SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) February 20,
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1998
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AMERICAN ECO CORPORATION
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(Exact name of registrant as specified in its charter)
ONTARIO, CANADA 0-10621 52-1742490
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
No.)
154 UNIVERSITY AVENUE
Toronto, Ontario M5H 3Y9
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code -
(416) 340-2727
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Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On February 20, 1998, American Eco Corporation (the
"Company") and Dominion Bridge Corporation, a Delaware
corporation ("Dominion Bridge"), entered into a non-binding
letter of intent (the "Letter of Intent") which provides for (a)
the purchase of $5.0 million of Dominion Bridge common stock by
the Company (the "Dominion Bridge Stock Purchase"), (b) a working
capital loan facility (the "Dominion Bridge Loan Facility") of up
to $25.0 million to be provided by the Company to Dominion
Bridge, (c) the engagement of the Company to provide certain
management services to Dominion Bridge (the "Management
Arrangement"), and (d) the acquisition by the Company of the
business and assets of Dominion Bridge (the "Acquisition
Transaction" and, collectively, the "Transactions"). The
Dominion Bridge Stock Purchase was completed on February 20, 1998
and the Company and Dominion Bridge are currently negotiating the
terms of definitive agreements which are intended to implement
the other Transactions proposed in the letter of intent.
Dominion Bridge Stock Purchase
On February 20, 1998, the Company purchased in a private
placement 1,923,077 units at a purchase price of $2.60 per unit.
Each unit consisted of (a) one share of Dominion Bridge common
stock (a total of 1,923,077 shares of Dominion Bridge common
stock); and (b) 1/10 of a Dominion Bridge common stock purchase
warrant (the "Warrants") (a total of 192,308 shares of Dominion
Bridge common stock underlying the Warrants). Each whole Warrant
entitles the Company to purchase one additional share of Dominion
Bridge common stock at a purchase price of $3.00 per share
(subject to customary anti-dilution provisions), exercisable
through February 20, 2001. The Company has the right to require
Dominion Bridge to register the purchased shares of Dominion
Bridge common stock, as well as the shares of Dominion Bridge
common stock underlying the Warrants under the Securities Act of
1933, as amended (the "Securities Act"); provided, however that
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Dominion Bridge is not required to commence such registration
process unless and until the Company and Dominion Bridge
terminate their negotiations (or any definitive agreement) with
respect to the Acquisition Transaction.
Immediately following the consummation of the Dominion
Bridge Stock Purchase, Michael E. McGinnis, the Chairman,
President and CEO of American Eco, was elected to serve on
Dominion Bridge's Board of Directors for a term expiring in 1999
and on the Executive Committee thereof.
Dominion Bridge Loan Facility
Upon the execution of definitive agreements with respect to
the Dominion Bridge Loan Facility, the Company will provide
Dominion Bridge with a loan facility of up to $25.0 million. The
specific amount that may be borrowed by Dominion Bridge pursuant
to the Dominion Bridge Loan Facility will be determined by the
Company and the Executive Committee of the Dominion Bridge Board
of Directors based upon their mutual assessment of the working
capital requirements of Dominion Bridge; provided, however, that
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American Eco and Dominion Bridge have agreed that a minimum of
$10 million will be placed in trust by March 5, 1998 and funded
under the Dominion Bridge Loan Facility by March 23, 1998.
Outstanding borrowings under the Dominion Bridge Loan
Facility will bear interest monthly at the rate of 9% per annum.
As security for the loans to be made by the Company, Dominion
Bridge will grant the Company a pledge and security interest in
all of its properties and assets, subject only to the prior
pledge and security interest granted by Dominion Bridge to The
Bank of New York ("BNY") pursuant to Dominion Bridge's existing
loan with BNY. All fees and costs borne by the Company in
obtaining such funds will be passed-through to Dominion Bridge
and will be included in, and deducted from, the amounts to be
borrowed by Dominion Bridge under the Dominion Bridge Loan
Facility.
As part of the Dominion Bridge Loan Facility, Dominion
Bridge will authorize the issuance to the Company of Warrants to
purchase up to 10% of the outstanding shares of Dominion Bridge
Common Stock as of the closing date of the Dominion Bridge Loan
Facility, with the number of Warrants to be issued to be based,
pro rata, upon the maximum amount of Dominion Bridge's
outstanding borrowings under the Dominion Bridge Loan Facility
during the term thereof, less pass-through costs.
The final terms of the Dominion Bridge Loan Facility are
subject to the outcome of discussions with BNY and the completion
of definitive loan documentation.
Management Arrangement
Upon the execution of definitive agreements with respect to
the Management Arrangement, the Company will provide Dominion
Bridge with management services in connection with its ongoing,
day-to-day operations. During the term of the Company's
engagement, the Company will, subject to the general supervision
and control of the Executive Committee of the Board of Directors
of Dominion Bridge, furnish Dominion Bridge with the following
management services: (i) financing and administrative support
services, including oversight of collection of accounts
receivable and payment of accounts payable; (ii) marketing
administration and support services; (iii) human resources
management; and (iv) oversight and administration of Dominion
Bridge's operating units. In order to facilitate the provision
of these services, the Chief Executive and Chief Financial
Officers of the Company will be given responsibilities within
Dominion Bridge's organization which are customarily performed by
a corporation's Chief Executive and Chief Financial Officers,
respectively.
As compensation for the management services to be rendered
by the Company to Dominion Bridge, Dominion Bridge will (i) pay
to the Company a management fee of $100,000 per month, and (ii)
reimburse the Company for all reasonable out-of-pocket expenses
and disbursements incurred in rendering such services; provided,
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however, that (a) such management fee will be increased to
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$250,000 if the parties will terminate their discussions (and any
definitive agreement) with respect to the Acquisition
Transaction, and (b) such out-of-pocket expenses and
disbursements will not include the hourly costs of the Company's
personnel when engaged in performing the management services.
Acquisition Transaction
Upon consummation of the Acquisition Transaction, a wholly-
owned subsidiary of the Company and Dominion Bridge will enter
into a merger or other mutually acceptable transaction providing
for the acquisition by the Company of the business and assets of
Dominion Bridge. As consideration for the Acquisition
Transaction, the Company will issue to the stockholders of
Dominion Bridge 7-1/2% convertible subordinated notes (the
"Convertible Notes") in the principal amount of $3.00 for each
outstanding share of Dominion Bridge common stock as of the
closing of the Acquisition Transaction, payable three years after
the closing date of the Acquisition Transaction.
The Convertible Notes will, at the option of the holder, be
convertible into American Eco Common Shares at a conversion rate
of $15.00 per share, subject to standard anti-dilution
provisions, as follows: (i) commencing 180 days following the
issuance date, one-third of each holder's Convertible Notes will
be convertible, (ii) commencing 360 days following the issuance
date, two-thirds of each holder's Convertible Notes will be
convertible, and (iii) commencing 540 days following the issuance
date, all of the Convertible Notes will be convertible. The
Company will have the right to force conversion at a rate of
$15.00 per share of American Eco Common Shares if the average
closing price of American Eco Common Shares on the Nasdaq
National Market will equal or exceed $16.00 per share for any
twenty consecutive-day trading period, and the Convertible Notes
are in good standing and not in arrears.
Both the Convertible Notes and the underlying shares of
American Eco Common Shares will be registered under the
Securities Act and will be listed on the Nasdaq National Market
or such national securities exchange or market system as such
shares are then listed or traded, prior to the closing of the
Acquisition Transaction.
In connection with the Acquisition Transaction, Michel L.
Marengere, the Chairman of the Board and Chief Executive Officer
of Dominion Bridge, Nicolas Matossian, the President and Chief
Operating Officer of Dominion Bridge, and Rene Amyot, a director
of Dominion Bridge, will enter into employment, consulting and
non-compete agreements which will provide for the retention of
their services and the payment of certain commissions and signing
bonuses upon consummation of the Acquisition Transaction and for
a period of three years thereafter, subject to certain
termination rights after six months as to Mr. Marengere. These
agreements will replace the severance agreements which are
currently in effect for Messrs. Marengere and Matossian.
The consummation of the Acquisition Transaction will be
subject, among other things, to the approval of the acquisition
by the Board of Directors and shareholders of Dominion Bridge and
the receipt of all consents, approvals, clearances and other
authorizations necessary to consummate the acquisition, including
(i) compliance with the Hart-Scott-Rodino Antitrust Improvements
Act and the Australian Corporations Law; (ii) the consent of the
Province of Quebec Finance Administration; and (iii) clearance by
the U.S. Securities and Exchange Commission and any required
Canadian authorities of definitive proxy material for the
Dominion Bridge stockholders meeting and of the registration
statement for the Convertible Notes (including receipt of any
required valuation or fairness opinion); and (iv) the consent of
the respective lenders of the Company and Dominion Bridge.
Dominion Bridge currently owns 63% of the outstanding
capital stock of McConnell Dowell Corporation Limited, an
Australian corporation ("MDC"). Under the Australian
Corporations law, American Eco's proposed acquisition of Dominion
Bridge will be deemed to be an indirect downstream acquisition of
MDC, subject to the requirements of the Australian takeover law.
The Company has applied to the Australian Securities Commission
for relief from the requirements of the Australian Corporations
Law. Because the shares of MDC constitute a substantial part of
the assets of Dominion Bridge, the relief granted by the
Australian Securities Commission may be conditioned upon American
Eco making an offer for the shares of MDC which it does not
already own within a prescribed period after the completion of
its acquisition of Dominion Bridge.
The Letter of Intent provides that until April 6, 1998
(subject to the execution of definitive agreements for the
Dominion Bridge Loan Facility and the Management Arrangement by
March 23, 1998), Dominion Bridge will deal exclusively with
American Eco with respect to the sale of the business and assets
of Dominion Bridge. If Dominion Bridge fails to honor this
exclusivity arrangement, American Eco may, under certain
circumstances, be entitled to receive a fee of US $3.5 million.
The specific terms of the Acquisition Transaction between
Dominion Bridge and the Company will be included in a mutually
acceptable acquisition agreement which will contain the
provisions outlined above and such other terms, conditions and
provisions customary for such a transaction.
Effect of Letter of Intent
The Letter of Intent provides that the parties will commence
the negotiation of definitive agreements with respect to the
Transactions immediately, with a view to their execution as soon
as practicable, provided that if (a) any of the events set forth
in the time schedule attached to the letter of intent are not
completed by the deadlines provided for therein, (b) definitive
agreements with respect to the Loan Transaction and the
Management Arrangement are not executed on or prior to March 23,
1998, or (c) a definitive agreement with respect to the
Acquisition Transaction is not executed on or prior to April 6,
1998, or, in each case, by such later date or dates as shall be
mutually agreed to by the parties, the respective obligations of
the parties will terminate and the letter of intent will be of no
further force or effect, except with respect to certain specific
matters set forth therein.
The foregoing is a summary of the Transactions provided for
in the Letter of Intent. For more complete information,
reference is made to the exhibits hereto which include the Letter
of Intent, the Securities Purchase Agreement, the Warrant
Agreement and the Registration Rights Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS.
Exhibit
Number Description of Document
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10.1 Letter of Intent, dated February 20, 1998,
between American Eco Corporation and
Dominion Bridge Corporation.
10.2 Securities Purchase Agreement, dated as of
February 20, 1998, between American Eco
Corporation and Dominion Bridge Corporation.
10.3 Warrant Agreement, dated February 20, 1998,
issued by Dominion Bridge Corporation.
10.4 Registration Rights Agreement, dated as of
February 20, 1998, between American Eco
Corporation and Dominion Bridge Corporation.
99.1 Press Release, dated February 26, 1998.
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.
Date: February 27, 1998
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
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Name: Michael E. McGinnis
Title: Chairman, President and CEO
February 20, 1998
Board of Directors of Dominion Bridge Corporation
C/o Mr. K. Mitchell Posner
Managing Director
Legg Mason Wood Walker, Incorporated
1735 Market Street, Suite 1100
Philadelphia, Pennsylvania 19103
RE: LETTER OF INTENT
DOMINION BRIDGE CORPORATION
Gentlemen:
This letter sets forth the mutual intentions of
American Eco Corporation, an Ontario, Canada corporation
("American Eco"), and Dominion Bridge Corporation, a Delaware
corporation ("Dominion Bridge"), with respect to (a) the purchase
of US $5 million of Dominion Bridge common stock by American Eco
(the "Dominion Bridge Stock Purchase"), (b) a working capital
loan facility to be provided by American Eco to Dominion Bridge
(the "Loan Transaction"), (c) the engagement of American Eco to
provide certain management services to Dominion Bridge ("the
"Management Arrangement"), and (d) the acquisition by American
Eco of the business and assets of Dominion Bridge (the
"Acquisition Transaction" and, collectively, the "Transactions").
The terms and conditions set forth in this letter, in the time
schedule attached hereto (the "Time Schedule") and in the letter
agreement, dated February 18, 1998 (the "Letter Agreement"),
shall supersede the terms and conditions contained in our letters
of January 15, 1998, January 28, 1998 and February 2, 1998 with
respect to the proposed Transactions.
