase agreement having customary
terms (including customary indemnification of the underwriters or
purchasers by EVI) for the plan of distribution specified in a notice
given pursuant to Section 6.1(a) hereof (it being understood that any
legal opinions and closing certificates contemplated by such underwriting
or purchase agreement shall also be addressed to the Shareholders whose
EVI Common Stock is included in the registration statement);
(g) bear all Registration Expenses in connection with all
registrations hereunder; provided, however, that all Selling Expenses of
EVI Common Stock held by the Shareholders and all fees and disbursements
of counsel for the Shareholders in connection with each registration
pursuant to this Agreement shall be borne by such Shareholders pro rata in
proportion to the number of shares of EVI Common Stock covered thereby
being sold or in such proportion as they may agree; and
(h) keep each registration pursuant to Section 6.1 hereof
effective for a period of up to 45 days or such shorter period of time
until the transfer or sale of all EVI Common Stock so registered has been
completed.
6.4 Indemnification.
(a) In the event of a registration of any EVI Common Stock
under the Securities Act pursuant to this Agreement, EVI will indemnify
and hold harmless each selling Shareholder and any other Person, if any,
who controls such selling Shareholder within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such selling Shareholder or such controlling
Person may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities or actions in respect
thereof arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such EVI Common Stock
was registered under the Securities Act, any preliminary prospectus
distributed with the consent of EVI or final prospectus contained therein,
or any amendment thereof or supplement thereto, including all documents
incorporated by reference therein, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such Shareholder and each such
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that EVI will not
be liable in any the case of any Shareholder to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in such registration statement, such preliminary prospectus, such final
prospectus or such amendment or supplement, including all documents
incorporated by reference therein, in reliance upon and in conformity with
written information furnished to EVI by or on behalf of such Shareholder
or a controlling Person of such Shareholder specifically for use in the
preparation thereof.
(b) In the event of any registration of any EVI Common Stock
under the Securities Act pursuant to this Agreement, each selling
Shareholder of such EVI Common Stock will severally indemnify and hold
harmless EVI and each Person, if any, who controls EVI within the meaning
of Section 15 of the Securities Act, each officer of EVI who signs the
registration statement, each director of EVI and each underwriter (if any)
and each Person who controls any underwriter (if any) within the meaning
of Section 15 of the Securities Act, against any and all such losses,
claims, damages, liabilities or actions which EVI or such officer,
director, underwriter (if any) or controlling Person may become subject
under the Securities Act or otherwise, and will reimburse EVI, each such
officer, director, underwriter (if any) and controlling Person for any
legal or any other expenses reasonably incurred by such party in
connection with investigating or defending any such loss, claim, damage,
liability or action, to the extent (a) such loss, claim, damage, liability
or action in respect thereof arises out of or is based upon any untrue
statement or alleged untrue statement of any material fact contained in
any such registration statement or any such prospectus, or any amendment
thereof or supplement thereto, or arises out of or is based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (b) any such statement or omission of a material fact was
made in reliance upon and in conformity with written information furnished
to EVI by or on behalf of such Shareholder specifically for use in
connection with the preparation of such registration statement or
prospectus. In connection with any transaction contemplated by
Section 6.2 hereof, the Shareholders also agree to indemnify each such
underwriter and each Person who controls any such underwriter within the
meaning of Section 15 of the Securities Act as may reasonably and
customarily be requested by the underwriters in connection with any
underwritten offering of such EVI Common Stock.
(c) Promptly after receipt by any indemnified Person of notice
of any claim or commencement of any action in respect of which indemnity
is to be sought against an indemnifying Person pursuant to this Agreement,
such indemnified Person shall notify the indemnifying Person in writing of
such claim or of the commencement of such action, and, subject to
provisions hereinafter stated, in case any such action shall be brought
against an indemnified Person and such indemnifying Person shall have been
notified of the same, such indemnifying Person shall be entitled to
participate therein, and, to the extent it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
Person, and after notice from the indemnifying Person to such indemnified
Person of its election to assume the defense thereof, such indemnifying
Person shall not be liable to such indemnified Person in connection with
expenses incurred in the defense thereof; provided, however, if there
exists or will exist a conflict of interest which would make it
inappropriate in the reasonable judgment of the indemnified Person for the
same counsel to represent both the indemnified Person and such
indemnifying Person then such indemnified Person shall be entitled to
retain its own counsel at the expense of such indemnifying Person;
provided further, however, the indemnifying Person shall not be required
to pay for more than one separate counsel for all of the indemnified
Persons in addition to any local counsel.
6.5 Termination. If Rule 144 or Rule 145 as promulgated under the
Securities Act or any successor or similar rule or statute shall permit
the sale in a single transaction of all of the shares of EVI Common Stock
of a Shareholder in compliance with the conditions thereof and the
provisions thereof, the rights of such Shareholder as to registration
provided for in Sections 6.1 and 6.2 of this Agreement as to such EVI
Common Stock shall terminate immediately; provided, however, this
Section 6.5 shall not apply to Christiana as long as Christiana holds at
least 5% of the total issued and outstanding shares of EVI Common Stock.
ARTICLE 7
ESCROW SHARES
7.1 Holdback of Escrow Shares. EVI or, at EVI's election, the
Surviving Corporation, shall hold the Escrow Shares as security for the
indemnification and the other obligations of the Shareholders to EVI,
Grant and the Surviving Corporation and each of their respective
successors and assigns hereunder, including without limitation, the
reimbursement obligation of the Shareholders under Section 11.5 hereof.
Any cash dividends and distributions that may be issued in respect of the
Escrow Shares will be held by a third party mutually agreed upon by the
Shareholders' Representative and EVI or the Surviving Corporation pursuant
to an escrow agreement reasonably satisfactory to EVI and the
Shareholders' Representative.
7.2 Time Period of Holdback. The Escrow Shares shall be held by EVI
or the Surviving Corporation for a period of 12 months following the
Effective Date; provided, however, if as of such date EVI, Grant and the
Surviving Corporation and each of their respective Affiliates, officers,
directors, employees, agents, shareholders and controlling Persons and
their respective successors and assigns shall have made a claim for
indemnification or payment pursuant to Article 11 hereof which has not
been finally resolved by such date, EVI or the Surviving Corporation shall
continue to hold the Escrow Shares until all such claims under Article 11
shall have been finally resolved in accordance therewith. Notwithstanding
the foregoing, each Shareholder shall be entitled to receive that portion
of the Escrow Shares and any dividends or distributions with respect
thereto relating to such Shareholder's Escrow Shares that have not been
made the subject of a claim for indemnification if such Shareholder shall
have delivered to EVI an amount of cash equal to the product of the number
of Escrow Shares of such Shareholder then held by EVI or the Surviving
Corporation multiplied by the Market Price. In addition, if a claim for
indemnification or payment pursuant to Article 11 hereof has been made
against any of the Shareholders at any time during the 12 months following
the Effective Date and such claim shall not have been finally resolved by
such date, a Shareholder shall also be entitled to receive such portion of
the Escrow Shares as shall have been determined in good faith by EVI as
not being necessary to satisfy any unresolved outstanding claim under
Article 11 hereof.
7.3 Claims Against Escrow. Each Shareholder agrees that EVI, Grant
and the Surviving Corporation and each of their respective successors and
assigns may make a claim against the Escrow Shares (and any dividends or
distributions paid in respect thereof after the Effective Time or cash
received in exchange therefor) of such Shareholder on account of any
obligation for indemnification or payment by such Shareholder under
Article 11. Any claims on account of any breach or misrepresentation of
the representations and warranties in Article 2 hereof shall be borne
62.8% by Christiana, 12.6% by Chunn, 11.7% by Hamilton and 12.9% by
Morris. Any claim on account of the breach or misrepresentation by a
Shareholder of the representations and warranties of the Shareholder under
Article 3 hereof or on account of any breach of any covenant or agreement
of a Shareholder shall be borne entirely by that Shareholder. For
purposes of such a claim, the Escrow Shares shall be valued at the average
of the closing sales prices of a share of EVI Common Stock as reported by
the principal stock exchange on which the EVI Common Stock is then listed,
or if the EVI Common Stock is not then listed, the average of the bid and
asked prices of a share of EVI Common Stock as reported by The Nasdaq
Stock Market, in each case, for the 20 consecutive trading days
immediately prior to the date such a claim is paid. Any dividend or other
distributions with respect to the EVI Common Stock, or any other property,
that is held in escrow and is used to satisfy a claim by EVI, Grant and
the Surviving Corporation and each of their respective successors and
assigns pursuant to Article 11 hereof shall be valued at their fair market
value as mutually agreed between the Shareholder involved and EVI, Grant
or the Surviving Corporation, or, if such parties cannot agree, as
determined pursuant to Section 14.1 hereof.
