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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1996
Commission File Number 1-10668
AIR-CURE TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 41-1667001
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2727 Allen Parkway, Suite 760 Houston, Texas 77019
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 713-285-2700
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
11,482,574
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(Number of shares of common stock of the
registrant outstanding as of August 13, 1996)
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AIR-CURE TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1996
<TABLE>
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Page
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PART I - FINANCIAL INFORMATION
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ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995 (audited) 3
Consolidated Statements of Operations for the
three and six month periods ended June 30, 1996
and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the
six month periods ended June 30, 1996 and
1995 (unaudited) 5
Notes to Consolidated Financial Statements 6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION 12
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AIR-CURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Current period unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995 (1)
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,377 $ 2,216
Restricted cash 124 83
Due on contracts and other receivables 15,116 22,926
Costs and estimated earnings in excess of billings
on uncompleted contracts 26,403 19,369
Inventories 3,791 3,944
Refundable income taxes 1,335 832
Prepaid expenses, deposits and other assets 879 502
Deferred tax asset 465 453
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Total Current Assets 50,490 50,325
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PROPERTY AND EQUIPMENT, NET 5,171 5,392
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OTHER ASSETS:
Licenses, trademarks and tradenames, net 4,300 4,400
Excess costs over net assets acquired, net 11,977 12,191
Other assets 41 51
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Total Other Assets 16,318 16,642
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TOTAL ASSETS $71,979 $72,359
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,139 $11,799
Accrued liabilities 18,191 14,892
Billings in excess of costs and estimated
earnings on uncompleted contracts 854 815
Current maturities of long-term obligations 3,332 3,347
Income taxes payable 96 124
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Total Current Liabilities 28,612 30,977
LONG-TERM LIABILITIES:
Borrowings under line of credit 15,300 11,499
Long-term obligations, less current maturities 5,909 6,709
Deferred tax liability 257 257
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Total Liabilities 50,078 49,442
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STOCKHOLDERS' EQUITY:
Preferred stock --- --
Common stock 11 11
Additional paid-in capital 20,985 20,901
Retained earnings 702 1,556
Translation adjustment 203 449
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Total Stockholders' Equity 21,901 22,917
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $71,979 $72,359
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</TABLE>
(1) The balance sheet at December 31,1995 is condensed from the
audited financial statements at that date.
See Notes To Financial Statements
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AIR-CURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenues $27,863 $33,601 $49,192 $56,440
Cost of revenues 22,409 27,702 39,058 46,380
------- ------- ------- -------
Gross profit 5,454 5,899 10,134 10,060
Selling, general and administrative expenses 2,345 2,970 4,992 5,526
Sales commissions 655 471 1,702 791
Depreciation and amortization 238 253 483 509
Restructuring costs ---- ---- 3,500 ----
------- ------- ------- -------
Operating profit (loss) 2,216 2,205 (543) 3,234
------- ------- ------- -------
Other income (expense):
Interest expense, net (468) (347) (853) (639)
Miscellaneous, net 26 204 44 264
------- ------- ------- -------
Total other expense (442) (143) (809) (375)
------- ------- ------- -------
Earnings (loss) before taxes 1,774 2,062 (1,352) 2,859
Income tax provision (benefit) 706 498 (504) 610
------- ------- ------- -------
Net earnings (loss) $ 1,068 $ 1,564 ($848) $ 2,249
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Net earnings (loss) per share $ 0.09 $ 0.14 ($0.07) $ 0.20
======= ======= ======= =======
Weighted average shares
outstanding 11,562 11,448 11,465 11,448
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</TABLE>
See Notes To Financial Statements
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AIR-CURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ($848) $2,249
Adjustments to reconcile net earnings (loss) to
net cash used in operating activities:
Depreciation and amortization 840 887
Benefit for deferred income taxes (12) (133)
Changes in assets and liabilities:
Restricted cash (43) 519
Due on contracts and other receivables, net 6,771 (4,055)
Inventories 150 1,438
Costs and estimated earnings in excess of
billings on uncompleted contracts (7,157) (9,984)
Prepaid expenses, deposits and other assets (380) (260)
Refundable income taxes 503 ---
Accounts payable and accrued liabilities (2,208) 9,317
Billings in excess of costs and estimated earnings
on uncompleted contracts 63 (944)
Income taxes payable (28) 315
Other 4 (122)
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Net cash used in operating activities (2,345) (773)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquired businesses, net of cash acquired (268) 2
Purchase of property and equipment (227) (501)
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Net cash used in investing activities (495) (499)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term obligations (833) (955)
Net borrowings under line of credit 3,791 2,835
Distributions to shareholders of pooled company --- (934)
Proceeds from issuance of stock 85 32
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Net cash provided by financing activities 3,043 978
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (42) 62
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Net decrease in cash and cash equivalents 161 (232)
Cash and cash equivalents, beginning of period 2,216 1,542
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Cash and cash equivalents, end of period $2,377 $1,310
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</TABLE>
See Notes To Financial Statements
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AIR-CURE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with Regulation S-X pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.