Upon your execution and return of this letter, the
parties intend to negotiate in good faith one or more definitive
agreements reflecting the Transactions, the basic terms of which
will be as follows:
1. The Dominion Bridge Stock Purchase
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1.01 Purchase of Common Stock. (a) American Eco will
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purchase, in a private placement, 1,923,077 units at a purchase
price of US $2.60 per unit. Each unit will consist of (a) one
share of Dominion Bridge common stock; and (b) 1/10 of a Dominion
Bridge common stock purchase warrant. Each whole warrant will
entitle American Eco to purchase one additional share of Dominion
Bridge Common Stock at a purchase price of US $3.00 per share
(subject to customary anti-dilution provisions), exercisable for
a period of three years following the date of its original
issuance. American Eco shall have the right to require Dominion
Bridge to register the purchased shares of Dominion Bridge common
stock, as well as the shares of Dominion Bridge common stock
underlying the warrants under the US Securities Act of 1933, as
amended (the "Securities Act"); provided, however that Dominion
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Bridge shall not be required to commence such registration
process unless and until American Eco and Dominion Bridge shall
terminate their negotiations (or any definitive agreement) with
respect to the Acquisition Transaction. Should the $5 million
gross proceeds from the above-mentioned stock purchase not be
received by Dominion Bridge in an account designated by it by
5:00 PM, Montreal time, on February 20, 1998, this letter of
intent shall be null and void ab initio.
(b) Upon consummation of the Dominion Bridge Stock
Purchase, the Board of Directors of Dominion Bridge shall elect
Michael E. McGinnis as the representative of American Eco to
serve on Dominion Bridge's Board of Directors and on the
Executive Committee thereof.
1.02 Documentation. The specific terms of the Dominion
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Bridge Stock Purchase shall be included in a mutually acceptable
subscription agreement (and a related warrant agreement) which
shall contain the provisions outlined above and such other terms,
conditions and provisions customary for such a stock purchase
transaction, including representations, warranties and
affirmative and negative covenants.
2. The Loan Transaction
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2.01 Amount. American Eco will provide Dominion Bridge
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with a loan facility (the "Loan Facility") of up to US $25
million. The specific amount that may be borrowed by Dominion
Bridge pursuant to the Loan Facility shall be determined by
American Eco and the Executive Committee of the Dominion Bridge
Board of Directors based upon their mutual assessment of the
working capital requirements of Dominion Bridge; provided,
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however, that a minimum of US $10 million shall be (a) placed in
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trust by American Eco by March 5, 1998, and (b) funded by
American Eco under the Loan Facility by March 23, 1998.
2.02 Interest Rate; Term. Outstanding borrowings under
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the Loan Facility shall bear interest at the rate of 9% per
annum, payable monthly in arrears on the last day of each
calendar month (or on such other day of the month which is
consistent with Dominion Bridge's payment obligations under its
existing loan facility with The Bank of New York ("BNY")). The
Loan Facility shall terminate, and all borrowings thereunder
shall be repaid to American Eco, on the first anniversary of
Dominion Bridge's initial borrowing under the Loan Facility (the
"Termination Date"); provided, however, that (a) if American Eco
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and Dominion Bridge shall terminate their negotiations with
respect to the Acquisition Transaction, Dominion Bridge shall not
be permitted to make any additional borrowings under the Loan
Facility and all outstanding amounts thereunder (together with
accrued interest thereon) shall be repaid in twelve consecutive
monthly payments of equal amount, commencing on the last day of
the month during which such negotiations were terminated, and (b)
if Dominion Bridge shall consummate a Third-Party Acquisition
Transaction (as defined in Paragraph 4.07 below) with a third
party prior to the Termination Date, the Loan Facility shall
terminate and the outstanding principal amount thereunder,
together with accrued interest thereon and any fees thereunder,
shall be repaid on the closing date of such Third-Party
Acquisition Transaction.
2.03 Security. As security for the loans to be made by
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American Eco under the Loan Facility, Dominion Bridge shall grant
American Eco a pledge and security interest in all of its
properties and assets, subject only to the prior pledge and
security interest granted by Dominion Bridge to BNY pursuant to
Dominion Bridge's existing loan with BNY.
2.04 Warrants. Concurrently with the closing of the
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Loan Facility, Dominion Bridge shall authorize the issuance to
American Eco of warrants (the "Warrants") to purchase up to 10%
of the outstanding shares of Dominion Bridge Common Stock as of
the closing date of the Loan Facility. The number of Warrants to
be issued will be based, pro rata, upon the maximum amount of
Dominion Bridge's outstanding borrowings under the Loan Facility
during the term thereof, less pass-through costs as described in
Paragraph 2.05 below (the "Peak Borrowing") (e.g., if Dominion
Bridge's Peak Borrowing is US $25 million, American Eco will
receive Warrants to purchase 10% of the outstanding Common Stock
of Dominion Bridge; if Dominion Bridge's Peak Borrowing is US
$12.5 million, American Eco will receive Warrants to purchase 5%
of the outstanding Common Stock of Dominion Bridge). Dominion
Bridge shall issue such Warrants to American Eco (a) at the time
of Dominion Bridge's initial borrowing under the Loan Facility,
and (b) at the time of each subsequent borrowing which results in
a new Peak Borrowing under the Loan Facility. The Warrants shall
be exercisable for a period of two years following the date of
their original issuance at an exercise price of US $3.00 per
share, subject to customary anti-dilution provisions. American
Eco shall have the right to require Dominion Bridge to register
the shares of Dominion Bridge common stock underlying the
Warrants under the US Securities Act of 1933, as amended;
provided, however that Dominion Bridge shall not be required to
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commence such registration process unless and until American Eco
and Dominion Bridge shall terminate their negotiations (or any
definitive agreement) with respect to the Acquisition
Transaction.
2.05 Pass-through of Funding Costs. All fees and costs
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borne by American Eco in obtaining such funds shall be passed-
through to Dominion Bridge and shall be included in, and deducted
from, the amounts to be borrowed by Dominion Bridge under the
Loan Facility. Such fees and costs shall be documented to
Dominion Bridge and shall be based, pro rata, upon Dominion
Bridge's Peak Borrowing under the Loan Facility (e.g., if
Dominion Bridge's Peak Borrowing is US $25 million, Dominion
Bridge shall pay all of such fees and costs; if Dominion Bridge's
Peak Borrowing is US $12.5 million, Dominion Bridge shall pay 50%
of such fees and costs); provided, however, that, assuming a Peak
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Borrowing of US $25 million, Dominion Bridge shall not be
required to pay more than US $1.2 million in fees and costs.
2.06 Documentation. The specific terms of the Loan
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Transaction shall be included in either (a) a mutually acceptable
direct loan agreement (and related agreements) between American
Eco and Dominion Bridge, or (b) a mutually acceptable amendment
to Dominion Bridge's existing loan agreement with BNY pursuant to
which American Eco will become a subordinated lender thereunder.
In either case, the loan documentation shall contain the
provisions outlined above and such other terms, conditions and
provisions customary for such a Loan Transaction, including
representations, warranties, affirmative and negative covenants,
default provisions and remedies. The obligation of American Eco
to enter into the Loan Facility shall be subject to the execution
of a satisfactory subdivision and inter-creditor agreement with
BNY, and the consents of the third parties, as required by
Dominion Bridge and American Eco. Upon the execution and return
of this letter of intent by Dominion Bridge, American Eco will
promptly commence discussions with BNY with a view to
implementation of the Loan Facility as soon as practicable.
3. The Management Transaction
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3.01 Services to be Provided. American Eco will
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provide Dominion Bridge with management services in connection
with its ongoing, day-to-day operations. During the term of
American Eco's engagement, American Eco shall, subject to the
general supervision and control of the Executive Committee of the
Board of Directors of Dominion Bridge, furnish Dominion Bridge
with the following management services: (i) financing and
administrative support services, including oversight of
collection of accounts receivable and payment of accounts
payable; (ii) marketing administration and support services;
(iii) human resources management; and (iv) oversight and
administration of Dominion Bridge's operating units. In order to
facilitate the provision of these services, the Chief Executive
and Chief Financial Officers of American Eco shall be given
responsibilities within Dominion Bridge's organization which are
customarily performed by a corporation's Chief Executive and
Chief Financial Officers, respectively.
3.02 Term. American Eco's engagement to provide
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management services for Dominion Bridge shall commence upon the
execution by the parties of definitive agreements with respect to
the Transactions and shall terminate upon the later to occur of
(i) the termination of the Loan Facility and the repayment of all
outstanding borrowings thereunder, or (ii) the termination by
American Eco and Dominion Bridge of their discussions (and any
definitive agreement) with respect to the Acquisition
Transaction.
3.03 Management Fee. As compensation for the
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management services to be rendered by American Eco to Dominion
Bridge, Dominion Bridge shall (i) pay to American Eco a
management fee of US $100,000 per month, and (ii) reimburse
American Eco for all reasonable out-of-pocket expenses and
disbursements incurred in rendering such services; provided,
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however, that (a) such management fee shall be increased to
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$250,000 if the parties shall terminate their discussions (and
any definitive agreement) with respect to the Acquisition
Transaction, and (b) such out-of-pocket expenses and
disbursements shall not include the hourly costs of American
Eco's personnel when engaged in performing the management
services.
3.04 Documentation. The specific terms of the
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Management Arrangement shall be included in a mutually acceptable
management services agreement which shall contain the provisions
outlined above and such other terms, conditions and provisions
customary for such a management relationship, including
representations, warranties, affirmative and negative covenants
and indemnification provisions.
4. The Acquisition Transaction
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4.01 Form of Transaction. American Eco (or a wholly-
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owned subsidiary) and Dominion Bridge will enter into a merger or
other mutually acceptable transaction providing for the
acquisition by American Eco of the business and assets of
Dominion Bridge.
4.02 Purchase Price. As consideration for the
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Acquisition Transaction, American Eco will issue to the
stockholders of Dominion Bridge convertible notes (the
"Convertible Notes") in the principal amount of US $3.00 for each
outstanding share of Dominion Bridge common stock as of the
closing. The parties intend to investigate the possibility of
restructuring the consideration so that the transaction will be
tax-free to the holders of Dominion Bridge common stock.
4.03 Terms of Convertible Notes. (a) The Convertible
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Notes will bear interest at the rate of 7-1/2% per annum (payable
quarterly in arrears) and the Convertible Notes will be payable
three years after the closing date of the Acquisition
Transaction.
(b) The Convertible Notes will, at the option of the
holder, be convertible into American Eco common stock at a
conversion rate of US $15 per share, subject to standard anti-
dilution provisions, as follows: (i) commencing 180 days
following the issuance date, one-third of each holder's
Convertible Notes will be convertible, (ii) commencing 360 days
following the issuance date, two-thirds of each holder's
Convertible Notes will be convertible, and (iii) commencing 540
days following the issuance date, all of the Convertible Notes
will be convertible. American Eco will have the right to force
conversion at a rate of US $15 per share of American Eco common
stock if the average closing price of American Eco common stock
on the Nasdaq National Market shall equal or exceed US $16.00 per
share for any twenty consecutive-day trading period, and the
Convertible Notes are in good standing and not in arrears.
(c) Upon 60 days prior written notice to the holders,
American Eco will have the right to redeem the outstanding
Convertible Notes, at US$3.00, plus accrued and unpaid interest;
provided, however, that, following the receipt of such notice and
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prior to the date set for redemption, the holders shall have the
right to convert all or a portion of their Convertible Notes into
American Eco common stock at a rate of US $15 per share of
American Eco common stock.
(d) Both the Convertible Notes and the underlying
shares of American Eco common stock will be registered under the
Securities Act and will be listed on the Nasdaq National Market
or such national securities exchange or market system as such
shares are then listed or traded, prior to the closing of the
Acquisition Transaction.
4.04 Due Diligence. We are confident that the results
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of our due diligence, thus far, have provided us with the
necessary comfort to move forward with this transaction.
However, American Eco will continue with its due diligence
investigation of Dominion Bridge promptly following Dominion
Bridge's execution and delivery of this letter of intent in
accordance with the letter, dated November 29, 1997, from Legg,
Mason, Wood Walker, Incorporated to American Eco, the terms of
which letter are incorporated herein.
Subject to the execution by Dominion Bridge of a
satisfactory confidentiality agreement, American Eco shall make
available to Dominion Bridge and its representatives, at
reasonable times, all information relating to its business which
Dominion Bridge or its representatives may reasonably request in
order to evaluate the Acquisition Transaction.
4.05 Conduct of Business. Dominion Bridge will, from
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and after the date it accepts and agrees to the terms herein,
conduct its business in the ordinary course and in substantially
the same manner as previously conducted, including not making any
changes in its capital stock. Dominion Bridge shall keep
American Eco advised of any and all material developments in its
business in addition to any information employees of American Eco
may learn by reason of the management arrangement. Dominion
Bridge shall use its reasonable best efforts to preserve in full
force and effect its franchises, licenses, permits, contracts,
and the goodwill of its suppliers, employees, customers and
others having business relationships with Dominion Bridge.