7.4 Prohibition on Transfer. Until such time as the Escrow Shares
shall have been delivered to the Shareholders pursuant to Section 7.2
hereof, each Shareholder covenants and agrees with EVI and Grant that such
Shareholder will not sell, transfer, pledge, assign, hypothecate or
otherwise dispose of, or enter into any contract, option or other
agreement or understanding (either written or oral) with respect to the
sale, transfer, pledge, assignment, hypothecation or other disposition of
any Escrow Shares or any dividends or distributions that may be declared
or paid in respect thereof.
7.5 Voting of Escrow Shares. Until such time as the Escrow Shares
and any dividends or distributions received in respect thereof shall have
been delivered to EVI pursuant to this Article 7, each Shareholder shall
be entitled to vote the Escrow Shares and any other voting securities of
such Shareholder held in escrow.
7.6 No Interest. No interest shall be payable with respect to any
cash or other property of any Shareholder, including the Escrow Shares,
that may be held pursuant to this Article 7.
ARTICLE 8
CONDITIONS TO EVI'S AND GRANT'S OBLIGATIONS
The obligations of EVI and Grant to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or
waiver by EVI and Grant) on or prior to the Closing of all of the
following conditions:
8.1 Accuracy of Representations and Warranties. The representations
and warranties of the Company and the Shareholders set forth in this
Agreement shall be true and correct in all respects as of the date when
made and at and as of the Closing, other than inaccuracies in the
representations and warranties which in the aggregate would not have a
financial impact of $100,000 or more or otherwise have a Material Adverse
Effect on the Company.
8.2 Performance of Covenants and Agreements. The Company and each
of the Shareholders shall have duly performed and complied in all respects
with the covenants, agreements and conditions required by this Agreement
to be performed by or complied with by them prior to or at the Effective
Time. None of the events or conditions entitling EVI or Grant to
terminate this Agreement under Article 10 hereof shall have occurred and
be continuing.
8.3 Working Capital of the Company. The Working Capital of the
Company shall not be less than the Target Working Capital and Funded Debt
shall not be greater than the Target Funded Debt, in each case as
determined based on the most recent financial information available to the
Company and adjusted for known changes since the date of such financial
information, each as certified in good faith by the Chief Financial
Officer of the Company and stating in such certification that, to the
knowledge of such officer, such officer has no reason to believe that the
Working Capital is less than the Target Working Capital or that Funded
Debt is greater than the Target Funded Debt.
8.4 Consents. Except for any consent required under the BankAmerica
Business Credit Facility or the reimbursement agreement with Firstar Bank
Milwaukee, N.A., each listed on Schedule 2.11(a) hereto, all Material
Consents and any other consent required for the consummation of the Merger
under any agreement, contract, license or other instrument described in
any exhibit or schedule of the Company or the Shareholders hereto,
including those contracts listed on Schedule 2.11 hereto, or for the
continued enjoyment by the Surviving Corporation of the benefits of any
such agreement, contract, license or other instrument after the Merger
(other than the insurance policies identified as being subject to
termination as provided in Section 2.10 hereof), shall have been obtained
and be effective.
8.5 Governmental Approvals. All necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities (other than
governmental consents, of which the failure to obtain would not prohibit
the Merger or have a Material Adverse Effect on the Company) and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity shall have been obtained,
made or lapsed and shall be in full force and effect.
8.6 Resignation of Directors and Officers. EVI and Grant shall have
received from the Company letters of resignation effective as of the
Effective Date from (a) the directors and officers of the Company
(provided, however, such resignation shall not be deemed to constitute a
resignation of any employment relationship with the Company) and (b) the
fiduciaries of the employee benefit plans of the Company as Grant shall
have designated by notice prior to the Closing.
8.7 Resolutions. EVI and Grant shall have received certified copies
of resolutions of the Board of Directors of the Company and Shareholders
approving this Agreement, the Merger and the transactions contemplated
hereby.
8.8 Certificates. EVI and Grant shall have received certificates on
behalf of the Company by the President of the Company, in his corporate
capacity, and executed by each of the Shareholders, as to compliance with
the matters set forth in Sections 8.1 and 8.2 hereof, and in the case of
the Company's certificate, Section 8.3 of this Agreement.
8.9 Opinion of Counsel. EVI and Grant shall have received an
opinion of counsel to the Company and the Shareholders in substantially
the form attached hereto as Exhibit 8.9.
8.10 Tax Matters. There shall have occurred no change in law that
would result in the Merger as currently structured not being treated as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
8.11 Material Adverse Effect. Since March 31, 1995, there shall not
have been any Material Adverse Effect on the Company.
ARTICLE 9
CONDITIONS TO THE COMPANY'S AND THE
SHAREHOLDERS' OBLIGATIONS
The obligations of the Company and the Shareholders to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by the Company and the Shareholders) on or prior
to the Closing of all of the following conditions:
9.1 Accuracy of Representations and Warranties. The representations
and warranties of EVI and Grant set forth in this Agreement shall be true
and correct in all respects as of the date when made and at and as of the
Closing, other than inaccuracies in the representations and warranties
which in the aggregate would not have a financial impact of $100,000 or
more or otherwise have a Material Adverse Effect on EVI and its
Subsidiaries taken as a whole.
9.2 Performance of Covenants and Agreements. EVI and Grant shall
have duly performed and complied in all respects with the covenants,
agreements and conditions required by this Agreement to be performed by or
complied with by it prior to or at the Effective Time. None of the events
or conditions entitling the Company to terminate this Agreement under
Article 10 hereof shall have occurred and be continuing.
9.3 Governmental Approvals. All necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity shall have been obtained,
made or lapsed and shall be in full force and effect.
9.4 Consents. Any consent required for the consummation of the
Merger under any agreement, contract, license or other instrument
described in any exhibit hereto or referred to herein shall have been
obtained and be effective.
9.5 Opinion of Counsel. The Company and the Shareholders shall have
received an opinion of counsel to EVI and Grant in substantially the form
attached hereto as Exhibit 9.5.
9.6 NYSE Listing. The EVI Common Stock issued pursuant to this
Agreement shall have been listed on the NYSE subject to official notice of
issuance.
9.7 Tax Matters. There shall have occurred no change in law that
would result in the Merger as currently structured not being treated as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
9.8 Material Adverse Effect. Except as disclosed or contemplated in
the SEC Documents, since March 31, 1995, there shall not have been any
Material Adverse Effect on EVI and its Subsidiaries, taken as a whole.
ARTICLE 10
TERMINATION PRIOR TO CLOSING
10.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) By the mutual written consent of EVI, Grant and the
Company; or
(b) By any of EVI, Grant or the Company in writing if the
Merger shall not have been consummated on or before November 17, 1995,
unless the failure to consummate the Merger is the result of a Default by
the party (with EVI and Grant collectively being deemed a party and the
Company and the Shareholders collectively being deemed a party) seeking to
terminate this Agreement; or
(c) By EVI or Grant in writing if the Company or any
Shareholder shall be in Default; or
(d) By the Company in writing if EVI or Grant shall be in
Default; or
(e) By any of EVI, Grant or the Company in writing if any Court
of competent jurisdiction or any Governmental Entity shall have issued an
order, decree or ruling enjoining, restraining or otherwise prohibiting
the consummation of the Merger or shall have authorized the filing or
taking of any action seeking to enjoin, restrain or otherwise prohibit the
consummation of the Merger;
(f) By EVI or Christiana in writing if the average closing sale
price per share of the EVI Common Stock as reported by the NYSE for the
20 consecutive trading days immediately prior to the third trading day
prior to the date of Closing is less than $11.00 (such price to be
adjusted for stock splits, reclassifications and recapitalizations in the
same manner as the thresholds in Section 1.3(f) hereto are to be
adjusted); or
(g) By Christiana in writing if the average closing sale price
per share of the EVI Common Stock as reported by the NYSE for the
20 consecutive trading days immediately prior to the third trading day
prior to the date of Closing is greater than $19.00 (such price to be
adjusted for stock splits, reclassifications and recapitalizations in the
same manner as the thresholds in Section 1.3(f) hereto are to be
adjusted).