In the opinion of management, the unaudited condensed financial statements
contain all adjustments, consisting of only normal recurring adjustments,
necessary to present fairly the financial position as of June 30,1996, the
results of operations for the three and six month periods ended June 30, 1996
and 1995, and the cash flows for the six month periods ended June 30, 1996 and
1995. The 1996 interim results are not necessarily indicative of what actual
results will be for the entire year.
NOTE 2 - DUE ON CONTRACTS AND OTHER RECEIVABLES
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
Due on contracts and other receivables consist of:
Billings on completed contracts and
contracts in progress $13,753,000 $21,482,000
Retained contract receivables 1,200,000 1,278,000
Other miscellaneous receivables 357,000 361,000
Allowance for doubtful accounts (194,000) (195,000)
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$15,116,000 $22,926,000
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NOTE 3 - ACCRUED LIABILITIES
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
Accrued liabilities consist of:
Job costs $13,299,000 $10,854,000
Warranties 310,000 419,000
Compensation 1,705,000 2,359,000
Miscellaneous 2,877,000 1,260,000
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$18,191,000 $14,892,000
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</TABLE>
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NOTE 4 - BUSINESS ACQUISITIONS
On December 28, 1995, the Company issued 4,139,305 shares of its common stock
in exchange for all of the outstanding common stock of Allied Industries, Inc.
("Allied"). The merger has been accounted for as a pooling-of-interests and,
accordingly, the Company's consolidated financial statements have been restated
to include the accounts and operations of Allied effective January 28, 1994
(date of inception of Allied).
Effective January 1, 1995, Allied was granted S Corporation tax status.
Accordingly, Allied did not pay U.S. Federal income taxes for the period from
January 1, 1995 through December 28, 1995 (the date of merger). If Allied had
been a C Corporation for the period ended December 28, 1995, an additional
provision for income taxes of $415,000 and $638,000, respectively, would have
been recorded for the three and six month periods ended June 30, 1995 resulting
in a pro forma net earnings for the Company of approximately, $1,149,000 and
$1,611,000, respectively, pro forma net earnings per share of $0.10 and $0.14,
respectively.
NOTE 5 - RESTRUCTURING COSTS
A restructuring charge totaling $4,200,000 was taken during the first quarter
of fiscal 1996. The charge includes the estimated future cost of the
employment agreement, including severance, with the former president and chief
executive officer who was replaced in March 1996, and the anticipated cost to
implement management's plan to reduce the Company's overall cost structure
including employee severance, lease and other contract buyouts, inventory and
other asset impairments, excess machinery disposal, and other costs. These
charges are reflected as restructuring costs of $3,500,000 and a reserve of
$700,000 which has been included in cost of revenues.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Air-Cure Technologies, Inc. ("Air-Cure" or the "Company") was formed in April
1990 when the Company purchased substantially all of the assets of Texcel
Filtration Systems, Inc. Since its founding, the Company has experienced
substantial growth, both internally and through acquisitions. The Company
acquired Pipkorn Environmental Technologies, Inc. and Interel Environmental
Technologies, Inc. in 1991, Air-Cure Dynamics, Inc., Air-Cure (Canada)
Technologies, Ltd., Air-Cure Environmental GmbH, and Air-Cure (Singapore) Pte.