4.06 Conditions to Acquisition. The consummation of
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the Acquisition Transaction will be subject, among other things,
to (a) the approval of the acquisition by the Board of Directors
and shareholders of Dominion Bridge; (b) the agreement of
beneficial owners of more than 5% of the outstanding Dominion
Bridge common stock to vote their shares for approval of the
Acquisition Transaction, (c) the approval of the acquisition by
the Board of Directors and, if required, shareholders of American
Eco; and (d) the receipt of all consents, approvals, clearances
and other authorizations necessary to consummate the acquisition,
including (i) compliance with the Hart-Scott-Rodino Antitrust
Improvements Act and the Australian Corporations Law; (ii) the
consent of the Province of Quebec Finance Administration; and
(iii) clearance by the U.S. Securities and Exchange Commission
and any required Canadian authorities of definitive proxy
material for the Dominion Bridge stockholders meeting and of the
registration statement for the Convertible Notes (including
receipt of any required valuation or fairness opinion); and (iv)
the consent of the respective lenders of American Eco and
Dominion Bridge. Upon the execution by the parties of a
definitive acquisition agreement, American Eco will promptly
apply to the Australian Securities Commission for relief from the
requirements of the Australian Corporations Law.
4.07 Exclusive Dealing. (a) In order to induce
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American Eco to expend the out-of-pocket expenses necessary for
its due diligence investigation of Dominion Bridge and the
drafting of definitive agreements reflecting the Transactions,
Dominion Bridge agrees that (a) Dominion Bridge and its officers,
directors, employees, representatives and agents shall
immediately cease any discussions or negotiations with any
parties conducted heretofore with respect to any Third-Party
Acquisition Transaction (as defined below) and cause any such
party in possession of confidential information about Dominion
Bridge that was furnished by or on behalf of Dominion Bridge or
its agents with respect to a possible Third-Party Acquisition
Transaction to return or destroy all such information in the
possession of any such party or in the possession of any agent or
adviser of any such party; and (b) Dominion Bridge and its
subsidiaries, and their respective officers, directors,
employees, representatives and agents, will not solicit,
initiate, encourage, continue or enter into negotiations or
discussions of any type, directly or indirectly, with, or furnish
any information or data to, any person, firm or corporation
relating to a Third-Party Acquisition Transaction; provided,
--------
however, that if Dominion Bridge receives an unsolicited written
-------
bona fide proposal for a Third-Party Acquisition Transaction,
Dominion Bridge may participate in discussions or negotiations
with, or furnish information to, such third party pursuant to an
appropriate confidentiality agreement if the Board of Directors
of Dominion Bridge concludes in good faith, based upon written
advice of outside counsel, that the failure to provide such
information or participate in such discussions or negotiations
would cause the members of the Board of Directors to breach their
fiduciary duties to Dominion Bridge's stockholders. Dominion
Bridge shall promptly provide American Eco with a copy of any
written proposal with respect to a Third-Party Acquisition
Transaction received and inform American Eco of the status and
content of any discussion with such third party. Representatives
of American Eco, as part of the management services they are to
render to Dominion Bridge pursuant to Paragraph 3.01 herein,
will, at the request of Dominion Bridge s Board of Directors,
cooperate in the due diligence requests of any such third party
for information which is part of the records of Dominion Bridge.
(b) If, (i) during the period commencing on the date
hereof and ending on the Termination Date (as defined in
Paragraph 5.04 below) (the Exclusivity Period ), Dominion Bridge
or its directors, officers or employees shall (a) breach their
obligations in Paragraph 4.07(a) above, or (b) participate in
discussions or negotiations with, or furnish information to, a
third party in accordance with the proviso in Paragraph 4.07(a)
above, and (ii) within one year after the Termination Date
---
Dominion Bridge's Board of Directors shall authorize entry into
an agreement with any person or entity with which it had such
discussions or negotiations during the Exclusivity Period, or
shall recommend acceptance of, or shall fail to recommend
rejection of, a tender offer or exchange offer that, if
successful, would result in a Third-Party Acquisition
Transaction, or a Third-Party Acquisition Transaction otherwise
shall have been consummated (each, a "Payment Event"), then
Dominion Bridge shall pay to American Eco a fee of US $3,500,000
(such fee to be payable by wire transfer of immediately available
funds upon the closing of any such Payment Event.) Nothing
contained in this Paragraph 4.07 shall constitute or shall be
deemed to constitute liquidated damages.
(c) For purposes of this Paragraph 4.07, "Third-Party
Acquisition Transaction" shall mean any bona fide proposal made
by a third party to acquire (i) beneficial ownership (as defined
under Rule 13(d) of the Securities Exchange Act of 1934, as
amended) of a majority or greater equity interest in Dominion
Bridge pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, tender offer,
exchange offer or similar transaction involving Dominion Bridge
including, without limitation, any single or multi-step
transaction which is structured in good faith to permit such
third party to acquire beneficial ownership of a majority or
greater equity interest in Dominion Bridge, or (ii) 50% or more
of Dominion Bridge's business (measured by revenues for the
preceding fiscal year or the current fiscal year through the last
complete fiscal quarter preceding such proposal) or consolidated
assets of Dominion Bridge.
4.08 Documentation. The specific terms of the
-------------
Acquisition Transaction between Dominion Bridge and American Eco
shall be included in a mutually acceptable acquisition agreement
which shall contain the provisions outlined above and such other
terms, conditions and provisions customary for such a
transaction, including (i) representations and warranties as to
the business, operations and historical financial position and
results of operations of the parties; (ii) compliance with all
applicable laws and regulations by the parties; (iii) the
obtaining of all necessary consents and approvals by the parties
for the Acquisition Transaction; (iv) the absence of any adverse
material change in the financial condition, operations or
prospects of each party from that represented to the other party;
(v) the compliance by the parties with all contracts, licenses
and real property leases and the enforceability thereof against
each other party thereto; (vi) the absence of regulatory
problems; and (vii) such other representations and warranties,
conditions precedent and opinions of legal counsel customary to a
transaction of this kind. The acquisition agreement shall
contain a termination provision which shall state, among other
things, that the acquisition agreement (and the parties'
obligation to consummate the Acquisition Transaction) shall
terminate six months after the execution date of the acquisition
agreement, subject to extension by the mutual agreement of the
parties.
5. General
-------
5.01 Expenses. Each party hereto shall bear its own
--------
costs and expenses including, without limitation, costs and
expenses with respect to legal, accounting, investment banking
and due diligence, in connection with the investigation,
negotiation and consummation of the Transactions.
5.02 Disclosure. Except as and to the extent required
----------
by law, without the prior written consent of the other party
hereto, neither American Eco nor Dominion Bridge shall make,
directly or indirectly, any public comment, statement, or
communication with respect to, or otherwise to disclose or permit
the disclosure of the existence of discussions regarding any of
the terms, conditions or other aspects of the Transactions
proposed in this letter of intent, in the Time Schedule attached
hereto or in Letter Agreement. If either party is required by
law to make any such disclosure, not less than 24 hours prior to
the release of such disclosure (or such shorter period as may be
required by law upon the advice of counsel) it shall provide to
the other party hereto the content of the proposed disclosure,
the reasons that such disclosure is required to be made publicly
by law, and the time and place that such disclosure will be made.
5.03 Notices. All notices, requests, claims, demands
-------
or other communications hereunder shall be in writing and shall
be deemed to have been duly given (i) when delivered in person,
by courier or by fax; and (ii) upon receipt if sent by express
mail, or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
If to American Eco then to:
American Eco Corporation
11011 Jones Road
Houston, Texas 77070
Attention: Michael E. McGinnis, President
with a copy to:
Bruce A. Rich, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
If to Dominion Bridge then to:
Michel L. Marengere
Chairman of the Board of Directors of Dominion Bridge
Corporation
500 Notre Dame Street
Lachine, Quebec
with copies to:
Mr. K. Mitchell Posner
Managing Director
Legg Mason Wood Walker, Incorporated
1735 Market Street, Suite 1100
Philadelphia, Pennsylvania 19103
and
Joseph P. Galda, Esq.
Buchanan Ingersoll
1835 Market Street
Philadelphia, Pennsylvania 19103
or to such other address as the person to whom such notice is
given may have previously furnished to the other party in writing
in the manner set forth above; provided, however, that any notice
-------- -------
of a change of address shall be effective only upon receipt
thereof.
5.04 Legal Effect. This letter of intent does not
------------
create any legally binding obligations, except with respect to
the matters set forth in Paragraphs 4.04, 4.05, 4.06, 4.07, 5.01
and 5.02 hereof. The purpose of this letter of intent is to set
forth the basis upon which the parties shall enter into good
faith negotiations to conclude definitive agreements with respect
to the Transactions. Drafts of such agreements shall be prepared
by counsel to American Eco upon the execution and return of this
letter of intent by Dominion Bridge. The parties will commence
the negotiations of the definitive agreements immediately, with a
view to their execution as soon as practicable. If (a) any of
the events set forth in the Time Schedule attached hereto are not
completed by the deadlines provided for therein, (b) definitive
agreements with respect to the Loan Transaction and the
Management Arrangement are not executed on or prior to March 23,
1998, or (c) a definitive agreement with respect to the
Acquisition Transaction is not executed on or prior to April 6,
1998, or, in each case, by such later date or dates as shall be
mutually agreed to by the parties (the "Termination Date"), this
letter of intent shall be of no further force or effect and
American Eco and Dominion Bridge shall not have any liability to
each other, except, if applicable, with respect to the matters
set forth in Paragraphs 4.07(b) and (c), 5.01 and 5.02 hereof.
5.05 Entire Agreement. This letter of intent and the
----------------
attached addendum constitute the entire agreement between
Dominion Bridge and American Eco as to the subject matter herein,
and supersede all prior oral and written agreements except the
letter referred to in Paragraph 4.04 herein. This letter of
intent and the attached addendum cannot be amended, modified or
terminated except by a writing executed by the parties hereto.
5.06 Governing Law. This letter of intent shall be
-------------
governed by, and construed in accordance with, the laws of the
State of Delaware.
* * *
If the foregoing accurately summarizes our
understanding, please so indicate by having a duly authorized
officer of Dominion Bridge execute and date both copies of this
letter in the space provided below and return one copy to the
undersigned. If this letter is not executed and returned by 3:00
PM, Montreal time, on the date hereof, the proposed Transactions
shall be null and void and this letter shall be without any legal
force or effect.
Very truly yours,
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
---------------------------------
Name: Michael E. McGinnis
Title: Chairman, President,
and CEO
ACCEPTED AND AGREED TO THIS
20th DAY OF FEBRUARY, 1998
DOMINION BRIDGE CORPORATION
By: /s/ Michel L. Marengere
-------------------------------
Name: Michel L. Marengere
Title:Chairman and CEO
<PAGE>
PRIVATE AND CONFIDENTIAL
LETTER AGREEMENT, DATED AS OF FEBRUARY 18, 1998, BETWEEN AND
AMONG AMERICAN ECO CORPORATION, MICHEL L. MARENGERE, NICOLAS MATOSSIAN
AND RENE AMYOT.
This Letter Agreement forms an integral component of the
Letter of Intent (the "Letter of Intent") between American Eco
Corporation and Dominion Bridge Corporation.
PART 1
- ------
(1) Services Agreements:
Michel L. Marengere February 28, 1998
(base salary US $360,000 + minimum guaranty bonus US $180,000) x 5 years
= US $2,700,000
Nicolas V. Matossian January 31, 1998
(base salary US $240,000 + minimum surplus bonus US $96,000) x 6 years
= US $2,106,000
Rene Amyot one time payment of US $250,000
(2) Non-compete signing bonus for Michel L. Marengere to equal
250,000 free trading shares of American Eco Corporation.
(3) Cause the Dominion Bridge Corporation to:
(i) Write-off or cancel the US $1,850,000 subscription
receivable.
(ii) Cancel the Roger Miller/Fidutech International
guaranty for Edinov Corporation transaction. The total
amount was written off as of September 30, 1997 fiscal
year end.
(4) Waiver and indemnification letters from each party for past up
to closing of AEC/DBC Acquisition Transaction.
(5) Satisfactory release of Michel L. Marengere, Nicholas
Matossian and Rene Amyot from personal liabilities relating to
Dominion Bridge's outstanding fiduciary deductions of
approximately Can $14,500,000.
PART 2
- ------
MICHEL L. MARENGERE
- -------------------
(1) Co-Chairman of combined entity for 3 years at US $250,000 per
year plus related expenses (resignation side letter post dated
6 months from close of Acquisition Transaction).
(2) Remain chairman of McConnell Dowell Corporation until the next
annual meeting.
(3) Commission plan on a case-by-case basis for each transaction
that Michel L. Marengere is involved with and accepted by
American Eco Corporation.
(4) Services of Rosa Nespeca as Executive Secretary to Michel L.
Marengere paid by American Eco Corporation up to one year.
(5) Office space for Michel L. Marengere and Rosa Nespeca for one
year.
NICHOLAS V. MATOSSIAN
- ---------------------
Consulting Agreement for 3 years at US $150,000 per year plus related
expenses.
RENE AMYOT
- ----------
Board of combined entity or a consulting agreement for 3 years at US
$120,000 per year plus Board fees of McConnell Dowell Corporation.