10.2 Effect on Obligations. Termination of this Agreement pursuant to
this Article 10 shall terminate all obligations of the parties
hereunder; provided, however, that termination pursuant to clauses (c) or
(d) of Section 10.1 hereof shall not relieve any defaulting party from any
liability to the other parties hereto; and provided further that the
Confidentiality Agreement and the confidentiality agreements referred to
in Section 5.5(c)(ii) hereof shall continue in full force and effect.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by the Shareholders. Except as otherwise
limited by this Article 11 and Article 12 hereof, each Shareholder
severally and not jointly agrees to indemnify, defend and hold EVI, Grant
and the Surviving Corporation and each of their respective Affiliates,
officers, directors, employees, agents, shareholders and controlling
Persons and their respective successors and assigns harmless from and
against and in respect of Damages actually suffered, incurred or realized
by such party (collectively, "General Grant Losses"), arising out of or
resulting from or relating to any misrepresentation, breach of warranty or
breach of any covenant or agreement made or undertaken by the Company or
such Shareholder in this Agreement.
11.2 Environmental Indemnification. Except as otherwise limited by
this Article 11, each Shareholder jointly and severally agrees to
indemnify, defend and hold EVI, Grant and the Surviving Corporation and
each of their respective Affiliates, officers, directors, employees,
agents, shareholders and controlling Persons and their respective
successors and assigns harmless from and against and in respect of any and
all Environmental Liabilities that may be imposed upon or incurred by EVI,
Grant or the Surviving Corporation or their respective Affiliates,
officers, directors, employees, agents, shareholders and controlling
Persons or their respective successors and assigns, arising out of or in
connection with (a) the acts or omissions of any Person prior to the
Effective Time relating to the Company, any business currently or
previously conducted by the Company, the Assets, the operations currently
or previously conducted by the Company on any other assets or properties
currently or previously leased or owned by the Company, the Facilities or
any business currently or previously conducted at the Facilities; or
(b) any breach by the Company or any Shareholder of a representation or
warranty contained in Section 2.14 hereof (collectively, "Environmental
Losses"). Any claim for indemnification under this Section 11.2 must be
made within three years after the Effective Date.
11.3 Tax Indemnification. Except as otherwise limited by this
Article 11, each Shareholder jointly and severally agrees to indemnify,
defend and hold EVI, Grant and the Surviving Corporation and each of their
respective officers, directors, employees, agents, shareholders and
controlling Persons and their respective successors and assigns harmless
from and against and in respect of Damages actually suffered, incurred or
realized by such party arising out of or resulting from or relating to any
Taxes or Tax Returns of the Company or its Subsidiaries for any period, or
portion thereof, up to and including the Effective Date to the extent such
Damages exceed the amount, if any, of the Company's reserve for unpaid
Taxes as reflected in the Effective Date Balance Sheet (collectively, "Tax
Losses"). Any claim for indemnification under this Section 11.3 must be
made within three years after the date of the filing of the Company's
Federal Tax Return for the period ending on the Effective Date.
11.4 Products Liability and Warranty Indemnification. Except as
otherwise limited by this Article 11, each Shareholder jointly and
severally agrees to indemnify, defend and hold EVI, Grant and the
Surviving Corporation and each of their respective officers, directors,
employees, agents, shareholders and controlling Persons and their
respective successors and assigns harmless from and against and in respect
of Damages actually suffered, incurred or realized by such party arising
out of or resulting from or relating to any products manufactured, sold or
distributed or services provided by or on behalf of the Company on or
prior to the Effective Date or with respect to any claims made pursuant to
warranties to third Persons in connection with products manufactured, sold
or distributed or services provided by or on behalf of the Company on or
prior to the Effective Date to the extent such Damages exceed the amount,
if any, of the Company's warranty reserve as reflected in the closing
balance sheet of the Company as of immediately prior to the Effective Time
(collectively, "Product Losses"). Any claim for indemnification under
this Section 11.4 must be made within two years after the Effective Date.
11.5 Working Capital Shortfall; Labor Matters.
(a) If the Working Capital of the Company immediately prior to
the Effective Time is less than the Target Working Capital or if Funded
Debt exceeds the Target Funded Debt, the Shareholders jointly and
severally agree to pay to EVI or, at the discretion of EVI, to the
Surviving Corporation, an amount of cash or shares of EVI Common Stock
having an aggregate Market Price equal to the Shortfall Amount. The
Working Capital and Funded Debt of the Company shall be based upon the
consolidated balance sheet of the Company and its Subsidiaries as of the
Effective Date (the "Effective Date Balance Sheet"), prepared in
accordance with this Section 11.5.
(b) As promptly as practicable, but not more than 45 days,
after the Effective Date, the Company shall cause to be prepared and
delivered to the Shareholders' Representative the Effective Date Balance
Sheet. The Effective Date Balance Sheet shall be prepared in accordance
with generally accepted accounting principles consistently applied by the
Company. EVI shall provide the Shareholders' Representative with access
to copies of all work papers and other relevant documents to verify the
entries contained in the Effective Date Balance Sheet. The Shareholders
shall have a period of 21 calendar days after delivery to them of the
Effective Date Balance Sheet to review it and to make any objections the
Shareholders may have in writing to EVI. Any objections shall require the
consent of the Shareholders' Representative. If written objections to the
Effective Date Balance Sheet are delivered to EVI within such 21 day
period, then EVI and the Shareholders shall attempt to resolve the matter
or matters in dispute. If no written objections are made within the time
period provided above, the Effective Date Balance Sheet shall be deemed
accepted by the Shareholders and shall be final and binding.
(c) If disputes with respect to the Effective Date Balance
Sheet cannot be resolved by EVI and the Shareholders' Representative
within 15 calendar days after the delivery of the objections to the
Effective Date Balance Sheet, then the specific matters in dispute shall
be submitted to Arthur Andersen LLP or such other independent accounting
firm as may be approved by EVI and the Shareholders who held a majority of
the outstanding shares of Common Stock immediately prior to the Merger,
which firm shall render its opinion as to such matters. Based on such
opinion, such accounting firm will send to EVI and the Shareholders'
Representative its determination on the specific matters in dispute, and
its calculation of Working Capital and Funded Debt, which determination
shall be final and binding on the parties hereto. Any disputes with
respect to legal matters and matters outside the expertise of the
independent accounting firm, shall be resolved by arbitration pursuant to
the provisions of this Agreement.
(d) The Shareholders shall promptly pay to EVI any amounts due
pursuant to this Section 11.5 upon the determination thereof in accordance
with the provisions of this Section 11.5.
(e) The fees and expenses of the independent accounting firm
appointed pursuant to Section 11.5(c) hereof shall be borne 50% by EVI and
50% by the Shareholders.
(f) Except as otherwise limited by this Article 11, each
Shareholder jointly and severally agrees to indemnify, defend and hold
EVI, Grant and the Surviving Corporation and each of their respective
officers, directors, employees, agents, shareholders and controlling
Persons and their respective successors and assigns harmless from and
against and in respect of Damages actually suffered, incurred or realized
by such party arising out of or resulting from or relating to the matters
identified as "Excepted Matters" on Schedule 2.7 (collectively, "Labor
Losses"). Any claim for indemnification under this Section 11.5(f) must
be made within three years after the Effective Date.
11.6 Indemnification by EVI. Except as otherwise limited by this
Article 11 and Article 12 hereof, EVI agrees to indemnify, defend and hold
the Shareholders harmless from and against and in respect of Damages
actually suffered, incurred or realized by such Shareholder (collectively,
"Shareholder Losses"), arising out of or resulting from any
misrepresentation, breach of warranty or breach of any covenant or
agreement made or undertaken by EVI or Grant in this Agreement or any
misrepresentation in or omission from any other agreement, certificate,
schedule, exhibit or writing delivered to the Shareholders pursuant to
this Agreement.
11.7 Baskets. The following baskets apply to indemnification
recoverable under this Article 11; provided, however, such dollar
thresholds shall not apply to indemnification under Section 11.5 of this
Agreement:
(a) There shall be no indemnification recoverable against the
Shareholders under Section 11.1 hereof for any misrepresentation or breach
of warranty, for Environmental Losses under Section 11.2 hereof and for
Product Losses under Section 11.4 hereof, until Damages subject to
indemnification under all such sections combined exceed $250,000 in the
aggregate and then only for Damages in excess of such amount;
(b) There shall be no indemnification recoverable against the
Shareholders under Section 11.3 hereof until Damages subject to
indemnification thereunder exceed $250,000 in the aggregate and then only
for Damages in excess of such amount; and
(c) There shall be no indemnification recoverable against EVI
under Section 11.6 hereof for any misrepresentation or breach of warranty,
until Damages subject to indemnification thereunder exceed $250,000 in the
aggregate and then only for Damages in excess of such amount.