Ltd. in 1992, and Amerex Industries, Inc. and VIC Environmental Systems, Inc.
in 1994. All of these acquisitions were accounted for under the purchase
method of accounting. For each purchase transaction, the excess of the total
acquisition costs over the fair value of the net assets acquired is being
amortized on a straight-line basis over 25 years. In December 1995, the
Company and Allied merged in a transaction in which Allied became a
wholly-owned subsidiary of the Company. The merger between the Company and
Allied was treated as a pooling-of-interests for accounting purposes.
Accordingly, the Company's historical financial statements have been restated
to reflect the combined operations of the Company and Allied for periods prior
to consummation of the merger.
Most of the Company's revenues are derived from the performance of fixed-price
contracts, which in some cases are subject to adjustment for changes in the
price of raw materials. Revenues from such contracts are recognized using the
percentage of completion method, measured by the percentage of costs incurred
to date to estimated total costs for each contract. The turnover rate of
contract receivables varies from period to period because the Company's
business includes both large and small contracts, and receivable balances
depend on individually negotiated contract terms, retainage amounts, if any,
and the timing of invoicing.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995:
Revenues. Revenues for the three month period ended June 30, 1996 totaled
$27,863,000, versus $33,601,000 for the corresponding period in 1995, a
$5,738,000 or 17% decrease in revenues. This decrease is due primarily to a
relatively low backlog at certain divisions at the beginning of 1996. Revenues
from North American operations for the three month period ended June 30, 1996
and 1995 totaled $24,333,000 and $30,779,000, respectively, with the European
and Asian operations combined totaling $3,530,000 and $2,822,000, respectively.
Gross Profit. Gross profit decreased to $5,454,000 (20% margin) for the three
month period ended June 30, 1996 from $5,899,000 (18% margin) for the same
period in the previous year. The gross profit margin percentage has increased
due to sales of a more profitable mix of products during the period. The gross
profit from North American operations for the three month period ended June 30,
1996 and 1995 totaled $4,685,000 (19% margin) and $5,294,000 (17% margin),
respectively, with the
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European and Asian operations combined totaling $769,000 (22% margin) and
$605,000 (21% margin), respectively.
Operating Expenses. S,G&A expenses for the three month period ended June 30,
1996 decreased to $2,345,000 from $2,970,000 for the same period in 1995. The
Company's focus on both restructuring its operations and cost containment,
including reductions in personnel and office space, contributed to declines in
salary and rent expense. Sales commissions totaled $655,000 and $471,000 for
the three months ended June 30, 1996 and 1995, respectively. The increase in
commissions relates to an increase in foreign sales by domestic operations.
Interest. Net interest expense of $468,000 and $347,000 during the second
quarters of 1996 and 1995, respectively, relates to debt for acquisitions and
for the Company's line of credit for working capital purposes. The increase in
the interest expense in 1996 compared to the corresponding period in 1995 is
due to the increase in the average outstanding balance on the line of credit.
Miscellaneous Income. Miscellaneous income for the three month period ended
June 30, 1995 included a $210,000 credit for an account receivable plus
interest that was collected during that quarter. The receivable had been
previously written off by a subsidiary of the Company prior to the Company's
acquisition of the subsidiary.
Net Earnings. Net earnings before taxes was $1,774,000 for the three month
period ended June 30, 1996, as compared to $2,062,000 for the corresponding
period in 1995. The decrease in earnings is primarily attributable to the
increase in interest expense and reduction in miscellaneous income. The income
tax provision totaled $706,000 for the second quarter of 1996 and $498,000 for
the second quarter of 1995. As more fully described in Note 4 to the financial
statements, the increase in taxes is due to the acquisition of Allied
Industries which was taxed as a C corporation in 1996 and was not taxed in 1995
since it was an S corporation. Also, the effective tax rate is higher than the
federal statutory rate due to state income taxes and nondeductible amortization
of intangible assets. Correspondingly, the net earnings for the three month
period ended June 30, 1996 totaled $1,068,000 and the net earnings for the
three month period ended June 30, 1995 totaled $1,564,000.