GENERAL
- -------
Part 1 and 2 of this Letter Agreement dated 02/18/98 to the Letter of
Intent Agreement 02/20/98 shall become effective and be in full force
and payable at the Closing upon the successful completion of all Phase
3 events as outlined in the Time Schedule attached to the Letter of
Intent.
American Eco Corporation
By: /s/ Michael E. McGinnis
--------------------------
/s/ Michel L. Marengere
--------------------------
Michel L. Marengere
/s/ Nicolas V. Matossian
--------------------------
Nicolas V. Matossian
/s/ Rene Amyot
--------------------------
Rene Amyot
CONFIDENTIAL
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered
into as of the 20th day of February, 1998, by and between DOMINION
BRIDGE CORPORATION, a Delaware corporation (the "Company"), and
American Eco Corporation, an Ontario, Canada corporation (the
"Purchaser"). The Company and Purchaser are hereinafter collectively
referred to as the "Parties".
BACKGROUND
The Company wishes to obtain additional financing for general
working capital purposes and Purchaser desires to provide such
financing to the Company through the purchase of Units (the "Units"),
each Unit consisting of one share of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), and one-tenth of a Common
Stock Purchase Warrant (the "Warrants"), on the terms provided herein.
The Units are being privately offered by the Company to Purchaser
pursuant to this Agreement.
AGREEMENT
In consideration of the premises hereof and the agreements set
forth below, the Parties hereto, intending to be legally bound, hereby
agree as follows:
1. SALE AND PURCHASE OF UNITS
--------------------------
(a) Purchase of Units: Subject to the terms and conditions
-----------------
herein, the Company agrees to issue and sell Purchaser, and
Purchaser agrees to purchase, 1,923,077 Units at the
Closing.
(b) Purchase Price: The purchase price for the Units shall be
--------------
$2.60 per Unit (the "Purchase Price"). Unless otherwise
indicated, all references to "$" or to "dollar" shall be to
lawful currency of the United States of America.
2. CLOSING:
--------
(a) A closing of the purchase and sale of the Units offered
hereunder (the "Closing") shall occur at 5:00pm (Montreal
time) on February 20 1998. . At the Closing, Purchaser shall
pay the Purchase Price of the Units by release of the
Purchase Price from escrow against delivery of (i) one or
more certificates for 1,923,077 shares of Common Stock; and
(ii) a Warrant in the form attached as Exhibit "A" for the
purchase of 192,308 additional shares of Common Stock, in
each case registered in the name of Purchaser. The date of
the Closing is referred to herein as the "Closing Date."
3. CONDITIONS PRECEDENT TO CLOSING: The following shall be
-------------------------------
conditions precedent to the Closing:
(a) Executed copy of the Securities Purchase Agreement;
(b) Executed Warrant to purchase 192,308 shares of Common Stock;
(c) Executed copy of the Registration Rights Agreement in the
form attached as Exhibit "B" (the "Registration Rights
Agreement");
(d) Delivery by the Company of certified resolutions of its
Board of Directors authorizing the:
(i) Securities Purchase Agreement;
(ii) Issuance of the Warrants; and
(iii) Registration Rights Agreement;
(e) Delivery by the Purchaser of certified resolutions of its
Board of Directors authorizing the:
(i) Securities Purchase Agreement; and
(ii) Registration Rights Agreement;
(f) Opinion from the Company's counsel in the form attached as
Exhibit "C";
(g) Opinion from the Purchaser's counsel in the form attached as
Exhibit "D"; and
(h) Delivery of the Purchase Price by Purchaser to the Company.
4. DESCRIPTION OF SECURITIES:
--------------------------
The Securities consist of Common Stock and Common Stock Purchase
Warrants, each of which is described below.
4.1 Common Stock. Holders of Common Stock of the Company have
------------
equal rights to receive dividends when, as, and if declared
by the Board of Directors out of funds legally available
therefor. Holders of Common Stock of the Company have one
vote for each share held of record and do not have
cumulative voting rights. Holders of Common Stock of the
Company are entitled upon liquidation of the Company to
share ratably in the net assets available for distribution,
subject to the rights, if any of holders of any preferred
stock of the Company then outstanding. Shares of Common
Stock of the Company are not redeemable and have no
pre-emptive or similar rights. All outstanding shares of
Common Stock of the Company are fully paid and
non-assessable.
4.2 Warrants. The terms and conditions of the Warrants are set
--------
forth in the form of Warrants attached hereto and made a
part hereof as Exhibit "B". Each Warrant entitles Purchaser
to purchase one (1) share of Common Stock of the Company at
an exercise price of $3.00 per share for a period of three
(3) years commencing from the date of issuance. Prior to the
exercise of the Warrants, Purchaser shall not be entitled to
voting rights or other rights provided by law to security
holders of the Company.
4.3 Restricted Securities. The Common Stock, Warrants, and
---------------------
shares of Common Stock underlying the Warrants (the
"Exercise Shares") (collectively, the "Securities")
constitute "restricted securities", as that term is defined
in Rule 144 under the Securities Act of 1933, as amended
(the "Act"). Accordingly, the Securities may not be offered
for sale or sold, or otherwise transferred in any
transaction which would constitute a sale thereof within the
meaning of the Act, unless (i) such security has been
registered for sale under the Act and registered or
qualified under applicable state securities laws relating to
the offer and sale of securities, or (ii) exemptions from
the registration requirements of the Act and the
registration or qualification requirements of all such state
securities laws are available and the Company shall have
received an opinion of counsel satisfactory to the Company
that the proposed sale or other disposition of such
securities may be effected without registration under the
Act and would not result in any violation of any applicable
state securities laws relating to the registration or
qualification of securities for sale, such counsel and such
opinion to be satisfactory to counsel to the Company.
4.4 Registration Rights. Purchaser shall have certain
-------------------
registration rights with regard to the Common Stock and the
Exercise Shares as set forth in the Registration Rights
Agreement by and between the Parties attached hereto and
made a part hereof as Exhibit "C".
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
------------------------------------------------
Purchaser represents and warrants to the Company as follows:
5.1 Organization and Standing. Purchaser is a corporation duly
-------------------------
organized, validly existing and in good standing under the
laws of the Province of Ontario, Canada.
5.2 Authority; Enforceability; No Conflict. Purchaser has all
--------------------------------------
required power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Purchaser has
been duly and validly authorized by all requisite corporate
action on the part of Purchaser including approval by the
Board of Directors of the Purchaser. This Agreement is a
valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms. The Purchaser has
applied for a waiver under the Credit and Guaranty Agreement
dated as of August 22, 1997 between Purchaser and Union Bank
of California, NA, as agent (the "Credit Agreement") with
respect to the transactions contemplated by this Agreement,
a copy of which has been delivered to the Company. The
execution and delivery of this Agreement by Purchaser do
not, and consummation by Purchaser of the transactions
contemplated hereunder will not, result in or constitute (i)
a default, breach or violation of or under the
organizational documents of Purchaser; or (ii) a default,
breach or violation of or under any mortgage, deed of trust,
indenture, note, bond, license, lease agreement or other
instrument or obligation to which Purchaser is a party or by
which any of its properties or assets are bound; or (iii) a
violation of any statute, rule, regulation, order, judgment
or decree of any court, public body or authority; provided,
however, that the Purchaser has not obtained the required
waiver under the Credit Agreement as of the date of this
Securities Purchase Agreement.
5.3 Deliveries at Closing. Purchaser shall deliver to the
---------------------
Company at or prior to Closing copies of its articles of
incorporation or other organizational documents, and
resolution of its Board of Directors authorizing the
transactions contemplated by this Agreement.
5.4 Access to Information. Purchaser has had access to all
---------------------
material and relevant information concerning the Company,
its management, financial conditions, capitalization, market
information, properties and prospects necessary to enable
Purchaser to make an informed investment decision with
respect to its investment in the Units. Purchaser
acknowledges that it has had the opportunity to ask
questions of and receive answers from, and to obtain
additional information from, representatives of the Company
concerning the terms and conditions of the acquisition of
the Units and the present and proposed business and
financial condition of the Company and has had all such
questions answered to its satisfaction and has been supplied
all information requested.
5.5 Review of Securities and Exchange Commission Filings.
----------------------------------------------------
Purchaser acknowledges that it has been provided with and
has reviewed a copy of the Company's Annual Report for the
year ended September 30, 1997 as filed with the Securities
and Exchange Commission ("SEC") on Form 10-K (the Form
10-K"). Purchaser acknowledges and understands that the Form
10-K reflects information as of the date thereof and that
there may have occurred changes thereafter, which changes
may be material.
5.6 Accredited Investor: Purchaser has such knowledge and
-------------------
experience in business and financial matters, such that it
is capable of evaluating the merits and risk of purchasing
the Securities and is an "Accredited Investor" as that term
is defined in the Act and the rules and regulations
thereunder.
5.7 Investment Intent: (i) Purchaser is acquiring the Units for
-----------------
its own account and not on behalf of any other person; (ii)
Purchaser is acquiring the Units for investment and not with
a view to the distribution thereof or with the intent to
divide its participation with others by reselling or
otherwise distributing the Units; and (iii) Purchaser will
hold the Units and will not sell, offer to sell, or
otherwise transfer or sell in any transaction which would
constitute a sale thereof under the meaning of the Act
unless the Company receives an opinion of counsel reasonably
acceptable to it (as to both counsel and the opinion) to the
effect that such registration is not necessary.
5.8 Understanding of Investment Risks. Purchaser acknowledges
---------------------------------
and understands that the Units offered hereby have not been
approved or disapproved by the SEC, or any state securities
commission, nor has the SEC or any state securities
commission passed upon the adequacy or accuracy of this
Agreement or any exhibit hereto.
5.9 Understanding of Nature of Units: Purchaser acknowledges and
--------------------------------
understands that:
(a) The Units have not been registered under the Act or any
state securities laws and are being issued and sold in
reliance upon certain of the exemptions contained in
the Act.
(b) The Units are "Restricted Securities" as that term is
defined in Rule 144 promulgated under the Act.
(c) The Units cannot be sold or transferred without
registration under the Act and applicable state
securities laws, or unless the Company receives an
opinion of counsel reasonably acceptable to it (as to
both counsel and the opinion) that such registration is
not necessary.
(d) The Securities and any certificates issued in
replacement therefor shall bear the following legend,
in addition to any other legend required by law or
otherwise:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION
THEREUNDER THE SALE, PLEDGE, HYPOTHECATION OR OTHER
TRANSFER OF SUCH SECURITIES IS SUBJECT TO COMPLIANCE
WITH APPLICABLE SECURITIES LAWS AND REGULATIONS."
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
---------------------------------------------
represents and warrants to Purchaser as follows:
6.1 Organization and Standing of the Company. The Company is a
----------------------------------------
duly organized and validly existing corporation in good
standing under the laws of the state of Delaware with the
power and authority to conduct the business in which it is
now engaged, and is in good standing in and qualified to do
business in such other states or jurisdictions as is
necessary to enable it to carry on its business, except
where failure to so qualify would not have a material
adverse effect on the business or the assets of the Company.
6.2 Capitalization. The authorized capital stock of the Company
--------------
is as set forth in the Form 10-K. Except as set forth in
Schedule 6.2 delivered by the Company to Purchaser
concurrently with the execution and delivery of this
Agreement, there are no outstanding pre-emptive, conversion
or other rights, options, warrants or agreements granted or
issued by or binding upon the Company for the purchase or
acquisition of any shares of capital stock of the Company or
any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such
capital stock. Except as set forth on Schedule 6.2, the
Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any
shares of the capital stock of the Company or any
convertible securities, rights, or options.
6.3 Due Authorization; Corporate Power and Authority. The
------------------------------------------------
Company has all required power and authority to enter into
this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the
transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company. No other corporate
act or proceeding on the part of the Company is necessary to
authorize this Agreement or the consummation of the
transactions contemplated hereby. When duly executed and
delivered by the Parties hereto, this Agreement will
constitute a valid and legally binding obligation of the
Company enforceable against it in accordance with its terms.
The Company has applied for approval of the transactions
contemplated by this Securities Purchase Agreement by the
Vancouver Stock Exchange ("VSE") The execution and delivery
of this Agreement by the Company do not, and consummation by
the Company of the transactions contemplated hereunder will
not, result in or constitute (i) a default, breach or
violation of or under the organizational documents of the
Company; or (ii) a default, breach or violation of or under
any mortgage, deed of trust, indenture, note, bond, license,
lease agreement or other instrument or obligation to which
the Company is a party or by which any of its properties or
assets are bound; or (iii) a violation of any statute, rule,
regulation, order, judgment or decree of any court, public
body or authority; provided, however, that the application
to the VSE is pending and that the VSE has not approved the
transactions contemplated by this Securities Purchase
Agreementas of the date hereof.
6.4 Securities. All of the Securities have been duly authorized
----------
and, upon issuance and sale pursuant to the terms of this
Agreement or upon the exercise of the Warrants in accordance
with the terms of the Warrants, will have been validly
issued, fully paid and non-assessable and will be free and
clear of all liens, claims and encumbrances.