11.8 Limitation.
(a) The maximum amount of Damages that an indemnified Person
may recover against the Shareholders on account of indemnification for all
misrepresentations and breaches of warranties pursuant to Section 11.1
hereof and for claims pursuant to Sections 11.2, 11.4 and 11.5(f) hereof
shall be $5,000,000 for all such Sections combined; provided, however,
there shall be no such limit on the amount of Damages recoverable as a
result of the Company's or a Shareholder's breach of the representations
and warranties in Sections 2.2, 2.3(a), 2.3(b)(iii), 2.4(a), 2.8(a)-(d)
(other than as set forth in Schedule 11.8 hereto), 2.12, the first and
last three sentences of 2.13, 3.1, 3.2, 3.3, 3.4, 3.7 or 3.8 of this
Agreement or for any breach of any covenant or agreement contained herein.
(b) The maximum amount of Damages that EVI, Grant or the
Surviving Corporation may recover against the Shareholders on account of
indemnification pursuant to Section 11.5 hereof shall be an amount equal
to 15% of the product of (a) the number of shares of EVI Common Stock
issued to the Shareholders pursuant to the Merger (including EVI Common
Stock placed in escrow) and (b) the Market Price. This amount shall be in
addition to the limitations provided in Section 11.8(a) hereof.
(c) The maximum amount of Damages that a Shareholder may
recover against EVI or Grant on account of indemnification for any
misrepresentation or breach of warranty pursuant to Section 11.6 hereof
shall be an amount equal to the product of (i) the number of shares of EVI
Common Stock issued to such Shareholder pursuant to the Merger and
(ii) the Market Price.
11.9 Procedure. All claims for indemnification or payment under this
Article 11 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of
any matter which an Indemnitee has determined has given or could give rise
to a right of indemnification under this Agreement, stating the amount of
the Loss, if known, and method of computation thereof, all with reasonable
particularity, and stating with particularity the nature of such matter.
Failure to provide such notice shall not affect the right of the
Indemnitee to indemnification except to the extent such failure shall have
resulted in liability to the Indemnitor that could have been actually
avoided had such notice been provided within such required time period.
(b) The obligations and liabilities of an Indemnitor under this
Article 11 with respect to Losses arising from claims of any third party
that are subject to the indemnification provided for in this Article 11
("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions: if an Indemnitee shall receive
notice of any Third Party Claim, the Indemnitee shall give the Indemnitor
prompt notice of such Third Party Claim and the Indemnitor may, at its
option, assume and control the defense of such Third Party Claim at the
Indemnitor's expense and through counsel of the Indemnitor's choice
reasonably acceptable to Indemnitee. In the event the Indemnitor assumes
the defense against any such Third Party Claim as provided above, the
Indemnitee shall have the right to participate at its own expense in the
defense of such asserted liability, shall cooperate with the Indemnitor in
such defense and will attempt to make available on a reasonable basis to
the Indemnitor all witnesses, pertinent records, materials and information
in its possession or under its control relating thereto as is reasonably
required by the Indemnitor. In the event the Indemnitor does not elect to
conduct the defense against any such Third Party Claim, the Indemnitor
shall cooperate with the Indemnitee (and be entitled to participate) in
such defense and attempt to make available to it on a reasonable basis all
such witnesses, records, materials and information in its possession or
under its control relating thereto as is reasonably required by the
Indemnitee. The Indemnitor understands that if such Third Party Claim
results in an obligation to indemnify hereunder, Damages shall include all
reasonable costs and expenses of such defense. Except for the settlement
of a Third Party Claim that involves the payment of money only and for
which the Indemnitee is totally indemnified by the Indemnitor, no Third
Party Claim may be settled without the written consent of the Indemnitee.
(c) If a claim for indemnity is provided pursuant to this
Article 11 by an Indemnitee and the Indemnitor does not pay such claim or
object to such claim within 20 Business Days after notice is received by
the Indemnitor (in the case of the Shareholders, an objection by the
Shareholders' Representative will be deemed to satisfy this requirement),
such claim shall be deemed agreed to by the Indemnitor. If the Indemnitor
shall object to such claim, a written notice of such objection setting
forth in reasonable detail the basis for such objection shall be provided
to the Indemnitee and such dispute shall be resolved in accordance with
Section 14.1 hereof. In addition, if the claim shall have been determined
to have been a valid claim, Damages shall include interest at the prime
rate as quoted from time to time by Texas Commerce Bank (Houston), N.A.
(the "Prime Rate") from the date the claim is first made until fully paid.
(d) No claims for indemnification may be made by any of the
parties if this Agreement terminates prior to Closing; provided, however,
this provision shall not prohibit a party from taking action for any
breach of this Agreement.
11.10 Payment.
(a) Payment of any amounts due pursuant to this Article 11
shall be made within ten Business Days after notice is sent by the
Indemnitee.
(b) With respect to amounts due pursuant to Section 11.1
hereof, the Indemnitor has the option to satisfy such indemnification
claim with Escrow Shares to the extent such shares are sufficient to pay
the amount, and otherwise shall be paid in cash. The value of such shares
shall be determined in accordance with Section 7.3 hereof.
(c) With respect to amounts due pursuant to Sections 11.2, 11.3
and 11.4 hereof, the Indemnitor has the option to satisfy such
indemnification claim with shares of EVI Common Stock not under escrow to
the extent such shares are sufficient to pay the amount, and otherwise
shall be paid in cash. The value of such shares shall be determined in
accordance with Section 7.3 hereof.
11.11 Adjustment of Liability. The amount which an Indemnitee
shall be entitled to receive from an Indemnitor with respect to a Loss
under this Article 11 shall be net of any insurance recovery by the
Indemnitee on account of such Loss from an unaffiliated party. Any tax
benefit actually realized by an Indemnitee on an account of a Loss that is
fully indemnified by an Indemnitor shall be paid to the Indemnitor when
and if such benefit is actually realized and then only to the extent such
benefit is attributable to the indemnified portion of the Loss. The
benefit actually realized shall be based on the Federal Tax Returns of the
Indemnitee and any benefit shall not be considered realized unless and
until the Tax Return reflecting such benefit is filed. To the extent such
benefit is disallowed or reduced in connection with any audit, the
Indemnitor shall promptly refund the amount of the benefit so disallowed
or reduced.
11.12 Failure to Pay Indemnification. If and to the extent the
Indemnitee shall make written demand upon the Indemnitor for
indemnification pursuant to this Article 11 and the Indemnitor shall
refuse or fail to pay in full within ten Business Days of such written
demand the amounts demanded pursuant hereto and in accordance herewith,
then the Indemnitee shall proceed in accordance with the arbitration
provisions of Section 14.1 hereof; provided, however, that in the case of
indemnification for a Third Party Claim, such matter need not be resolved
by arbitration until the underlying Third Party Claim is finally resolved.
11.13 Express Negligence. THE INDEMNIFICATION TO BE PROVIDED BY
THE SHAREHOLDERS PURSUANT TO THIS ARTICLE 11 FOR MATTERS RELATING TO THE
COMPANY OR REPRESENTATIONS REGARDING THE COMPANY SHALL APPLY
NOTWITHSTANDING SUCH MATTERS OR REPRESENTATIONS MAY RELATE TO THE
NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR VIOLATION OF LAW BY
THE COMPANY, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
11.14 Cooperation. The Indemnitor and the Indemnitee shall
cooperate with each other with regard to any indemnification obligation
under this Article 11 and each shall attempt to make available to the
other on a reasonable basis all personnel, records, materials and
information in its possession or under its control as is reasonably
requested by the other.
11.15 Waiver of Breaches. To the extent there exists a breach of
representation or warranty or breach of covenant that is expressly waived
in writing on or before the Closing or pursuant to the provisions of this
Section 11.15, no claim for indemnification under this Article 11 may be
made in respect of such breach. To the extent written notice is given by
the Company and the Shareholders, on the one hand, to EVI or Grant, on the
other hand, or by EVI and Grant, on the one hand, to the Company and the
Shareholders, on the other hand, on or prior to the Closing specifying in
reasonable detail a specific breach of representation or warranty or
breach of covenant by such party or parties and the parties receiving such
notice elect to close the transactions contemplated hereby notwithstanding
such breach of representation or warranty or breach of covenant, unless
otherwise agreed to by the affected parties, such breach shall be deemed
to have been waived. Nothing in this Section 11.15, however, shall limit
the right of any party hereto to elect not to close as a result of such
breach and to seek damages for such breach.
11.16 Exclusivity. From and after the Closing, the rights and
remedies provided for under this Article 11 with respect to matters set
forth herein shall be the exclusive rights and remedies for such matters
and any and all disputes with respect to such matters shall be resolved in
accordance with the arbitration provisions set forth herein.