Backlog. The Company's backlog represents revenue which is expected to be
recognized in subsequent periods with respect to contracts which have been
awarded as of the date on which backlog has been calculated. Depending upon
the length of time required to perform its contracts, the Company's results of
operations reflect the volume and pricing of orders received. As of June 30,
1996, the Company had an estimated backlog of work under contracts believed to
be firm of approximately $28,462,000, 13% of which is attributable to one
customer. As of December 31, 1995, the Company had an estimated backlog of
approximately $28,105,000, 20% of which was attributable to a project for one
customer. The Company expects to complete virtually all of its backlog as of
June 30, 1996 within the next twelve months.
SIX MONTHS ENDED JUNE 30,1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995:
Revenues. Revenues for the six month period ended June 30, 1996 totaled
$49,192,000, a $7,248,000 decrease in revenues from the corresponding period in
1995. The revenue decrease is due primarily to a relatively low backlog at the
beginning of 1996. Combined revenues from the Company's European and Asian
operations were $7,373,000 and $4,681,000, respectively, for the six months
ended June 30, 1996 and 1995.
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Gross profit. Gross profit was $10,134,000 and $10,060,000,respectively, for
the six month periods ended June 30, 1996 and 1995; however, the gross margin
percentage improved to 21%in fiscal 1996 from 18% in fiscal 1995. The gross
profit from North American operations for the six months ending June 30, 1996
and 1995 totaled $8,338,000 and $9,118,000, respectively, with the European and
Asian operations totaling $1,796,000 and $942,000, respectively.
Selling, General and Administrative Expenses. S, G &A expenses for the six
month period ending June 30, 1996 decreased to $4,992,000 from $5,526,000 for
the same period in 1995. The Company's focus on both restructuring its
operations and cost containment, including reductions in personnel and office
space, contributed to declines in salary and rent expense.
Interest. Interest expense during the first six months of 1996 was $853,000
compared to $639,000 for the comparable period in 1995. The increase is
attributable to an increase in the average outstanding borrowings on the
Company's line of credit.
Net Earnings (Loss). Net loss before taxes was $1,352,000 for the six month
period ended June 30, 1996, as compared to earnings of $2,859,000 for the
corresponding period in 1995. The income tax benefit totaled $504,000 for the
six month period ended June 30, 1996, with an income tax provision of $610,000
for the six month period ended June 30, 1995. Correspondingly, the net loss
for the six month period ended June 30, 1996 was $848,000 and the net earnings
for the six month period ended June 30, 1995 totaled $2,249,000. The decrease
in net earnings is primarily a result of the $4,200,000 restructuring charge,
described in Note 5 of the financial statements, taken in the first quarter of
1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $21,878,000 at June 30, 1996, compared to
$19,348,000 at December 31, 1995. Cash and cash equivalents increased by
$161,000 during such period.
The Company's existing capital resources consist of cash generated by its
operating activities and funds available under its line of credit. During the
six month periods ended June 30, 1996 and 1995, the Company's operating
activities used cash of $2,345,000 and $773,000, respectively.
During the six month periods ended June 30, 1996 and 1995, $227,000 and
$501,000, respectively, were invested in property and equipment. Cash paid for
acquired businesses, net of cash received totaled $268,000 in 1996. Net
borrowings totaled $2,958,000 and $1,880,000 during the six month periods ended
June 30, 1996 and 1995, respectively. Proceeds received relating to the
issuance of stock totaled $85,000 and $32,000 for the six month periods ended
June 30, 1996 and 1995, respectively. During the six month period ended June
30, 1995, which was prior to the merger, $934,000 of distributions were made to
the shareholders of Allied Industries, Inc.
The Company's capital requirements consist of its general working capital
needs, capital expenditures and the funds necessary to make the payments
required under the promissory notes. The Company's general working capital
requirements consist of salary costs and related overhead, the purchase price
of material and components and subcontract costs incurred prior to the receipt
of corresponding progress payments under the contract with respect to which
such costs are incurred. Management anticipates that the Company will make
approximately $400,000 in capital expenditures during the last six months of
1996. Approximately $1,666,000 in principal payments related to the term loan
will be payable during the last six months of 1996.