6.5 Deliveries at Closing. The Company has delivered copies of
---------------------
the Company's Certificate of Incorporation, By-Laws, certain
resolutions of the Board of Directors and the Form 10-K.
6.6 Financial Statements. The Company has delivered to Purchaser
--------------------
true and complete copies of the Company's audited income
statement and balance sheet for the two years ended
September 30, 1997 (included in the Form 10-K). The
Financial Statements fairly and accurately present in
accordance with generally accepted accounting principles
("GAAP"), the consolidated financial position of the Company
as of their respective dates and the results of operations
for the periods covered thereby. There has been no material
adverse change in the business, financial condition or the
results of operations since September 30, 1997.
6.7 Reservation of Common Stock. The Company has reserved from
---------------------------
issuance 192,308 shares of Common Stock of the Company to
cover the exercise of the Warrants granted to Purchaser
hereunder.
7. AFFIRMATIVE COVENANTS OF THE COMPANY. From and after the Closing
------------------------------------
Date and so long as Purchaser owns at least 1,923,077 shares of
Common Stock, the Company hereby covenants and agrees as follows:
7.1 SEC Reports. The Company shall provide Purchaser with copies
-----------
of all reports or forms filed with the Securities and
Exchange Commission
7.2 Board of Directors. Upon completion of the Closing, the
------------------
Purchaser shall be entitled to designate Michael E. McGinnis
to serve as a member of the Company's Board of Directors for
a term expiring 1999 and its Executive Committee. If
Purchaser does not obtain the waiver under the Credit
Agreement referred to in Section 5.2 hereof, the Company
shall appoint two (2) additional independent directors who
shall be representatives from internationally recognized
public accounting firms.
7.3 VSE. The Company shall take any action required to delist
---
from the VSE if consent to the transactions contemplated by
this Securities Purchase Agreement is not obtained by March
3, 1998.
8. NOTICES. All notices, requests, consents or other communications
-------
required or permitted hereunder shall be in writing and shall be
hand delivered or mailed first class postage prepaid, registered
or certified mail, to the following addresses:
If to the Company:
Dominion Bridge Corporation.
500, rue Notre Dame
Third Floor
Lachine, Quebec, Canada H8S 2B2
Attention: Chairman of the Board & C.E.O.
With a copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll, P.C.
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, PA 19103
If to Purchaser:
American Eco Corporation
11011 Jones Road
Houston, TX 77070
Attention: Michael E. McGinnis
Chairman, President and CEO
With a copy to:
Bruce A. Rich, Esquire
Reid & Priest LLP
40 West 57th Street
New York, NY 10019
Such notices and other communications shall for all purposes of
this Agreement be treated as being effective upon being delivered
personally or, if sent by mail, five days after it has been
deposited in a regularly maintained receptacle for the deposit of
mail, addressed as set forth above, and postage prepaid.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Representations and
------------------------------------------
warranties contained herein shall survive the execution and
delivery of this Agreement.
10. INDEMNIFICATION.
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(a) Indemnification of Company by Purchaser relating to the
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Credit Agreement. Purchaser shall indemnify, defend and hold
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the Company, any subsidiary ("Subsidiary") of the Company
and any director, executive officer or agent of the Company
or any Subsidiary (collectively the "Indemnified Persons"
each an "Indemnified Person") harmless from and against any
and all demands, claims suits, actions, proceedings, losses,
damages or liabilities of any kind or nature, together with
all reasonable costs and expenses related thereto, including
legal, accounting and other fees and expenses arising out of
or in any way related to Purchaser's failure to obtain the
waiver under the Credit Agreement referred to in Section 5.2
hereof.
(b) Indemnification Procedure. In the event that the Company
--------------------------
receives notice of the commencement of any action involving
a claim referred to in Section 10(a) hereof, the Company
shall provide written notice to the Purchaser of such claim
as soon as reasonably practicable. Thereafter, the
Purchasher will be entitled to participate in and, if it so
elects, to assume the defense of any and all Indemnified
Persons; provided, however, that in the event that
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the Company shall have reasonably concluded that
there may be one or more legal defenses available to it or
any Indemnified Person which are different from or
additional to and are inconsistent with those available to
the Purchaser, then Purchaser shall not have the right to
assume the defense of the Company. In such event, the
Company shall have the right to retain a single counsel of
its choosing and Purchaser shall be obligated to pay the
reasonable fees and expenses of such counsel including, but
not limited to, any reasonable expenses incurred in
connection with retention of any expert witnesses reasonably
required in connection with the defense of the Indemnified
Person. If an offer is made to settle any such claim against
any Indemnifed Person and such Indemnified Person desires to
accept such offer, such Indemnified Person shall give
written notice to Purchaser, who shall have fifteen (15)
days from receipt thereof to accept or reject the offer,
which rejection must be on a reasonable basis.
11. PARTIES IN INTEREST. All the terms and provisions of this
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Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and permitted assigns
of the Parties hereto, provided that this Agreement and the
interests herein may not be assigned by either party without the
express written consent of the other party.
12. GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware, without
regard to that State's conflict of laws provisions.
13. SECTIONS AND OTHER HEADINGS. The section and other headings
---------------------------
contained in this Agreement are for the convenience of reference
only, do not constitute part of this Agreement or otherwise
affect any of the provisions hereof.
14. COUNTERPART SIGNATURES. The Agreement may be signed in
----------------------
counterpart and all counterparts together shall become effective
only when the counterpart(s) have been executed and delivered by
and on behalf of the Company and the Purchaser.
15. NON-ASSIGNABILITY. This Agreement is not assignable by either of
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the Parties hereto.
16. TIME IS OF THE ESSENCE. This Agreement shall be null and void if
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the Closing has not occurred prior to 5:00 pm (Montreal time) on
February 20, 1998.
17. ENTIRE AGREEMENT. This Agreement represents, the entire agreement
----------------
among the Parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings with respect
thereto.
<PAGE>
IN WITNESS THEREOF THIS AGREEMENT HAS BEEN DULY EXECUTED AS OF THE
DATE FIRST ABOVE WRITTEN.
DOMINION BRIDGE CORPORATION AMERICAN ECO CORPORATION
Per: /s/ Michel L. Marengere Per: /s/ Michael E. McGinnis
------------------------ -----------------------
Per: /s/ Nicolas V. Matossian Per: _______________________
------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN
BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW
TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE
TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION
DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE RULES AND REGULATIONS THEREUNDER.
WARRANT TO PURCHASE
COMMON STOCK OF
DOMINION BRIDGE CORPORATION
Void after 5:00 p.m. Eastern Standard Time on February 20, 2001.
This is to verify that, FOR VALUE RECEIVED, AMERICAN ECO
CORPORATION, a corporation organized under the laws of Ontario, Canada
(hereinafter referred to as the "Holder"), with a principal address at
11011 Jones Road, Houston, Texas 77070, is entitled to purchase,
subject to the terms and conditions hereof, from DOMINION BRIDGE
CORPORATION (the "Company") 192,308 shares of Common Stock, $.001 par
value per share (the "Common Stock"), during the period commencing at
9:00 a.m., Eastern Standard Time on February 20, 1998 (the
"Commencement Date") and ending at 5:00 p.m. Eastern Standard Time on
February 20, 2001 (the "Termination Date") at an exercise price of
$3.00 per share of Common Stock. The number of shares of Common Stock
purchasable upon exercise of this Warrant (the "Warrant(s)") and the
exercise price per share shall be subject to adjustment from time to
time upon the occurrence of certain events as set forth below.
The shares of Common Stock or any other shares or other units of
stock or other securities or property, or any combination thereof then
receivable upon exercise of this Warrant, as adjusted from time to
time, are sometimes referred to hereinafter as "Exercise Shares". The
exercise price per share as from time to time in effect is referred to
hereinafter as the "Exercise Price".
1. Exercise of Warrant; Issuance of Exercise Shares.
(a) Exercise of Warrant. This Warrant may be exercised in whole
-------------------
or in part at any time or from time to time on or after the
Commencement Date and until and including the Termination Date. This
Warrant may be surrendered on any business day to the Company at its
principal office, presently located at the address of the Company set
forth in Paragraph 9 hereof, (or such other office of the Company, if
any, as shall theretofore have been designated by the Company by
written notice to the Holder), together with: (i) a completed and
executed Notice of Warrant Exercise in the form set forth in Appendix
A hereto and made a part hereof; and (ii) payment of the full Exercise
Price for the amount of Exercise Shares set forth in the Notice of
Warrant Exercise, in lawful money of the United States of America by
certified check or cashier's check, made payable to the order of the
Company, together with certification of investment intent and such
other agreements, representations and warranties as counsel for the
Company shall require to establish an exemption from the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act")..
In the event that this Warrant shall be duly exercised in part
prior to the Termination Date, the Company shall issue a new Warrant
Certificate of like tenor evidencing the rights of the Holder thereof
to purchase the balance of the Exercise Shares purchasable under the
Warrant so surrendered that shall not have been purchased.
No adjustments shall be made for any cash dividends on Exercise
Shares issuable upon exercise of the Warrant. The Company shall cancel
Warrant Certificates surrendered upon exercise of Warrants.
(b) Issuance of Exercise Shares; Delivery of Certificates. The
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Company shall, within five (5) business days or as soon thereafter as
is practicable of the exercise of this Warrant, issue in the name of
and cause to be delivered to the Holder (or such other person or
persons, if any, as the Holder shall have designated in the Notice of
Warrant Exercise) one or more certificates representing the Exercise
Shares to which the Holder (or such other person or persons) shall be
entitled upon such exercise under the terms hereof. Such certificate
or certificates shall be deemed to have been issued and the Holder (or
such other person or persons so designated) shall be deemed to have
become the record holder of the Exercise Shares as of the date of the
due exercise of this Warrant.
(c) Exercise Shares Fully Paid and Non-assessable. The Company
---------------------------------------------
agrees and covenants that all Exercise Shares issuable upon the due
exercise of the Warrant represented by this Warrant Certificate will,
upon issuance in accordance with the terms hereof, be duly authorized,
validly issued, fully paid and non-assessable and free and clear of
all taxes (other than taxes which, pursuant to Paragraph 2 hereof, the
Company shall not be obligated to pay) or liens, charges, and security
interests created by the Company with respect to the issuance thereof.
(d) Reservation of Exercise Shares. At the time of or before
------------------------------
taking any action which would cause an adjustment pursuant to
Paragraph 6 hereof increasing the number of shares of capital stock
constituting the Exercise Shares, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order
that the Company have remaining, after such adjustment, a number of
shares of such capital stock unissued and unreserved for other
purposes sufficient to permit the exercise of all the then outstanding
Warrants of like tenor immediately after such adjustment; the Company
will also from time to time take action to increase the authorized
amount of its capital stock constituting the Exercise Shares if at any
time the number of shares of capital stock authorized but remaining
unissued and unreserved for other purposes shall be insufficient to
permit the exercise of the Warrants then outstanding. The Company may
but shall not be required to reserve and keep available, out of the
aggregate of its authorized but unissued shares of capital stock, for
the purpose of enabling it to satisfy any obligation to issue Exercise
Shares upon exercise of Warrants, through the Termination Date, the
number of Exercise Shares deliverable upon the full exercise of this
Warrant and all other Warrants of like tenor then outstanding.
At the time of or before taking any action which would cause an
adjustment pursuant to Paragraph 6 hereof, reducing the Exercise Price
below the then par value (if any) of the Exercise Shares issuable upon
exercise of the Warrants, the Company will take any corporate action
which may, in the opinion of its counsel, be necessary in order to
assure that the par value per share of the Exercise Shares is at all
times equal to or less than the Exercise Price per share and so that
the Company may validly and legally issue fully paid and
non-assessable Exercise Shares at the Exercise Price, as so adjusted.
The Company will also from time to time take such action if at any
time the Exercise Price is below the then par value of the Exercise
Shares.
(e) Fractional Shares. The Company shall not be required to issue
-----------------
fractional shares of capital stock upon the exercise of this Warrant
or to deliver Warrant Certificates which evidence fractional shares of
capital stock. In the event that any fraction of an Exercise Share
would, except for the provisions of this subparagraph (e), be issuable
upon the exercise of this Warrant, the Company shall pay to the Holder
exercising the Warrant an amount in cash equal to such fraction
multiplied by the Current Market Value of the Exercise Share. For
purposes of this subparagraph (e), the Current Market Value shall be
determined as follows:
(i) if the Exercise Shares are traded on the over-the-counter
market and not on any national securities exchange and not on the
NASDAQ Reporting System, the average of the mean between the last bid
and asked prices per share, as reported by the National Quotation
Bureau, Inc., or an equivalent generally accepted reporting service,
for the last business day prior to the date on which this Warrant is
exercised, or if not so reported, the average of the closing bid and
asked prices for an Exercise Share as furnished to the Company by any
member of the National Association of Securities Dealers, Inc.,
selected by the Company for that purpose;
(ii) if the Exercise Shares are listed or traded on a national
securities exchange or on the NASDAQ National Market System, the
closing price on the principal national securities exchange on which
they are so listed or traded or on the NASDAQ National Market System,
as the case may be, on the last business day prior to the date of the
exercise of this Warrant. The closing price referred to in this clause
(ii) shall be the last reported sales price or, in case no such
reported sale takes place on such day, the average of the reported
closing bid and asked prices, in either case on the national
securities exchange on which the Exercise Shares are then listed or in
the NASDAQ Reporting System; or
(iii) if no such closing price or closing bid and asked prices
are available, as determined in any reasonable manner as may be
prescribed by the Board of Directors of the Company.