ARTICLE 12
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS,WARRANTIES AND AGREEMENTS
The several representations and warranties of the parties to this
Agreement shall survive the Closing and shall remain in full force and
effect for a period of 12 months following the Closing (except that
(a) the representations and warranties set forth in Sections 2.2, 2.3(a),
2.3(b)(iii), 2.4(a), 2.8(a)-(d) (other than as set forth in Schedule 11.8
hereto), the first sentence and last three sentences of 2.13, 3.2, 3.3,
3.4, 3.7, 3.8, 4.2 and 4.4 hereof shall survive the Closing without
limitation, (b) the representations and warranties set forth in
Section 2.14 shall survive the Closing and shall not terminate until three
years thereafter, (c) the representations and warranties set forth in
Section 2.16 shall survive the Closing and shall not terminate until three
years after the date of the filing of the Company's Federal Tax Return for
the period ending on the Effective Date and (d) the representations and
warranties contained in Sections 2.12, 3.1, 4.5 and 5.13 hereof shall
survive the Closing and shall not terminate until 20 days after the
expiration of all applicable statutes of limitations (including any and
all extensions thereof)) (the period during which the representations and
warranties shall survive being referred to herein with respect to such
representations and warranties as the "Survival Period"), and shall be
effective with respect to any inaccuracy therein or breach thereof (and a
claim for indemnification under Article 11 hereof may be made thereon) if
a written notice asserting the claim shall have been duly given in
accordance with Article 11 hereof within the Survival Period with respect
to such matter. Any claim for indemnification made during the Survival
Period shall be valid and the representations and warranties relating
thereto shall remain in effect for purposes of such indemnification
notwithstanding the fact that such claim may not be resolved within the
Survival Period. All representations, warranties and covenants and
agreements made by the parties shall not be affected by any investigation
heretofore or hereafter made by and on behalf of any of them and shall not
be deemed merged into any instruments or agreements delivered in
connection with the Closing or otherwise in connection with the
transactions contemplated hereby. Except for the covenants and agreements
set forth in Sections 5.1(a), 5.2, 5.3, 5.4, 5.5(b) and 5.6 hereof, which
shall survive for a period of 12 months following the date of Closing, or
as otherwise expressly provided herein, the covenants and agreements
entered into pursuant to this Agreement shall survive the Closing without
limitation. Any claim for indemnification made by EVI, Grant or the
Surviving Corporation or their respective Affiliates, officers, directors,
employees, agents, shareholders or controlling Persons or their respective
successors and assigns with respect to any matter subject to
Sections 11.1, 11.2, 11.3, 11.4 or 11.5 hereof shall be asserted against
the Shareholders and the Shareholders hereby expressly acknowledge and
agree that they shall be liable and responsible therefor and that they
shall not seek or receive indemnification or contribution from the Company
or the Surviving Corporation with respect to such matters.
ARTICLE 13
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
given to them in this Article 13 unless defined elsewhere in this
Agreement.
13.1 "Affiliate" shall mean with respect to any Person, an individual
or entity that, directly or indirectly, controls, is controlled by or is
under common control with such Person.
13.2 "Agreement" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.3 "Assets" shall mean all the assets and properties owned by the
Company, tangible and intangible, real, personal and mixed.
13.4 "Benefit Plan" shall mean any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical dependent care, cafeteria, employee assistance,
scholarship program or other plan, arrangement or understanding (whether
or not legally binding) providing benefits to any current or former
employee or director of the Company.
13.5 "Business Day" shall mean any day other than Saturday, Sunday or
other day on which federally chartered commercial banks in Houston, Texas
are authorized or required by law to close.
13.6 "CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
13.7 "Christiana" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.8 "Chunn" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.9 "Closing" shall have the meaning such term is given in
Section 1.2 hereof.
13.10 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
13.11 "Commission" shall mean the United States Securities and
Exchange Commission.
13.12 "Common Stock" shall mean the common stock, $.10 par value,
of the Company.
13.13 "Company" shall have the meaning such term is given in the
introductory paragraph to this Agreement; provided, however, that for
purposes of the representations and warranties in Section 2 hereof and the
covenants in Section 5 hereof, unless the context otherwise requires, all
references to the Company shall mean the Company and its Subsidiaries.
13.14 "Company HSR Documents" shall have the meaning such term is
given in Section 5.5(c)(ii) hereof.
13.15 "Confidentiality Agreement" shall mean each of the letter
agreements dated August 15, 1994, between EVI and the Company.
13.16 "Conversion Rate" shall have the meaning such term is given
in Section 1.3(a) hereof.
13.17 "Damages" shall mean any and all liabilities, losses,
damages, demands, assessments, claims, costs and expenses (including
interest, awards, judgments, penalties, settlements, fines, costs of
remediation, diminutions in value, costs and expenses incurred in
connection with investigating and defending any claims or causes of action
(including, without limitation, attorneys' fees and expenses and all fees
and expenses of consultants and other professionals)); provided, however,
Damages shall not include consequential, incidental, special, exemplary or
punitive damages.
13.18 "Default" shall mean, as to any party to this Agreement,
(a) a default by such party in the performance of any of its material
obligations hereunder and the continuation of such default for a period of
15 Business Days after written notice is delivered by Grant or EVI (in the
case of a default by the Company or the Shareholders) or by the Company or
the Shareholders (in the case of a default by Grant or EVI) to the
defaulting party that a default has occurred or (b) the material breach of
any representation or warranty of such party hereunder and the
continuation of such breach for a period of 15 Business Days after written
notice is delivered by Grant or EVI (in the case of a breach by the
Company or the Shareholders) or by the Company or the Shareholders (in the
case of a breach by Grant or EVI) to the breaching party that a breach has
occurred.
13.19 "Effective Date" shall have the meaning such term is given
in Section 1.2 hereof.
13.20 "Effective Time" shall mean the date and time when the
Merger shall become effective.
13.21 "Encumbrance" shall mean any security interest, mortgage,
pledge, trust, claim, lien, charge, option, defect, restriction,
encumbrance or other right or interest of any third Person of any nature
whatsoever.
13.22 "Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any
Governmental Entity pertaining to the environment heretofore or currently
in effect in any and all jurisdictions in which the Company is conducting
or at any time has conducted business, or where any of the Assets are
located, or where any hazardous substances generated by or disposed of by
the Company are located. "Environmental Laws" shall include, but not be
limited to, the Clean Air Act, as amended, CERCLA, the Federal Water
Pollution Control Act, as amended, RCRA, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, and all other laws,
statutes, ordinances, rules, regulations, orders and determinations of any
Governmental Entity relating to (a) the control of any potential pollutant
or protection of the air, water or land, (b) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation
and (c) exposure to hazardous, toxic or other substances alleged to be
harmful. The terms "hazardous substance", "release" and "threatened
release" have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in RCRA;
provided, however, that, to the extent the laws of the state in which any
Assets are or were located currently provide for a meaning for "hazardous
substance", "release", "solid waste" or "disposal" which is broader than
that specified in either CERCLA or RCRA, such broader meaning shall apply.
13.23 "Environmental Liabilities" shall mean any and all
liabilities, responsibilities, claims, suits, losses, costs (including
remediation, removal, response, abatement, clean-up, investigative or
monitoring costs and any other related costs and expenses), other causes
of action recognized now or at any later time, damages, settlements,
expenses, charges, assessments, liens, penalties, fines, pre-judgment and
post-judgment interest, attorney fees and other legal fees (a) pursuant to
any agreement, order, notice or responsibility, directive embodied in
Environmental Laws or relating to environmental matters, injunction,
judgment or similar documents (including settlements) relating to
environmental matters or (b) pursuant to any claim by a Governmental
Entity or other person for personal injury, property damage, damage to
natural resources, remediation or similar costs or expenses incurred by
such Governmental Entity or person pursuant to common law or statute.
13.24 "Environmental Losses" shall have the meaning given such
term in Section 11.2 hereof.
13.25 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
13.26 "Escrow Shares" shall have the meaning such term is given
in Section 1.4(b) hereof.
13.27 "EVI" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.28 "EVI Common Stock" shall mean the common stock, $1.00 par
value, of EVI.
13.29 "EVI HSR Documents" shall have the meaning such term is
given in Section 5.5(c)(ii) hereof.
13.30 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
13.31 "Facilities" shall mean all real property listed on
Schedule 2.8(c) hereto.
13.32 "Financial Statements" shall have the meaning such term is
given in Section 2.5 hereof.
13.33 "Funded Debt" shall mean the sum of (a) the outstanding
principal and any unpaid interest not included as a current liability as
of the Effective Time under any contract, agreement, indenture, note or
other instrument relating to the borrowing of money by or guaranteed by
the Company or any of its Subsidiaries and (b) the total amount of all
capitalized leases as of the Effective Time.