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On October 18, 1995, the Company entered into a $15,000,000 financing agreement
with Bank of America which was amended on December 29, 1995 to increase the
maximum borrowings to $25,000,000. As amended, the financing consisted of a
$10,000,000 term loan plus a $15,000,000 revolving credit facility. On June
28, 1996, the Company further amended the financing agreement to, among other
things, increase the revolving credit facility to $20,000,000. The term loan
and the line of credit currently bear interest at the prime rate or a
calculated interest factor plus the Eurodollar rate. The term loan, maturing
December 31 1998, is payable in 12 quarterly payments of principal and
interest, while the line of credit is due in full in December 1997, with
interest payable monthly. As of June 30, 1996, approximately $4,258,000 was
available for borrowing under the Company's revolving credit facility.
Management expects that funds available under the credit facility, together
with cash generated from operations, will be sufficient to meet the Company's
capital requirements for its general working capital needs, capital
expenditures and debt service requirements for at least the next 12 months.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which the Company is party
or of which any of its property is subject.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required to be filed by Item 601 of Regulation S-K.
<TABLE>
<S> <C>
3.1(h) Certificate of Incorporation of Air-Cure Technologies, Inc., as amended.
3.2 Certificate of Amendment to Certificate of Incorporation.
3.3(h) By-Laws of Air-Cure Technologies, Inc., as amended.
4.1 Omitted.
4.2 Omitted.
4.3 Form of Warrant Agreement between Air-Cure and Sanders Morris Mundy Inc. dated
April 24, 1996.
4.4 Omitted.
4.5(c) Form of Warrant Agreement between Air-Cure and Sanders Morris Mundy Inc. dated
June 15, 1992.
</TABLE>
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<TABLE>
<S> <C>
4.6(d) Form of Warrant Agreement between Air-Cure and Pennsylvania Merchant Group,
Ltd.
10.1(f) Air-Cure 401(k) Employee Retirement Savings Program, as amended June 30, 1994.
10.2(i) Agreement and Plan of Merger, dated October 13, 1995, among Air-Cure
Technologies, Inc., Air-Cure Acquisition Corporation, Allied Industries, Inc.,
Mark E. Johnson and Pierre S. Melcher.
10.3(k) Employment Agreement, dated December 29, 1995, between Air-Cure and Mark E.
Johnson.
10.4(k) Employment Agreement, dated December 29, 1995, between Air-Cure and Pierre S.
Melcher.
10.5(g) Amended and Restated 1990 Stock Option Plan, as amended June 29, 1995.
10.6 Omitted.
10.7(f) Lease agreement between Halligan and Labbe Enterprises LLC and Amerex
Industries, Inc., dated May 25, 1994.
10.8(d) Employment Agreement, dated December 17, 1992, between Air-Cure and Michael P.
Lawlor.
10.9 Employment Agreement, dated March 1, 1996, between Air-Cure and Lawrance W.
McAfee.
10.10 Omitted.
10.11(f) Employment Agreement, dated March 1, 1995 between Air-Cure and John P.
Fitzpatrick.
10.12 Omitted.
10.13 Omitted.
10.14 Omitted.
10.15 Omitted.
10.16(d) Form of Stock Option Agreement.
10.17 Omitted.
10.18 Omitted.
</TABLE>
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<TABLE>
<S> <C>
10.19(b) License and Technical Assistance Agreement, dated August 28, 1991, between
Interel Environmental Technologies, Inc. and Heinrich Luhr Staubtechnik GmbH &
Co.
10.20 Omitted.
10.21 Omitted.
10.22 Omitted.
10.23 Omitted.
10.24(g) Directors' Stock Option Plan.
10.25 Amendment to Directors' Stock Option Plan.
10.26(f) Employees Stock Purchase Plan, as amended December 15, 1994.
10.27(e) Agreement, dated January 31, 1994, between Air-Cure Technologies, Inc. and
Local Union #486, Sheet Metal Worker's International Association.
10.28(j) Credit Agreement dated as of October 18, 1995, among Air-Cure and Bank of
America.
10.29(e) Agreement and Plan of Merger, dated April 5, 1994, among Air-Cure
Environmental, Inc., Air-Cure Acquisition Corporation, Amerex, Inc., Amerex
Industries, Inc. and other parties.
10.30(e) Agreement and Plan of Merger, dated April 28, 1994, among Air-Cure
Environmental, Inc., VIC Acquisition Corporation, VIC Environmental Systems,
Inc. and Ronald E. Lewis.