2. Payment of Taxes. The Company will pay all documentary stamp taxes,
----------------
if any, attributable to the initial issuance of Exercise Shares upon
the exercise of this Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Exercise Shares in a name other
than that of the Holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue
or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
3. Mutilated or Missing Warrant Certificates. In case any Warrant
-----------------------------------------
Certificate shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
in substitution for the Warrant Certificate lost, stolen or destroyed,
a new Warrant Certificate or Warrant Certificates of like tenor and in
the same aggregate denomination, but only (i) in the case of loss,
theft or destruction, upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate
and indemnity or bond, if requested, also satisfactory to it; and (ii)
in the case of mutilation, upon surrender of the mutilated Warrant
Certificate. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or its counsel may prescribe.
4. Rights of Holder; No Impairment. The Holder shall not, by virtue of
-------------------------------
anything contained in this Warrant Certificate or otherwise, be
entitled to any right whatsoever, either in law or equity, of a
stockholder of the Company, including without limitation, the right to
receive dividends or to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election
of directors of the Company or any other matter. The Company will not
amend its Certificate of Incorporation or participate in any
reorganization, consolidation, merger, dissolution, sale of assets or
similar voluntary action for the purpose of avoiding or seeking to
avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in carrying out
all such action as may be reasonably necessary in order to protect the
rights of the Holder of this Warrant against impairment.
5. Registration of Transfers and Exchanges. The Warrant shall be
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transferable, subject to the provisions of Paragraph 7 hereof, only
upon the books of the Company if any, to be maintained by it for that
purpose, upon surrender of the Warrant Certificate to the Company at
its principal office accompanied (if so required by it) by a written
instrument or instruments of transfer in form satisfactory to the
Company and duly executed by the Holder thereof or by the duly
appointed legal representative thereof or by a duly authorized
attorney and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. In all cases of
transfer by an attorney, the original letter of attorney, duly
approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and
may be required to be deposited and remain with the Company in its
discretion. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee named in such instrument
of transfer, and the surrendered Warrant Certificate shall be canceled
by the Company.
Any Warrant Certificate may be exchanged, at the option of the
Holders thereof and without change, when surrendered to the Company at
its principal office, or at the office of its transfer agent, if any,
for another Warrant Certificate or other Warrant Certificates of like
tenor and representing in the aggregate the right to purchase from the
Company a like number and kind of Exercise Shares as the Warrant
Certificate surrendered for exchange or transfer, and the Warrant
Certificate so surrendered shall be canceled by the Company or
transfer agent, as the case may be.
6. Adjustment of Exercise Shares and Exercise Price. The Exercise
------------------------------------------------
Price and the number and kind of Exercise Shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to
time upon the happening of certain events as hereinafter provided. The
Exercise Price in effect at any time and the number and kind of
securities purchasable upon exercise of each Warrant shall be subject
to adjustment as follows:
(a) In the case the Company shall (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock;
(ii) subdivide or classify its outstanding Common Stock into a greater
number of shares; or (iii) combine or reclassify its outstanding
Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination
or reclassification shall be proportionally adjusted so that the
Holder of this Warrant exercised after such date shall be entitled to
receive the aggregate number and kind of shares which, if this Warrant
had been exercised by such Holder immediately prior to such date, he
would have owned upon such exercise and been entitled to receive upon
such dividend, subdivision, combination or reclassification. For
example, if the Company declares a 2 for 1 stock dividend or stock
split and the Exercise Price immediately prior to such event was $3.00
per share, the adjusted Exercise Price immediately after such event
would be $1.50 per share. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall hereafter issue rights or warrants
to all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into Common
Stock) at a price (or having a conversion price per share) less than
the current market price of the Common Stock (as defined in
Subparagraph (d) below) on the record date mentioned below, the
Exercise Price shall be adjusted so that the same shall equal the
price determined by multiplying the Exercise Price in effect
immediately prior to the date of such issuance by a fraction, the
numerator of which shall be the sum of the number of shares of Common
Stock outstanding on the record date mentioned below and the number of
additional shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so offered (or the
aggregate conversion price of the convertible securities so offered)
would purchase at such current market price per share of the Common
Stock, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on such record date and the number
of additional shares of Common Stock offered for subscription or
purchase (or into which the convertible securities so offered are
convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately
after the record date for the determination of shareholders entitled
to receive such rights or warrants; and to the extent that shares of
Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or
warrants the Exercise Price shall be readjusted to the Exercise Price
which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(c) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subparagraphs (a) and (b) above, the
number of Exercise Shares purchasable upon exercise of this Warrant
shall simultaneously be adjusted by multiplying the number of Exercise
Shares initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the product
so obtained by the Exercise Price, as adjusted.
(d) For the purpose of any computation under Subparagraph (b)
above, the current market price per share of Common Stock at any date
shall be deemed to be the average of the daily closing prices for 30
consecutive business days before such date. The closing price for each
day shall be the last sale price regular way or, in case no such
reported sale takes place on such day, the average of the last
reported bid and lowest reported asked prices as reported by NASDAQ,
or other similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price as
determined by the Board of Directors.
(e) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least ten
cents ($0.10) in such price; provided, however, that any adjustments
which by reason of this Subparagraph (e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations under this
Paragraph 6 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Anything in this
Paragraph 6 to the contrary notwithstanding, the Company shall be
entitled, but shall not be required, to make such changes in the
Exercise Price, in addition to those required by this Paragraph 6, as
it, in its sole discretion, shall determine to be advisable in order
that any dividend or distribution in shares of Common Stock,
subdivision, reclassification or combination of Common Stock, issuance
of warrants to purchase Common Stock or distribution of evidences of
indebtedness or other assets (excluding cash dividends) referred to
hereinabove in this Paragraph 6 hereafter made by the Company to the
holders of its Common Stock shall not result in any tax to the holders
of its Common Stock or securities convertible into Common Stock.
(f) Whenever the Exercise Price is adjusted, as herein provided,
the Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon exercise of
each Warrant to be mailed to the Holders, at their last addresses
appearing in the Warrant Register, and shall cause a certified copy
thereof to be mailed to its transfer agent, if any. The Company may
retain a firm of independent certified public accountants selected by
the Board of Directors (who may be the regular accountants employed by
the Company) to make any computation required by this Paragraph 6, and
a certificate signed by such firm shall be conclusive evidence of the
correctness of such adjustment.
(g) In the event that at any time, as a result of an adjustment
made pursuant to Subparagraph (a) above, the Holder of this Warrant
thereafter shall become entitled to receive any Exercise Shares of the
Company, other than Common Stock, thereafter the number of such other
shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in Subparagraphs (a) to (e), inclusive above.
(h) Irrespective of any adjustments in the Exercise Price or the
number or kind of Exercise Shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
the similar Warrants initially issuable pursuant to this Agreement.
(i) Whenever the Exercise Price shall be adjusted as required by
the provisions of the foregoing Paragraph, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts
requiring such adjustment, including a statement of the number of
additional shares of Common Stock, if any, and such other facts as
shall be necessary to show the reason for and the manner of computing
such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by the Holder and the
Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder.
7. Restrictions on Transferability; Restrictive Legend. Neither this
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Warrant nor the Exercise Shares shall be transferable except in
accordance with the provisions of this paragraph.
(a) Restrictions on Transfer; Indemnification. Neither this
-----------------------------------------
Warrant nor any Exercise Share may be offered for sale or sold, or
otherwise transferred or sold in any transaction which would
constitute a sale thereof within the meaning of the Securities Act,
unless (i) such security has been registered for sale under the
Securities Act and registered or qualified under applicable state
securities laws relating to the offer and sale of securities; or (ii)
exemptions from the registration requirements of the Securities Act
and the registration or qualification requirements of all such state
securities laws are available and the Company shall have received an
opinion of counsel satisfactory to the Company that the proposed sale
or other disposition of such securities may be effected without
registration under the Securities Act and would not result in any
violation of any applicable state securities laws relating to the
registration or qualification of securities for sale, such counsel and
such opinion to be satisfactory to the Company.
The Holder agrees to indemnify and hold harmless the Company
against any loss, damage, claim or liability arising from the
disposition of this Warrant or any Exercise Share held by such holder
or any interest therein in violation of the provisions of this
Paragraph 7.
(b) Securities Purchase Agreement. This Warrant and the
-----------------------------
underlying shares of Common Stock are subject to the terms contained
within that certain Securities Purchase Agreement by and between the
Company and the Holder dated February 6, 1998.
(c) Restrictive Legends. Unless and until otherwise permitted by
-------------------
this Paragraph 7 or in the Agreement, this Warrant Certificate, each
Warrant Certificate issued to the Holder or to any transferee or
assignee of this Warrant Certificate, and each Certificate
representing Exercise Shares issued upon exercise of this Warrant or
to any transferee of the person to whom the Exercise Shares were
issued, shall bear a legend setting forth the requirements of
paragraph (a) of this Paragraph 7, together with such other legend or
legends as may otherwise be deemed necessary or appropriate by counsel
to the Company.
(d) Notice of Proposed Transfers. Prior to any transfer, offer to
----------------------------
transfer or attempted transfer of this Warrant or any Exercise Share,
the holder of such security shall give written notice to the Company
of such holder's intention to effect such transfer. Each such notice
shall (x) describe the manner and circumstances of the proposed
transfer in sufficient detail, and shall contain an undertaking by the
person giving such notice to furnish such other information as may be
required, to enable counsel to render the opinion referred to below,
and shall (y) designate the counsel for the person giving such notice,
such counsel to be satisfactory to the Company. The person giving such
notice shall submit a copy thereof to the counsel designated in such
notice and to the Company and the following provisions shall apply.
(i) If, in the opinion of such counsel, the proposed transfer of
this Warrant or Exercise Share, as appropriate, may be effected
pursuant to the terms of the Agreement of Sale and without
registration of such security under the Securities Act, and such
opinion and such counsel are acceptable to the Company, the Company
shall, as promptly as practicable, so notify the holder of such
security and such holder shall thereupon be entitled to transfer such
security in accordance with the terms of the notice delivered by such
holder to the Company. Each certificate evidencing the securities thus
to be transferred (and each certificate evidencing any untransferred
balance of the securities evidenced by such certificate) shall bear
the restrictive legends referred to in subparagraph (c) above, unless
in the opinion of such counsel such legend is not required in order to
insure compliance with the Securities Act and such opinion and such
counsel are acceptable to the Company.
(ii) If the opinion of such counsel is not acceptable to the
Company, the Company shall, as promptly as practicable, so notify the
holder thereof. However, the Company shall have no obligation to
register such securities under the Securities Act, except as otherwise
provided herein or in the Registration Rights Agreement.
The holder of the securities giving the notice under this
subparagraph (d) shall not be entitled to transfer any of the
securities until receipt of notice from the Company under paragraph
(i) of this subparagraph (d) or registration of such securities under
the Securities Act has become effective.
(e) Removal of Legend. The Company shall, at the request of any
-----------------
registered holder of a Warrant or Exercise Share, exchange the
certificate representing such security for a certificate representing
the same security not bearing the restrictive legend required by
subparagraph (c) if, in the opinion of counsel to the Company, such
restrictive legend is no longer necessary.
8. Notices. All notices or other communications under this Warrant
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Certificate shall be in writing and shall be deemed to have been given
if delivered by hand or mailed by certified mail, postage prepaid,
return receipt request, addressed as follows:
If to the Company:
Dominion Bridge Corporation
500 Notre Dame
Lachine, Quebec, Canada H8S 2B2
Attention: Michel L. Marengere
Chief Executive Officer
With a Copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll Professional Corporation
11 Penn Center - 14th Floor
1835 Market Street
Philadelphia, PA 19103-2985
if to the Holder:
American Eco Corporation
1101 Jones Road
Houston, TX 77070
Attention: Michael E. McGinnis
Chairman, President and CEO
With a Copy to:
Bruce A. Rich, Esquire
Reid & Priest LLP
40 West 57th Street
New York, NY 10019
Either of the Company or the Holder may from time to time change
the address to which notices to it are to be mailed hereunder by
notice in accordance with the provisions of this Paragraph 8.
Such notices and other communications shall for all purposes of
this Agreement be treated as being effective upon being delivered
personally or, if sent by mail, five (5) days after the same has been
deposited in a regularly maintained receptacle for the deposit of
United States mail, addressed as set forth above, and postage prepaid.
9. Registration Rights. The Holder shall be entitled to the
-------------------
registration rights set forth in that certain Registration Rights
Agreement dated as of even date herewith by and between the Company
and such Holder.
10. Supplements and Amendments. The Company may from time to time
--------------------------
supplement or amend this Warrant without the approval of any holders
of Warrants in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent
with any other provision, or to make any other provisions in regard to
matters or questions herein arising hereunder which the Company may
deem necessary or desirable and which shall not materially adversely
affect the interests of the Holder.