13.34 "General Grant Losses" shall have the meaning given such
term in Section 11.1 hereof.
13.35 "Governmental Entity" shall mean the United States of
America, any state, province, territory, county, city, municipality and
any subdivision thereof, any court, administrative or regulatory agency,
commission, department or body or other governmental authority or
instrumentality or any entity or Person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
13.36 "Grant" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.37 "Grant Common Stock" shall mean the common stock, $.01 par
value, of Grant.
13.38 "Hamilton" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.39 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
13.40 "Indemnitee" shall mean the Person or Persons indemnified,
or entitled, or claiming to be entitled to be indemnified or receive
property, pursuant to the provisions of Sections 11.1 through 11.6 hereof,
as the case may be.
13.41 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify or make payment pursuant to the provisions of
Sections 11.1 through 11.6 hereof, as the case may be.
13.42 "Intellectual Property" shall mean patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, copyrights, technology, know how, processes
and other proprietary intellectual property rights and computer programs.
13.43 "IRS" shall mean the United States Internal Revenue
Service.
13.44 "Knowledge" shall mean the actual knowledge, after
reasonable investigation of (a) with respect to the Company, William
Chunn, Sr., William Chunn, Jr., Jerry Wilson, Alan Feinsilber and Sealy
Morris, each an executive officer of the Company, (b) with respect to the
Shareholders, Chunn, Morris, Hamilton, Sheldon B. Lubar, as Christiana's
Chief Executive Officer, and William T. Donovan, as Christiana's Chief
Financial Officer and (c) with respect to EVI or Grant, any executive
officer of EVI or Grant; provided, however, that reasonable investigation
shall not require the retention of a third party to conduct an independent
investigation.
13.45 "Labor Losses" shall have the meaning such term is given in
Section 11.5(f) hereof.
13.46 "Losses" shall mean General Grant Losses, Environmental
Losses, Tax Losses, Product Losses, Labor Losses or Shareholder Losses, as
the case may be.
13.47 "Market Price" shall mean the average of the closing sales
prices of a share of EVI Common Stock as reported by the NYSE for the 20
consecutive trading days immediately prior to the third trading day prior
to the Effective Date.
13.48 "Material Adverse Effect" shall mean, with respect to any
Person, a single event, occurrence or fact that, together with all other
events, occurrences and facts, has had or could reasonably be expected to
have a material adverse effect on the business, results of operations,
financial conditions or Assets of that Person.
13.49 "Merger" shall have the meaning such term is given in the
recitals to this Agreement.
13.50 "Morris" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
13.51 "Multiemployer Pension Plans" shall have the meaning such
term is given in Section 2.9(g) hereof.
13.52 "NYSE" shall mean the New York Stock Exchange, Inc.
13.53 "Other Common Stock" shall have the meaning such term is
given in Section 6.2 hereof.
13.54 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
13.55 "Pension Plans" shall have the meaning such term is given
in Section 2.7(a) hereof.
13.56 "Permitted Encumbrances" shall mean (a) Encumbrances for
current taxes and assessments not yet past due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves are reflected in the Financial Statements,
(b) mechanics and materialmen Encumbrances for construction in progress to
the extent not perfected by filing, recording, giving of notice or other
appropriate action in the relevant jurisdiction, (c) workmen, repairmen,
warehousemen, carriers, lessors and operators Encumbrances arising in the
ordinary course of business to the extent not perfected by filing,
recording, giving of notice or other appropriate action in the relevant
jurisdiction and (d) easements, including agreements and deeds of
easement, and other minor imperfections of title which would not have a
Material Adverse Effect on the Company.
13.57 "Person" shall mean any individual, corporation,
association, partnership, joint venture, trust, estate or unincorporated
organization or Governmental Entity.
13.58 "Preferred Stock" shall mean the preferred stock, $.05 par
value, of the Company.
13.59 "Product Losses" shall have the meaning such term is given
in Section 11.4 hereof.
13.60 "RCRA" shall mean the Resource Conservation and Recovery
Act of 1976, as amended.
13.61 "Registration Expenses" shall mean expenses incurred by EVI
in complying with Article 6 of this Agreement, including, without
limitation: (a) all registration and filing fees; (b) all printing
expenses; (c) all fees and disbursements of counsel for EVI; (d) all blue
sky fees and expenses; and (e) all fees and expenses of accountants for
EVI.
13.62 "SEC Documents" shall have the meaning such term is given
in Section 4.6 hereof.
13.63 The term "securities" shall have the meaning such term is
given in Section 3.8(a) hereof.
13.64 "Securities Act" shall mean the Securities Act of 1933, as
amended.
13.65 The term "securities laws" shall have the meaning such term
is given in Section 3.8(a) hereof.
13.66 "Selling Expenses" shall mean all underwriting fees and
discounts and brokerage and selling commissions and fees and expenses of
the Shareholders' counsel and any underwriter's counsel (other than the
fees and expenses of such counsel for any blue sky matters) applicable to
the sales in connection with any registration pursuant to Article 6
hereof.
13.67 "Shareholders" shall have the meaning such term is given in
the introductory paragraph to this Agreement.
13.68 "Shareholder Losses" shall have the meaning such term is
given in Section 11.6 hereof.
13.69 "Shortfall Amount" shall mean the sum of (i) the amount, if
any, by which the Working Capital of the Company immediately prior to the
Effective Time is less than the Target Working Capital and (ii) the
amount, if any, by which Funded Debt exceeds the Target Funded Debt.
13.70 "Subsidiaries" shall mean any corporation, partnership,
joint venture, association or other entity in which a party to this
Agreement owns, either directly or indirectly, a 50% or more equity or
other similar ownership interest; provided, however, that Prideco de
Venezuela, S.A. shall not be considered to be a Subsidiary of the Company.
13.71 "Survival Period" shall have the meaning such term is given
in Article 12 hereof.
13.72 "Surviving Corporation" shall have the meaning such term is
given in Section 1.1(a) hereof.
13.73 "Target Funded Debt" shall mean $14.0 million plus an
amount equal to the amount, if any, by which the Working Capital of the
Company immediately prior to the Effective Time is greater than
$16.7 million; provided, however, that Target Funded Debt shall not exceed
$14.5 million.
13.74 "Target Working Capital" shall mean $15.0 million.
13.75 "Taxes" shall mean any foreign, federal, state or local
tax, assessment, levy, impost, duty, withholding, estimated payment or
other similar governmental charge, together with any penalties, additions
to Tax, fines, interest and similar charges thereon or related thereto.
13.76 "Tax Losses" shall have the meaning such term is given in
Section 11.3 hereof.
13.77 "Tax Returns" shall mean all Tax returns and reports
(including, without limitation, income, franchise, sales and use,
unemployment compensation, excise, severance, property, gross receipts,
profits, payroll and withholding Tax returns and information returns).
13.78 "TBCA" shall mean the Texas Business Corporation Act.
13.79 "Third Party Claims" shall have the meaning such term is
given in Section 11.9(b) hereof.
13.80 "Waste Materials" shall mean any toxic or hazardous
materials or substances, or solid wastes, including asbestos, buried
contaminants, chemicals, flammable or explosive materials, radioactive
materials, petroleum and petroleum products, and any other chemical,
pollutant, contaminant, substance or waste that is regulated by any
Governmental Entity under any Environmental Law.
13.81 "Working Capital" shall mean the difference between current
assets and current liabilities excluding the principal amount of any
Funded Debt included in current liabilities, using generally accepted
accounting principals consistently applied by the Company, at year end;
provided, however, that the following shall be deemed to be current
liabilities: (a) the fees and expenses payable to Wertheim
Schroder & Co., or any other broker or advisor whose fees are to be paid
by the Company in connection with the transaction contemplated hereby, to
the extent not theretofore paid and (b) the amount of any prepayment
penalties, make whole charges or similar payments that would be required
to be paid with respect to all Funded Debt if such Funded Debt were to be
paid in full at Closing and all credit arrangements relating thereto
terminated at the Closing; provided further however, that any liability
that is not currently a current liability and that would also be an
Environmental Loss subject to indemnification under Section 11.2 hereof
shall not be considered a current liability for purposes of this
definition of "Working Capital"; provided further however, that any Taxes
with respect to the items set forth on Schedule 2.16 hereto that have not
been accrued as of the date hereof shall not be considered current
liabilities unless the failure to accrue for such Taxes would result in
the Effective Date Balance Sheet not being in accordance with generally
accepted accounting principles.