27 Financial Data Schedule
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</TABLE>
<TABLE>
<S> <C>
a Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-18 (File No. 33-37240).
b Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-1 (File No. 33-44205).
c Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-1 (File No. 33-52012).
d Incorporated by reference. Documents were previously filed as exhibits to registrant's Annual Report
on Form 10-K for fiscal year ending March 31, 1993 (File No. 1-10668).
</TABLE>
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<TABLE>
<S> <C>
e Incorporated by reference. Documents were previously filed as exhibits to registrant's
registration statement on Post-Effective Amendment No. 1 to Form S-1 filed on May 5, 1994 (File
No. 33-69524).
f Incorporated by reference. Documents were previously filed as exhibits to registrant's
Annual Report on Form 10-K for the year ending December 31, 1994 (File No. 1-10668).
g Incorporated by reference. Documents were previously filed as exhibits to registrant's
Preliminary Proxy Statement for the Annual Meeting of Stockholders held on June 29, 1995.
h Incorporated by reference. Documents were previously filed as exhibits to registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 (File No. 1-10668).
i Incorporated by reference. Documents were previously filed as exhibits to registrant's
registration statement on Post-Effective Amendment No. 1 to Form S-4 filed on October 20, 1995
(File No. 33-92308).
j Incorporated by reference. Documents were previously filed as exhibits to registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (File No. 1-10668).
k Incorporated by reference. Documents were previously filed as exhibits to registrant's
Annual Report on Form 10-K for the year ending December 31, 1995 (File No. 1-10668).
</TABLE>
(b) Reports on Form 8-K.
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIR-CURE TECHNOLOGIES, INC.
Date: August 14, 1996 /s/Lawrance W.McAfee
----------------------------------------
Lawrance W. McAfee
Executive Vice President,
Chief Financial Officer and
Secretary
Date: August 14, 1996 /s/David E. Crays
----------------------------------------
David E. Crays
Corporate Controller and
Assistant Secretary
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1(h) Certificate of Incorporation of Air-Cure Technologies, Inc., as amended.
3.2 Certificate of Amendment to Certificate of Incorporation.
3.3(h) By-Laws of Air-Cure Technologies, Inc., as amended.
4.1 Omitted.
4.2 Omitted.
4.3 Form of Warrant Agreement between Air-Cure and Sanders Morris Mundy Inc. dated
April 24, 1996.
4.4 Omitted.
4.5(c) Form of Warrant Agreement between Air-Cure and Sanders Morris Mundy Inc. dated
June 15, 1992.
4.6(d) Form of Warrant Agreement between Air-Cure and Pennsylvania Merchant Group,
Ltd.
10.1(f) Air-Cure 401(k) Employee Retirement Savings Program, as amended June 30, 1994.
10.2(i) Agreement and Plan of Merger, dated October 13, 1995, among Air-Cure
Technologies, Inc., Air-Cure Acquisition Corporation, Allied Industries, Inc.,
Mark E. Johnson and Pierre S. Melcher.
10.3(k) Employment Agreement, dated December 29, 1995, between Air-Cure and Mark E.
Johnson.
10.4(k) Employment Agreement, dated December 29, 1995, between Air-Cure and Pierre S.
Melcher.
10.5(g) Amended and Restated 1990 Stock Option Plan, as amended June 29, 1995.
10.6 Omitted.
10.7(f) Lease agreement between Halligan and Labbe Enterprises LLC and Amerex
Industries, Inc., dated May 25, 1994.
10.8(d) Employment Agreement, dated December 17, 1992, between Air-Cure and Michael P.
Lawlor.
10.9 Employment Agreement, dated March 1, 1996, between Air-Cure and Lawrance W.
McAfee.
10.10 Omitted.
10.11(f) Employment Agreement, dated March 1, 1995 between Air-Cure and John P.
Fitzpatrick.
10.12 Omitted.
10.13 Omitted.
10.14 Omitted.
10.15 Omitted.
10.16(d) Form of Stock Option Agreement.
10.17 Omitted.
10.18 Omitted.
10.19(b) License and Technical Assistance Agreement, dated August 28, 1991, between
Interel Environmental Technologies, Inc. and Heinrich Luhr Staubtechnik GmbH &
Co.