11. Successors and Assigns. This Warrant shall inure to the benefit of
----------------------
and be binding on the respective successors, assigns and legal
representatives of the Holder and the Company.
12. Severability. If for any reason any provision, paragraph or term
------------
of this Warrant is held to be invalid or unenforceable, all other
valid provisions herein shall remain in full force and effect and all
terms, provisions and paragraphs of this Warrant shall be deemed to be
severable.
13. Governing Law. This Warrant shall be deemed to be a contract made
-------------
under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of said State.
14. Headings. Paragraph and subparagraph headings, used herein are
--------
included herein for convenience of reference only shall not affect the
construction of this Warrant nor constitute a part of this Warrant for
any other purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused these presents to be
duly executed the day and year defined herein as the "Commencement
Date."
DOMINION BRIDGE CORPORATION
By: /s/ Michel L. Marengere
-------------------------
Michel L. Marengere
Chairman and Chief Executive Officer
<PAGE>
APPENDIX A
----------
NOTICE OF WARRANT EXERCISE
--------------------------
Pursuant to a Warrant by and between the undersigned and DOMINION
BRIDGE CORPORATION, a Delaware corporation (the "Company"), dated as
of February 20, 1998, and subject to the vesting periods set forth
therein, the undersigned hereby irrevocably elects to exercise its
warrant to the extent of purchasing ______________ shares of Common
Stock, $.001 par value per share (the "Exercise Shares"), of the
Company as provided for therein.
The undersigned hereby represents and agrees that the Exercise
Shares purchased pursuant hereto are being purchased for investment
and not with a view to the distribution or resale thereof, and that
the undersigned understands that said Exercise Shares have not been
registered under the Securities Act of 1933, as amended.
Payment of the full Purchase Price of the Exercise Shares is
enclosed herewith, in the form of a check made payable to the Company.
The undersigned requests that a certificate for the Exercise
Shares be issued in the name of:
-----------------------------------------------
------------------------------------------------
------------------------------------------------
(Please print name, address and social security number)
Dated:________________________________________, ______
Address:______________________________________________
----------------------------------------------
----------------------------------------------
Signature:_____________________________________________
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT made and entered into as of
this 20th of February, 1998, by and between Dominion Bridge
Corporation, a Delaware corporation (the "Company"), and American Eco
Corporation, an Ontario, Canada corporation ("Investor").
BACKGROUND
----------
Pursuant to a Securities Purchase Agreement dated February
20, 1998 (the "Purchase Agreement"), by and between the Company and
Investor, the Company has agreed to issue to Investor shares of its
Common Stock, par value $.001 per share ("Common Stock"), and
Warrants, (each, a "Warrant") to purchase shares of its Common Stock.
In order to induce Investor and the Company to enter into
the foregoing transaction, the Company has agreed to provide Investor
with the rights set forth in this Agreement.
ARTICLE 1. CERTAIN DEFINITIONS.
In addition to the other terms defined in this Agreement,
the following terms shall be defined as follows:
"Brokers' Transactions" has the meaning ascribed to such
---------------------
term pursuant to Rule 144 under the Securities Act.
"Business Day" means any day on which the New York Stock
------------
Exchange ("NYSE") is open for trading.
"Common Stock" means any outstanding shares of Common Stock
------------
of the Company, as well as any Shares issuable upon the exercise of
the Warrants.
"Company" means Dominion Bridge Corporation, a Delaware
-------
corporation.
"Demand Registrations" mean all registrations of Registrable
--------------------
Securities covered by Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations of the SEC thereunder, all as
the same shall be in effect at the relevant time.
"Holder" means American Eco Corporation for so long as (and
------
to the extent that) it owns any Registrable Securities, and each of
its successors, assigns, and direct and indirect transferees who
become registered owners of Registrable Securities or securities
exercisable, exchangeable or convertible into Registrable Securities.
"Outstanding" means with respect to any securities as of any
-----------
date, all such securities therefore issued, except any such securities
therefore canceled or held by the Company or any successor thereto
whether in its treasury or not) or any affiliate of the Company or any
successor thereto shall not be deemed "Outstanding" for the purpose of
this Agreement.
"Person" means an individual, a partnership (general or
------
limited), corporation, limited liability company, joint venture,
business trust, cooperative, association or other form of business
organization, whether or not regarded as a legal entity under
applicable law, a trust (inter vivos or testamentary), an estate of a
deceased, insane or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision or other
instrumentality thereof, or any other entity.
"Registrable Security(ies)" means the Common Stock issued to
-------------------------
the Investor pursuant to the Purchase Agreement and all or any
portions of any shares of Common Stock that may be issued upon the
exercise of the Warrants, and any additional shares of Common Stock or
other equity securities of the Company issued or issuable after the
date hereof in respect of any such securities (or other equity
securities issued in respect thereof) by way of a stock dividend or
stock split, in connection with a combination, exchange,
reorganization, recapitalization or reclassification of Company
securities, or pursuant to a merger, division, consolidation or other
similar business transaction or combination involving the Company;
provided that: as to any particular Registrable Securities, such
securities shall cease to constitute Registrable Securities (i) when a
registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such
securities shall have been disposed of thereunder, or (ii) when and to
the extent such securities are permitted to be publicly sold pursuant
to Rule 144 (or any successor provision to such Rule) under the
Securities Act or are otherwise freely transferable to the public
without further registration under the Securities Act, or (iii) when
such securities shall have ceased to be Outstanding and, in the case
of clause (ii), the Company shall, if requested by the Holder or
Holders thereof, have delivered to such Holder or Holders the written
opinion of independent counsel to the Company to such effect. Any time
this Agreement requires the vote or consent of the Holder of a
"majority" or other stated percentage of the Registrable Securities,
the term Registrable Securities shall, solely for purposes of
calculating such vote, be deemed to include the Registrable Securities
then issuable under the Warrant and any other securities exercisable
or exchangeable for, or convertible into, Registrable Securities.
"Registration Expenses" means all expenses incident to the
---------------------
Company's performance of or compliance with the registration
requirements set forth in this Agreement including, without
limitation, the following: (i) the fees, disbursements and expenses of
the Company's counsel(s), accountants, and experts in connection with
the registration under the Securities Act of Registrable Securities;
(ii) all expenses in connection with the preparation, printing and
filing of the registration statement, any preliminary prospectus or
final prospectus, any other offering documents and amendments and
supplements thereto, and the mailing and delivery of copies thereof to
the underwriters and dealers, if any; (iii) the cost of printing or
producing any agreement(s) among underwriters, underwriting
agreement(s) and blue sky or legal investment memoranda, any selling
agreements, and any other documents in connection with the offering,
sale or delivery of Registrable Securities to be disposed of; (iv) any
other expenses in connection with the qualification of Registrable
Securities for offer and sale under state securities laws, including
the fees and disbursements of counsel for the underwriters in
connection with such qualification and in connection with any blue sky
and legal investment surveys; (v) the filing fees incident to securing
any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of Registrable Securities to be disposed
of and any blue sky registration or filing fees, and (vi) the fees and
expenses incurred in connection with the listing of Registrable
Securities on each securities exchange (or NASDAQ National Market
System) on which Company securities of the same class are then listed;
provided, however, that Registration Expenses with respect to any
- -----------------
registration pursuant to this Agreement shall not include (x) expenses
of any Holder's counsel, or (y) any underwriting discounts or
commissions attributable to Registrable Securities, each of which
shall be borne by the Holder.
"SEC" means the United States Securities and Exchange
---
Commission, or such other federal agency at the time having the
principal responsibility for administering the Securities Act.
"Securities Act" means the Securities Act or 1933, as
--------------
amended, and the rules and regulations of the SEC thereunder, all as
the same shall be in effect at the relevant time.
ARTICLE 2. DEMAND REGISTRATION.
(a) Commencing after March 31, 1998, Holder or Holders may
request at any time (by written notice delivered to the Company) that
the Company register under the Securities Act all or any portion of
the Registrable Securities held by (or then issuable to) such Holder
or Holders (the "Requesting Holders") for sale in the manner specified
in such notice. In each such case, such notice shall specify the
number of Registrable Securities for which registration is requested,
the proposed manner of disposition of such securities, and the minimum
price per share at which the Requesting Holders would be willing to
sell such securities in an underwritten offering. The Company shall,
within five (5) Business Days after its receipt of any Requesting
Holders' notice under this Section 2(a) give written notice of such
request to all other Holders of Registrable Securities and afford them
the opportunity of including in the requested registration statement
such of their Registrable Securities as they shall specify in a
written notice given to the Company within twenty (20) days after
their receipt of the Company's notice. Within ten (10) Business Days
after the expiration of such twenty (20) day period, the Company shall
notify all Holders requesting registration of (A) the aggregate number
of Registrable Securities proposed to be registered by all Holders,
(B) the proposed filing date of the registration statement, and (C)
such other information concerning the offering as any Holder may have
reasonably requested. If the Holders of a majority in aggregate amount
of the Registrable Securities to be included in such offering shall
have requested that such offering be underwritten, the managing
underwriter for such offering shall be chosen by the holders of a
majority in aggregate amount of the Registrable Securities being
registered, with the consent of the Company, which consent shall not
be unreasonably withheld, not less than thirty-five (35) days prior to
the proposed filing date stated in the Company's notice, and the
Company shall thereupon promptly notify such Holders as to the
identity of the managing underwriter, if any, for the offering. On or
before the 30th day prior to such anticipated filing date, any Holder
may give written notice to the Company and the managing underwriter
specifying either that (A) Registrable Securities of such Holder are
to be included in the underwriting, on the same terms and conditions
as the securities otherwise being sold through the underwriters under
such registration or (B) such Registrable Securities are to be
registered pursuant to such registration statement and sold in the
open market without any underwriting, on terms and conditions
comparable to those normally applicable to offerings in reasonably
similar circumstances, regardless of the method of disposition
originally specified in Holder's request for registration.
(b) Company shall use its best efforts to file with the SEC
within ninety (90) days after the Company's receipt of the initial
Requesting Holders' written notice pursuant to Section 2(a), a
registration statement for the public offering and sale, in accordance
with the method of disposition specified by such Holders, of the
number of Registrable Securities specified in such notice, and
thereafter use its best efforts to cause such registration statement
to become effective as quickly thereafter as is practicable, provided
that the Company may delay the filing of such registration statement
for up to an additional sixty (60) days if the Company determines that
such a delay is necessary either: (i) to obtain additional financial
statements for inclusion in such registration statement as a result of
an acquisition or probable acquisition of a "significant subsidiary"
as such term is defined by the SEC in Regulation S-X; or (ii) in order
to complete or otherwise bring to fruition a material business
combination or proposed material corporate transaction which in a
pending status would render difficult the completion of a registration
statement in accordance with applicable SEC regulations. Such
registration statement may be on Form S-1 or another appropriate form
(including Form S-3) that the Company is eligible to use.
(c) The Company shall not have any obligation hereunder to
register any Registrable Securities under Section 2(a) unless it shall
have received requests from Holders to register at least 40% of the
total Registrable Securities. Further, the Holder(s) shall only have
the right to exercise their rights of demand under this Section 2(a)
on two occasions in which the registration statement is declared
effective.
(d) Notwithstanding anything to the contrary contained
herein, the Company's obligation in Section 2(a) above shall extend
only to the inclusion of the Registrable Securities in a registration
statement filed under the Securities Act. The Company shall have no
obligation to assure the terms and conditions of distribution, to
obtain a commitment from an underwriter relative to the sale of the
Registrable Securities or to otherwise assume any responsibility for
the manner, price or terms of the distribution of the Registrable
Securities.
(e) The Company shall not be obligated to effect any Demand
Registration within 180 days after the effective date of a previous
underwritten Demand Registration or a previous registration in which
the Holders of Registrable Securities were given piggyback rights
pursuant to Section 3 and in which there was no reduction in the
number of Registrable Securities requested to be included. The Company
may postpone once for up to three months and once for up to six months
the filing or the effectiveness of a registration statement for a
Demand Registration if the Company determines that such Demand
Registration would reasonably be expected to have an adverse effect on
any proposal or plan by the Company or any of its subsidiaries to
engage in any financing, acquisition of assets or any merger,
consolidation, tender offer or other similar transaction; provided
that in such event, the Holders of Registrable Securities initially
requesting such Demand Registration shall be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration
shall not count as one of the Demand Registrations permitted to
Holders of Registrable Securities hereunder and the Company shall pay
all Registration Expenses in connection with such registration; and
provided further that the Company may exercise such right only once in
any 12-month period.
ARTICLE 3. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. If at any time after March 31, 1998,
------------------
the Company proposes to file a registration statement under the
Securities Act (except with respect to registration statements on
Forms S-4, S-8, or any other form not available for registering the
Registrable Securities for sale to the public), with respect to an
offering of Common Stock for its own account or for the account of
another person, then the Company shall in each case give written
notice of such proposed filing to the Holders of Registrable
Securities at least 45 days before the anticipated filing date of the
registration statement with respect thereto (the "Piggyback
Registration"), and shall, subject to Section 3(b) and 3(c) below,
include in such Piggyback Registration such amount of Registrable
Securities as each such Holder may request within 20 days of the
receipt of such notice.