ARTICLE 14
MISCELLANEOUS
14.1 Arbitration.
(a) Subject to Section 11.5 hereof, in the event there shall
exist any dispute or controversy between any of the Shareholders or the
Company and EVI with respect to this Agreement or any matter relating
hereto or the transactions contemplated hereby (other than with respect to
Section 5.7 and Article VI hereof), the parties hereto agree to seek to
resolve such dispute or controversy by mutual agreement. If such dispute
or controversy is unable to be resolved by agreement within 30 days
following notice by EVI or the prior holders of a majority of the shares
of Common Stock and Preferred Stock (the "Shareholder Group") of the
nature of such dispute or controversy setting forth in reasonable detail
the circumstances and basis of such dispute or controversy, either EVI or
the Shareholder Group may require that such dispute or controversy be
resolved by binding arbitration pursuant to the provisions of this
Section 14.1. If a party elects to submit such matter to arbitration,
such party shall provide notice to the other parties of its election to do
so, which notice shall name one arbitrator. Within 10 days after the
receipt of such notice, the other party shall name a second arbitrator.
The two arbitrators so appointed shall name a third arbitrator, or failing
to do so, a third arbitrator shall be appointed pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Each
arbitrator selected to act hereunder shall be disinterested and have no
financial relationship with the parties and be qualified by education and
experience to pass on the particular question in dispute. The arbitrators
shall resolve all disputes in controversy in accordance with the
applicable substantive law. All statutes of limitations that would
otherwise be applicable shall apply to any arbitration proceeding.
(b) The arbitrators appointed pursuant to this Section 14.1
shall promptly hear and determine (after due notice and hearing and giving
the parties reasonable opportunity to be heard) the questions submitted,
and shall render their decision within 90 days after appointment of the
third arbitrator or as soon as practical thereafter. If within such
period a decision is not rendered by the board or a majority thereof, new
arbitrators may be named and shall act hereunder at the election of either
party in like manner as if none had previously been named. The decision
of the arbitrators, or a majority thereof, made in writing, shall absent
manifest error be final and binding upon the parties hereto as to the
questions submitted, and each party shall abide by such decision.
(c) All expenses of arbitration, including reasonable
compensation to the arbitrators, shall be borne equally by EVI and the
Shareholders (collectively), except each party shall bear the compensation
and expenses of its own counsel, witnesses and employees.
(d) No arbitration decision or award, or agreement by the
Shareholder Group shall, without the consent of each Shareholder affected,
change the limitations set forth in Section 11 hereof.
(e) The place of arbitration shall be New York, New York, and
each party shall pay its individual costs and fees arising therefrom.
(f) Judgment upon the award resulting from arbitration may be
entered in any court having jurisdiction for direct enforcement, or any
application may be made to a court for a judicial acceptance of the award
and an order of enforcement, as the case may be.
14.2 Entire Agreement. This Agreement, the Confidentiality Agreement
and the other agreements contemplated hereby constitute the sole
understanding of the parties with respect to the matters provided for
herein and supersede any previous agreements and understandings between
the parties with respect to the subject matter hereof. No amendment,
modification or alteration of the terms or provisions of this Agreement
shall be binding unless the same shall be in writing and duly executed by
the parties hereto.
14.3 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon EVI, Grant and the Company and their
respective successors and permitted assigns. This Agreement will inure to
the benefit of and be binding upon the Shareholders and their respective
successors and assigns and their respective heirs, executors,
administrators and legal representatives. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other
parties hereto (which consent shall not be unreasonably withheld). The
parties acknowledge that a transfer of rights and obligations to the
estate of a deceased Shareholder or to a guardian or conservator of an
incompetent Shareholder shall not be deemed an assignment in prohibition
of this Section 14.3. Notwithstanding the foregoing, (a) Grant may assign
its rights in this Agreement to an Affiliate and (b) Christiana may assign
its rights in this Agreement to an Affiliate or in connection with the
transfer of all or substantially all of the assets of Christiana;
provided, however, that any such assignment by Grant or Christiana shall
not release EVI, Grant or Christiana from any of their obligations or
agreements under this Agreement.
14.4 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, other than as expressly provided for herein,
each of the parties hereto shall pay the fees and expenses of its
respective counsel, accountants and other experts, and all other expenses
incurred by such party incident to the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated hereby.
14.5 Invalidity. 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 and
legal substance of the transactions contemplated hereby 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 an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
14.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
14.7 Headings. The headings of the Sections and paragraphs of this
Agreement and of the Schedules hereto are included for convenience only
and shall not be deemed to constitute part of this Agreement or to affect
the construction or interpretation hereof or thereof.
14.8 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require.
Unless otherwise specified, all references in this Agreement to Sections,
paragraphs or clauses are deemed references to the corresponding Sections,
paragraphs or clauses in this Agreement, and all references in this
Agreement to Schedules are references to the corresponding Schedules
attached to this Agreement.
14.9 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of
this Agreement shall be deemed to or shall constitute a waiver of any
other provisions hereof (whether or not similar).
14.10 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party
shall be in writing and delivered personally, by facsimile (with receipt
confirmed) or by registered or certified mail, postage prepaid:
if to the Company or Christiana, to:
Christiana Companies, Inc.
777 East Wisconsin Avenue, Suite 3380
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile No. 414-291-9061 (confirm 414-291-9000)
with copies to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Jeffrey H. Lane
Facsimile No. 414-297-4900 (confirm 414-297-5444)
if to Chunn, to:
William Chunn
To the address and facsimile number set forth on the signature
page under such Person's name.
if to Morris, to:
Donald Morris
To the address and facsimile number set forth on the signature
page under such Person's name.
if to Hamilton, to:
Sandra Hamilton
To the address and facsimile number set forth on the signature
page under such Person's name.
if to EVI or Grant, to:
Energy Ventures, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: James G. Kiley
Facsimile No. (713) 297-8488 (confirm) (713) 297-8400
with copies to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Curtis W. Huff
Facsimile No. (713) 651-5246 (confirm) (713) 651-5657
or at such other address for a party as shall be specified by like notice.
Any notice which is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is
directed upon actual receipt by such party (or its agent for notices
hereunder). Any notice which is addressed and mailed in the manner herein
provided shall be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the fifth day after the day it is so placed in the mail.
Any notice which is sent by facsimile shall be deemed to have been duly
given to the party to which it is addressed upon telephonic confirmation
of the same as provided herein. A copy of any notices delivered by
facsimile shall promptly be mailed in the manner herein provided to the
party to which such notice was given.
14.11 Governing Law; Interpretation. Except to the extent the
provisions of the TBCA are required by the laws of the State of Texas to
be applied to the Merger, this Agreement shall be construed in accordance
with and governed by the laws of the State of Texas, without regard to the
conflicts or choice of law rules of the State of Texas.
14.12 Dissenters Rights. Each of the Shareholders hereby waives
any dissenters or other similar rights that such Shareholder may have
under the TBCA or otherwise with respect to the Merger and the
transactions contemplated by this Agreement.
14.13 Attorney-Client Privilege. EVI agrees that communications
with respect to the transaction contemplated hereby between Foley &
Lardner, in its capacity as counsel to the Company in connection with this
Agreement and the Merger, will be privileged and may not be provided to
EVI, Grant or the Surviving Corporation. EVI and Grant further consent to
Foley & Lardner's continued representation of any of the Shareholders in
respect of any dispute between the Shareholders, EVI, Grant or the
Surviving Corporation as a successor to the Company, including matters
with respect to Article 11 hereof.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed on its behalf as of the date first above written.
PRIDECO, INC.
By:
____________________
President
ENERGY VENTURES, INC.
By:
James G. Kiley
Vice President-Finance, Treasurer
and Secretary
GRANT ACQUISITION COMPANY
By:
James G. Kiley
Vice President, Treasurer
and Secretary
CHRISTIANA COMPANIES, INC.
By:
Name:
Title:
<PAGE>
WILLIAM CHUNN
William Chunn
Address:
Facsimile No. ________ (confirm)
The undersigned is the spouse of William Chunn, who is a signatory to
the foregoing Agreement, and I acknowledge I know its contents. I further
consent to the entering into of such Agreement and agree that such
Agreement shall be binding upon me to the extent of my community property
interest.
Name:
<PAGE>
DONALD MORRIS
Donald Morris
Address:
Facsimile No. ________ (confirm)
The undersigned is the spouse of Donald Morris, who is a signatory to
the foregoing Agreement, and I acknowledge I know its contents. I further
consent to the entering into of such Agreement and agree that such
Agreement shall be binding upon me to the extent of my community property
interest.
