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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JUNE 30, 1995
ENERGY VENTURES, INC.
(Exact name of registrant as specified in charter)
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DELAWARE 0-7265 04-2515019
(State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
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5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-8400
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Page 1
Exhibit Index Appears on Page 5
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 30, 1995, Energy Ventures, Inc., a Delaware corporation ("the
Company"), completed the acquisition (the "Acquisition") of all of the capital
stock of Prideco, Inc., a Texas corporation ("Prideco"), pursuant to an
Agreement and Plan of Merger dated as of May 22, 1995, as amended on June 30,
1995 (the "Agreement"), by and among the Company, Grant Acquisition Company, a
wholly owned subsidiary of the Company ("Grant"), Prideco and the shareholders
of Prideco. Under the terms of the Agreement, the Company acquired Prideco
through the merger of Grant with and into Prideco in exchange for 2,255,198
shares of the Company's common stock, $1.00 par value ("Common Stock"),
including 606,405 shares of Common Stock that were issued to Christiana
Companies, Inc. for $9 million that was used to reduce Prideco's debt at the
closing.
The Company currently intends to combine the operations of Prideco with
the operations of the Company's Grant TFW tubular division and to rename this
division Grant Prideco.
A copy of the press release announcing the closing of the Acquisition
is filed as Exhibit 99.1 hereto and is hereby incorporated herein by reference.
Page 2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
The financial statements of Prideco that are required for this
item are not currently available and will be filed by the Company by an
amendment to this report as soon as practical.
(b) Pro forma financial information.
The acquisition of Prideco by the Company will be accounted for as
a purchase and will require an allocation of the purchase price among the
acquired assets. As of the date of this report, such allocation has not been
completed and it would be impracticable for the Company to provide the pro forma
financial information that is required pursuant to Article 11 of Regulation S-X
with respect to the acquisition at this time. Such pro forma financial
information will be filed by the Company by an amendment to this report as soon
as practical.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of May 22, 1995, as amended by
Amendment No. 1 dated as of June 30, 1995, by and among Prideco,
Inc., Christiana Companies, Inc., William Chunn, Donald Morris,
Sandra Hamilton, the Company and Grant Acquisition Company.
99.1 Press Release of the Company dated July 3, 1995.
Page 3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENERGY VENTURES, INC.
Dated: July 12, 1995 /s/ Frances R. Powell
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Frances R. Powell
Vice President, Accounting
and Controller
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INDEX TO EXHIBITS
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Number Exhibit
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2.1 Agreement and Plan of Merger dated as of May 22, 1995, as
amended by Amendment No. 1 dated as of June 30, 1995, by and
among Prideco, Inc., Christiana Companies, Inc., William Chunn,
Donald Morris, Sandra Hamilton, the Company and Grant
Acquisition Company.
99.1 Press Release of the Company dated July 3, 1995.
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EXHIBIT 2.1
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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
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TABLE OF CONTENTS
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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
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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
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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; Labor Matters . . . . . . . . . . . . . . . . . 40
11.6 Indemnification by EVI . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.7 Baskets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
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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
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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.
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(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):
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(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
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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.
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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
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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.
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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
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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
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<PAGE> 14
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
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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
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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
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<PAGE> 17
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
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<PAGE> 18
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.
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<PAGE> 19
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.
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<PAGE> 20
(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,
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<PAGE> 21
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
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<PAGE> 22
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,
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<PAGE> 23
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
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<PAGE> 24
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
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<PAGE> 25
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
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<PAGE> 26
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).
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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
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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
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<PAGE> 29
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
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<PAGE> 30
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
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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
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<PAGE> 32
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 2/3% 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,
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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
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<PAGE> 34
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
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Securities Act all or any portion of the shares of EVI Common Stock (any
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
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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;
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(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
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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
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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.
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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
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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
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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
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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
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(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
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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
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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
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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
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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,
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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
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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.
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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.
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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.
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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
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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.
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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.
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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
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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
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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:
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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
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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.
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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: /s/ William Chunn
--------------------------
William Chunn
President
ENERGY VENTURES, INC.
By: /s/ James G. Kiley
--------------------------
James G. Kiley
Vice President, Treasurer
and Secretary
GRANT ACQUISITION COMPANY
By: /s/ James G. Kiley
---------------------------
James G. Kiley
Vice President, Treasurer
and Secretary
CHRISTIANA COMPANIES, INC.
By: /s/ William T. Donovan
--------------------------
William T. Donovan
Executive Vice President
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WILLIAM CHUNN
/s/ 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 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.
/s/ Lora E. Chunn
------------------------------
Lona E. Chunn
DONALD MORRIS
/s/ Donald Morris
------------------------------
Donald Morris
27 West Rivercrest
Houston, Texas 77042
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.
/s/ June Morris
------------------------------
June Morris
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<PAGE> 63
SANDRA HAMILTON
/s/ 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 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.
/s/ Al Hamilton
------------------------
Al Hamilton
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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
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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.
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(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.
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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.
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<PAGE> 68
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: /s/ William Chunn
-----------------------------
William Chunn
President
ENERGY VENTURES, INC.
By: /s/ James G. Kiley
-----------------------------
James G. Kiley
Vice President, Treasurer
and Secretary
GRANT ACQUISITION COMPANY
By: /s/ James G. Kiley
-----------------------------
James G. Kiley
Vice President, Treasurer
and Secretary
CHRISTIANA COMPANIES, INC.
By: /s/ William T. Donovan
-----------------------------
William T. Donovan
Executive Vice President
-5-
<PAGE> 69
WILLIAM CHUNN
/s/ 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.
/s/ Lora E. Chunn
---------------------------------
Lona E. Chunn
DONALD MORRIS
/s/ Donald Morris
---------------------------------
Donald Morris
27 West Rivercrest
Houston, Texas 77042
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.
/s/ June Morris
---------------------------------
June Morris
-6-
<PAGE> 70
SANDRA HAMILTON
/s/ 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.
/s/ Al Hamilton
---------------------------------
Al Hamilton
-7-
<PAGE> 1
EXHIBIT 99.1
[ENERGY VENTURES, INC. LETTERHEAD]
For Immediate Release
EVI ACQUIRES PRIDECO
July 3, 1995, Houston, Texas -- Energy Ventures, Inc. (NYSE--EVI)
completed the previously announced acquisition of Prideco, Inc., a manufacturer
and marketer of drill pipe, heavyweights and drill collars. The transaction
closed on June 30, 1995, with EVI issuing approximately 2.25 million shares of
its common stock to the previous owners of Prideco and assuming approximately $5
million of Prideco debt.
The operations of Prideco will be combined with Grant TFW, EVI's
tubular subsidiary. The combined entity, which will be known as Grant Prideco,
is the world's largest manufacturer and supplier of drill pipe as well as being
one of the largest North American manufacturers of premium tubulars. Grant
Prideco had combined revenues of approximately $75 million for the six months
ended June 30, 1995 and total assets in excess of $150 million. The combination
is expected to result in substantial cost savings.
EVI is an international oilfield service and equipment company with
manufacturing and rig operations in nine countries. The Company manufactures
artificial lift & completion systems, drill pipe and premium tubulars and
provides rig contracting services.
Contact:
James G. Kiley
Vice President, Finance
and Treasurer
(713) 297-8440
5 POST OAK PARK, SUITE 1760 HOUSTON, TEXAS 77027-3415 (713) 297-8400
FAX: (713) 297-8488