(b) Priority on Primary Registrations. If a Piggyback
---------------------------------
Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in
an orderly manner in such offering within a price range acceptable to
the Company, the Company shall include in such registration (i) first,
the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration
to the extent that the number of shares to be registered will not, in
the opinion of the managing underwriters, adversely affect the
offering of the securities pursuant to clause (i), pro rata among the
Holders of such Registrable Securities on the basis of the number of
shares owned by such Holder and (iii) third, provided that all
Registrable Securities requested to be included in the registration
statement have been so included, any other securities requested to be
included in such registration.
(c) Priority on Secondary Registrations. If a Piggyback
-----------------------------------
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities other than the Holders of
Registrable Securities, and the managing underwriters advise the
Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the
Company shall include in such registration (i) first, the securities
requested to be included therein by the holders requesting such
registration, (ii) second, the Registrable Securities requested to be
included in such registration, to the extent that the number of shares
to be registered will not, in the opinion of the managing
underwriters, adversely affect the offering of the securities pursuant
to clause (i), pro rata among the Holders of such securities on the
basis of the number of shares so requested to be included therein
owned by each such Holder, and (iii) third, other securities requested
to be included in such registration.
ARTICLE 4. HOLDBACK AGREEMENTS.
(a) Each Holder of Registrable Securities shall not effect
any public sale or distribution (including sales pursuant to Rule 144)
of equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the 10
days prior to and the 120-day period beginning on the effective date
of any underwritten primary registration undertaken by the Company
(except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 30 days prior to and
during the 120-day period beginning on the effective date of any underwritten
Demand Registration on behalf of the Holders of Registrable Securities (except
as part of such underwritten registration or pursuant to registrations on Form
S-8 or S-4 or any successor form), unless the underwriters managing the
registered public offering otherwise agree.
ARTICLE 5. REGISTRATION PROCEDURES.
Whenever the Holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to
this Agreement, the Company shall use its best efforts to effect the
registration of the resale of such Registrable Securities and pursuant
thereto the Company shall as soon as practicable:
(a) prepare and file with the SEC a registration statement
with respect to the resale of such Registrable Securities and use its
best efforts to cause such registration statement to become effective
(provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall furnish to
the counsel selected by the Holders of a majority of the Registrable
Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to
the review and consent of such counsel);
(b) notify each Holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and
prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
a period of not less than 180 days and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any Holder reasonably requests and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition of the
Registrable Securities owned by the sellers in such jurisdictions
(provided that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent
to general service of process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the
request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange or trading system on which similar securities
issued by the Company are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary underwriting agreements
(containing terms acceptable to the Company) as the Holders of a
majority of the Registrable Securities being sold or the underwriters,
if any, reasonably request; and
(i) make available for inspection during normal business
hours by any seller of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any
such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
<PAGE>
ARTICLE 6. REGISTRATION EXPENSES.
All Registration Expenses in connection with any of the
registration events identified within this Agreement shall be borne by
the Company. All other expenses shall be borne by the Holders.
ARTICLE 7 INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted
by law, each Holder of Registrable Securities, its officers and
directors and each Person who controls such Holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue statement of material
fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto
or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information
furnished to the Company by such Holder for use therein or by such
Holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company
has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall
provide reasonable and customary indemnification to such underwriters,
their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the
Holders of Registrable Securities.
(b) In connection with any registration statement in which a
Holder of Registrable Securities is participating, each such Holder
shall furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection
with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning
of the Securities Act) against any losses, claims,. damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so
furnished by such Holder.
(c) Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification (provided that the
failure to give prompt notice shall not impair any Person's right to
indemnification hereunder to the extent such failure has not
prejudiced the indemnifying party) and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party.
If such defense is assumed, the indemnifying party shall not be
subject to any liability for any settlement made by the indemnified
party without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim shall not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director
or controlling Person of such indemnified party and shall survive the
transfer of securities. The Company also agrees to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification
is unavailable for any reason.
ARTICLE 8 OBLIGATION OF HOLDERS.
(a) In connection with each registration hereunder, each
selling Holder will furnish to the Company in writing such information
with respect to such seller and the securities held by such seller,
and the proposed distribution by them as shall be reasonably requested
by the Company in order to assure compliance with federal and
applicable state securities laws, as a condition precedent to
including such seller's Registrable Securities in the registration
statement. Each selling Holder also shall agree to promptly notify the
Company of any changes in such information included in the
registration statement or prospectus as a result of which there is an
untrue statement of material fact or an omission to state any material
fact required or necessary to be stated therein in order to make the
statements contained therein not misleading in light of the
circumstances then existing.
(b) In connection with each registration pursuant to this
Agreement, the Holders included therein will not effect sales thereof
until notified by the Company of the effectiveness of the registration
statement, and thereafter will suspend such sales after receipt of
telegraphic or written notice from the Company to suspend sales to
permit the Company to correct or update a registration statement or
prospectus. At the end of any period during which the Company is
obligated to keep a registration statement current, the Holders
included in said registration statement shall discontinue sales of
shares pursuant to such registration statement upon receipt of notice
from the Company of its intention to remove from registration the
shares covered by such registration statement which remain unsold, and
such Holders shall notify the Company of the number of shares
registered which remain unsold immediately upon receipt of such notice
from the Company.
ARTICLE 9 INFORMATION BLACKOUT.
(a) At any time when a registration statement effected
pursuant to this Agreement relating to Registrable Securities is
effective, upon written notice from the Company to the Holders that
the Company has determined in good faith that sale of Registrable
Securities pursuant to the registration statement would require
disclosure of non-public material information not otherwise required
to be disclosed under applicable law (an "Information Blackout"), all
Holders shall suspend sales of Registrable Securities pursuant to such
registration statement until the earlier of:
(i) thirty (30) days after the Company makes such good
faith determination; and
(ii) such time as the Company notifies the Holders that
such material information has been disclosed to the public or has
ceased to be material or that sales pursuant to such registration
statement may otherwise be resumed (the number of days from such
suspension of sales by the Holders until the day when such sale may be
resumed hereunder is hereinafter called a "Sales Blackout Period").
(b) Notwithstanding the foregoing, there shall be no more
than two (2) Information Blackouts during the term of this Agreement
and no Sales Blackout Period shall continue for more than thirty (30)
consecutive days.
ARTICLE 10 MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without
regard to that state's conflict of laws provisions.
(b) Counterparts. This Agreement may be signed in
------------
counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
(c) Amendments and Waivers. Except as otherwise provided
----------------------
herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the
Company and the Holders.
(d) Notices. All communications under this Agreement shall
-------
be sufficiently given if delivered by hand or by overnight courier or
mailed by registered or certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Dominion Bridge Corporation
500 rue Notre Dame
Lachine, Quebec, Canada H8S 2B2
Attention: Chairman
with a copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll Professional Corporation
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, PA 19103
or, in the case of the Holders, at such address as each such Holder
shall have furnished in writing to the Company; or at such other
address as any of the parties shall have furnished in writing to the
other parties hereto.
(e) Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(f) Entire Agreement; Survival; Termination. This Agreement
---------------------------------------
is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties have executed this Agreement as of the date first written
above.
DOMINION BRIDGE CORPORATION
By: /s/ Michel L. Marengere
-----------------------
Name: Michel L. Marengere
Title: Chairman and CEO
HOLDER:
AMERICAN ECO CORPORATION
BY: /s/ Michael E. McGinnis
-----------------------
Name: Michael E. McGinnis
Title: Chairman, President,
and CEO
<PAGE>
NOTICE SCHEDULE:
List of Holders:
American Eco Corporation
NEWS RELEASE
AMERICAN ECO CORPORATION 154 University Avenue, Suite 200,
Toronto, Ontario, Canada M5H 3Y9 [NASDAQ SYMBOL: ECGOF/TSE
SYMBOL: ECX/CBOE SYMBOL: EOQ/BERLIN SYMBOL: AEOGR]
FOR IMMEDIATE RELEASE THURSDAY, FEBRUARY 26, 1998
-------------------------------------------------
AMERICAN ECO OUTLINES LETTER OF INTENT
FOR DOMINION BRIDGE ACQUISITION
TORONTO, CANADA - MICHAEL E. MCGINNIS, CHAIRMAN, PRESIDENT & CEO
OF AMERICAN ECO CORPORATION announced today that as the first
step in a proposal to acquire Dominion Bridge Corporation of
Montreal, Quebec, following completion of the purchase of a
private placement of USD$5.0 million in shares and warrants of
Dominion Bridge, he has accepted appointments to the Board of
Directors and to the Executive Committee of Dominion Bridge.
Unanimous approval of an American Eco Letter of Intent to acquire
Dominion Bridge, was given upon the recommendation of Legg Mason
Wood Walker, Incorporated. The final transaction will be subject
to ratification of the Boards of both companies, execution of a
definitive acquisition agreement, approval of the shareholders of
both companies, as well as approval of requisite regulatory
authorities and customary closing conditions.
In the proposed acquisition transaction, the shareholders of
Dominion Bridge would receive, three year, 7-1/2% convertible
subordinated notes ("Notes") of American Eco in the principal
amount of USD$3.00 per each common share of Dominion Bridge. At
the end of each six-month period, holders may convert one-third
of the Notes into shares of American Eco common shares at a price
of USD$15.00 per share. In the event that American Eco's common
shares trade at more than USD$16.00 per share for a period of
twenty consecutive trading days, the Notes will be redeemable at
USD$3.00 per share by American Eco. The Notes will bc registered
and tradable on a nationally recognized securities exchange.
The transaction is valued at approximately USD$135.0 million
including the third party bank debt of Dominion Bridge
Corporation of USD$37.5 million. The valuation of Dominion
Bridge Corporation is based on the significant synergies between
the operating units of both companies in North America. American
Eco feels that the combined capabilities of the firms will enable
them to provide a broad array of services to their industrial
based clients including the offshore oil and gas businesses. The
significant engineering and construction expertise of Dominion
Bridge Corporation's 63% owned subsidiary, McConnell Dowell,
complements American Eco's business strategy.
The Letter of Intent includes a USD$25.0 million working capital
loan to be made available to Dominion Bridge by March 23, at
which time, American Eco will also provide management services to
Dominion Bridge. Concurrently, Dominion Bridge will issue a two-
year warrant to American Eco entitling American Eco to purchase
up to 10% of the outstanding common shares of Dominion Bridge at
USD$3.00 per share.
The Letter of Intent also provides for the payment of a USD$3.5
million break-up fee to American Eco in the event of a third
party acquisition of Dominion Bridge. The Letter of Intent
terminates if definitive agreements providing for the
contemplated transactions are not executed by April 6, 1998.
NEWS RELEASE - AMERICAN ECO CORPORATION - Page 2 of 2 - February
26, 1998
Michael McGinnis, Chairman, President & CEO of American Eco,
stated, "As a Canadian Company, American Eco plans to support the
employees and customers of Dominion Bridge through this
transition period and then to expand it as world class company,
by collaborating and sharing fabrication work with our American
Eco facilities in Halifax, Edmonton and Vancouver. In addition,
the ability to expand services not only throughout North America
but on a world wide basis, including the very strong Pacific Rim
presence of McConnell Dowell provides a major profit opportunity
for all divisions".
After execution of a definitive acquisition agreement, American
Eco and Dominion Bridge will file a registration statement with
the Securities and Exchange Commission containing a joint proxy
statement and prospectus that will be mailed to the companies'
stockholders. This announcement does not constitute an offering
of American Eco notes, which will be made only be means of a
prospectus filed with the Securities and Exchange Commission.
This news release contains forward-looking statements as defined
by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are other than
statements of historical facts. These statements that are
subject to uncertainties and risks including, but not limited to,
ability to raise capital, economic conditions, continuation of
existing contracts and increase in backlog, impact of
competition, pricing, capacity and supply constraints or
difficulties, government regulation and other risks, including
similar risks involving Dominion Bridge. All such forward-
looking statements whether written or oral, and whether made by
or on behalf of the company are expressly qualified by these
cautionary statements and any other cautionary statements which
may accompany the forward-looking statements. In addition, the
Company disclaims any obligation to update any forward-looking
statements to reflect events or circumstances after the date,
hereof.
DOMINION BRIDGE was established in 1879. The Company is active
in the international engineering and infrastructure markets. It
manages projects and operates facilities in North and South
America, Europe and the Asia Pacific. Dominion Bridge
Corporation's subsidiaries are Dominion Bridge, Inc., Steen
Becker, Inc. and Davie Industries. Its Australian subsidiary,
McConnell Dowell Corporation, is a major Asia Pacific engineering
firm.
AMERICAN ECO is a leading North American provider of single-
source construction management, maintenance, specialty
fabrication, engineering and environmental remediation services
in the refining, petrochemical, utility, forest products and
offshore manufacturing industries.
-30-
For additional information call:
J.C.Pennie Bruce Tobecksen
Vice-Chairman Treasurer
Toronto, Canada Houston, Texas
(416) 340-2727 (281) 774-7000
WWW.AMERICANECO.COM
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