Name:
<PAGE>
SANDRA HAMILTON
Sandra Hamilton
Address:
Facsimile No. ________ (confirm)
The undersigned is the spouse of Sandra Hamilton, who is a signatory
to the foregoing Agreement, and I acknowledge I know its contents. I
further consent to the entering into of such Agreement and agree that such
Agreement shall be binding upon me to the extent of my community property
interest.
Name:
AMENDMENT NO. 1 TO THE
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 dated as of June 30, 1995 (this "Amendment"), to
the Agreement and Plan of Merger dated as of May 22, 1995 (the
"Agreement"), is made and entered into by and among Prideco, Inc., a Texas
corporation (the "Company"), Christiana Companies, Inc., a Wisconsin
corporation ("Christiana"), William Chunn ("Chunn"), Donald Morris
("Morris"), Sandra Hamilton ("Hamilton", and collectively with Christiana,
Chunn and Morris, the "Shareholders"), Energy Ventures, Inc., a Delaware
corporation ("EVI"), and Grant Acquisition Company, a Texas corporation
("Grant").
W I T N E S S E T H:
WHEREAS, the parties have previously executed the Agreement, whereby
EVI agreed to acquire the Company through a merger of Grant, a wholly-
owned Subsidiary of EVI, with and into the Company pursuant to which
shares of Preferred Stock and Common Stock of the Company would be
converted into EVI Common Stock, on the terms and conditions set forth in
the Agreement;
WHEREAS, in connection with the Merger, Christiana agreed to provide
EVI with $9 million in funds to reduce the debt of the Company immediately
following the Merger through a sale of additional shares of EVI Common
Stock to Christiana on the terms and subject to the conditions set forth
in the Agreement; and
WHEREAS, the parties wish to amend the Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Each capitalized term used in this Amendment shall
have the meaning given to such term in the Agreement, unless defined
elsewhere in this Amendment.
2. Amendments. The Agreement is amended as follows:
(a) Section 1.3(a) is hereby amended to read in its entirety as
follows:
"1.3 Conversion of Stock.
(a) Except as provided in this Section 1.3 or in
Section 1.5 hereof, at the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any
shares of Common Stock or Preferred Stock or any holder of any
shares of Grant Common Stock, each share of Common Stock and
Preferred Stock outstanding immediately prior to the Effective
Time shall be converted into the right to receive, upon the
surrender of the certificates formerly representing such shares
pursuant to Section 1.4 hereof, a fraction of a share of EVI
Common Stock per share of Common Stock or Preferred Stock, as
the case may be, as follows (the fraction of a share of EVI
Common Stock issuable in exchange for the shares of Common Stock
and Preferred Stock in the Merger shall be referred to as the
"Conversion Rate" with respect to such shares):
(i) the Conversion Rate for the Common Stock
shall be .52634; and
(ii) the Conversion Rate for the Preferred Stock
shall be .13571."
(b) Section 1.3(f) is hereby amended to read in its entirety as
follows:
"(f) In the event of any stock dividend or other
distribution to the holders of EVI Common Stock, stock split,
recapitalization, combination, merger, consolidation or other
similar change in capitalization, an adjustment to the
Conversion Rate will be made. Such adjustment to the Conversion
Rate shall be made so that the holder of a share of Common Stock
or Preferred Stock would receive in the Merger for each share of
EVI Common Stock issuable in the Merger such number of shares of
EVI Common Stock and other securities or property as a holder of
a share of EVI Common Stock as of the date hereof would have in
respect of such share of EVI Common Stock as of the Effective
Time. The Market Price shall also be appropriately adjusted in
the event of a stock split, reclassification or recapitalization
to reflect the change in the number of shares of EVI Common
Stock."
(c) Section 5.1(b) is hereby amended to read in its entirety as
follows:
"(b) The Company shall not without the prior written
consent of EVI, (i) declare or pay any dividend on or make any
other distribution in respect of any of its capital stock,
(ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of, its
capital stock, (iii) purchase, redeem or otherwise acquire any
shares of its capital stock or (iv) except as contemplated by
this Agreement, enter into any agreement or other transaction
with a Shareholder or an Affiliate of a Shareholder."
(d) Section 5.12(a) is hereby amended to read in its entirety
as follows:
"5.12 Purchase of EVI Stock.
(a) At the Closing, Christiana shall purchase from
EVI, and EVI shall sell to Christiana, 606,405 shares of EVI
Common Stock for $9,000,000 payable in immediately available
funds."
(e) Section 6.1(a) is hereby amended to read in its entirety as
follows:
"(a) Commencing one year after the Effective Date,
Christiana, individually, and Chunn, Morris and Hamilton, as a
group, may each request EVI to register under the Securities Act
all or any portion of the shares of EVI Common Stock (and
references in this Article 6 to "EVI Common Stock" shall be
deemed to include any securities received by the Shareholders on
account of any stock split, stock dividend, recapitalization,
other distribution, share exchange or merger of EVI) issued to
such Shareholder pursuant to the Merger, purchased by Christiana
in the transactions described in Schedule 3.1 or Section 5.12
hereof pursuant to a plan of distribution to be described in
such notice; provided that, unless otherwise agreed to by EVI,
such request may not be for a continuous or "shelf" registration
made pursuant to Rule 415 promulgated under the Securities Act
or any similar or successor rule. EVI shall be obligated to
register the EVI Common Stock issued to each of Christiana,
individually, and Chunn, Morris and Hamilton, as a group,
pursuant to this Section 6.1(a) on one occasion only for each
such group; provided, however, in the event Christiana elects to
dispose of all of its EVI Common Stock pursuant to this
Section 6.1(a) and is not able to dispose of all of such EVI
Common Stock pursuant to such plan of distribution or in the
event such disposition is not completed as a result of a default
by EVI under the underwriting agreement relating to such plan of
distribution, Christiana shall be entitled to one additional
registration pursuant to this Section 6.1(a)."
(f) Section 13.47 is hereby amended to read in its entirety as
follows:
"13.47 "Market Price" shall mean $18.0219."
3. Non-Effective Provisions. All references in the Agreement to
adjustments to the Conversion Rate based on the Market Price shall not be
effective.
4. Representations, Warranties and Covenants. The Company and
Christiana represent and warrant to EVI and Grant that no shares of
Preferred Stock of the Company have been converted into shares of Common
Stock of the Company. The Company and Christiana covenant and agree that
no shares of Preferred Stock of the Company will be converted into shares
of Common Stock of the Company.
5. Agreement Otherwise Unchanged. Each reference to the Agreement
in the Agreement shall, unless the context otherwise requires, mean the
Agreement as amended by this Amendment. The Agreement, as amended hereby,
is in all respects ratified, approved and confirmed.
6. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
7. Headings. The headings of the Sections and paragraphs of this
Amendment are included for convenience only and shall not be deemed to
constitute part of this Amendment or to affect the construction or
interpretation hereof or thereof.
8. Governing Law; Interpretation. Except to the extent the
provisions of the TBCA are required by the laws of the State of Texas to
be applied to the Merger, this Amendment shall be construed in accordance
with and governed by the laws of the State of Texas, without regard to the
conflicts or choice of law rules of the State of Texas.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Amendment to be executed on its behalf as of the date first above written.
PRIDECO, INC.
By:
William Chunn
President
ENERGY VENTURES, INC.
By:
James G. Kiley
Vice President, Treasurer
and Secretary
GRANT ACQUISITION COMPANY
By:
James G. Kiley
Vice President, Treasurer
and Secretary
CHRISTIANA COMPANIES, INC.
By:
William T. Donovan
Executive Vice President
<PAGE>
WILLIAM CHUNN
William Chunn
9850 East Shore Drive
Willis, Texas 77378
Facsimile No. (409) 856-3222
The undersigned is the spouse of William Chunn, who is a signatory to
the foregoing Amendment, and I acknowledge I know its contents. I further
consent to the entering into of such Amendment and agree that such
Amendment shall be binding upon me to the extent of my community property
interest.
Lona E. Chunn
<PAGE>
DONALD MORRIS
Donald Morris
42 West Rivercrest
Houston, Texas 77042
Facsimile No.:
The undersigned is the spouse of Donald Morris, who is a signatory to
the foregoing Amendment, and I acknowledge I know its contents. I further
consent to the entering into of such Amendment and agree that such
Amendment shall be binding upon me to the extent of my community property
interest.
June Morris
<PAGE>
SANDRA HAMILTON
Sandra Hamilton
P.O. Box 300455
Bandera, Texas 78003
Facsimile No.: (210) 562-3594
The undersigned is the spouse of Sandra Hamilton, who is a signatory
to the foregoing Amendment, and I acknowledge I know its contents. I
further consent to the entering into of such Amendment and agree that such
Amendment shall be binding upon me to the extent of my community property
interest.