10.20 Omitted.
10.21 Omitted.
10.22 Omitted.
10.23 Omitted.
10.24(g) Directors' Stock Option Plan.
10.25 Amendment to Directors' Stock Option Plan.
10.26(f) Employees Stock Purchase Plan, as amended December 15, 1994.
10.27(e) Agreement, dated January 31, 1994, between Air-Cure Technologies, Inc. and
Local Union #486, Sheet Metal Worker's International Association.
10.28(j) Credit Agreement dated as of October 18, 1995, among Air-Cure and Bank of
America.
10.29(e) Agreement and Plan of Merger, dated April 5, 1994, among Air-Cure
Environmental, Inc., Air-Cure Acquisition Corporation, Amerex, Inc., Amerex
Industries, Inc. and other parties.
10.30(e) Agreement and Plan of Merger, dated April 28, 1994, among Air-Cure
Environmental, Inc., VIC Acquisition Corporation, VIC Environmental Systems,
Inc. and Ronald E. Lewis.
27 Financial Data Schedule
- --------------------
</TABLE>
<TABLE>
<S> <C>
a Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-18 (File No. 33-37240).
b Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-1 (File No. 33-44205).
c Incorporated by reference. Documents were previously filed as exhibits to registrant's registration on
Form S-1 (File No. 33-52012).
d Incorporated by reference. Documents were previously filed as exhibits to registrant's Annual Report
on Form 10-K for fiscal year ending March 31, 1993 (File No. 1-10668).
e Incorporated by reference. Documents were previously filed as exhibits to registrant's
registration statement on Post-Effective Amendment No. 1 to Form S-1 filed on May 5, 1994 (File
No. 33-69524).
f Incorporated by reference. Documents were previously filed as exhibits to registrant's
Annual Report on Form 10-K for the year ending December 31, 1994 (File No. 1-10668).
g Incorporated by reference. Documents were previously filed as exhibits to registrant's
Preliminary Proxy Statement for the Annual Meeting of Stockholders held on June 29, 1995.
h Incorporated by reference. Documents were previously filed as exhibits to registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 (File No. 1-10668).
i Incorporated by reference. Documents were previously filed as exhibits to registrant's
registration statement on Post-Effective Amendment No. 1 to Form S-4 filed on October 20, 1995
(File No. 33-92308).
j Incorporated by reference. Documents were previously filed as exhibits to registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (File No. 1-10668).
k Incorporated by reference. Documents were previously filed as exhibits to registrant's
Annual Report on Form 10-K for the year ending December 31, 1995 (File No. 1-10668).
</TABLE>
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
AIR-CURE TECHNOLOGIES, INC.
Air-Cure Technologies, Inc., a Delaware corporation (the "Corporation"),
does hereby certify that:
1. Article Fourth of the Certificate of Incorporation of the Corporation
is hereby amended in its entirety to read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall have
the authority to issue is 31,000,000 shares, of which 30,000,000 shares shall
be designated Common Stock, par value $.001 per share, and 1,000,000 shares
shall be designated Preferred Stock, par value $.01 per share. The Board of
Directors may authorize the issuance from time to time of the Preferred Stock
in one or more series with such designations, preferences, qualifications,
limitations, restrictions and optional or other special rights (which may
differ with respect to each series) as the Board may fix by resolution.
Without limiting the foregoing, the Board of Directors is authorized to fix
with respect to each series:
(1) The number of shares which shall constitute the series and the name of
the series;
(2) The rate and times at which, and the preferences and conditions under
which, dividends shall be payable on shares of the series, and the status of
such dividends as cumulative or non-cumulative and as participating or
non-participating;
(3) The prices, times and terms, if any, at or upon which shares of the
series shall be subject to redemption;
(4) The rights, if any, of holders of shares of the series to convert such
shares into, or to exchange such shares for, shares of any other class of stock
of the Corporation;
(5) The terms of the sinking fund or redemption or purchase account, if
any, to be provided for shares of the series;
(6) The rights and preferences, if any, of the holders of shares of the
series upon any liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation;
(7) The limitations, if any, applicable while such series is outstanding,
on the payment of dividends or making of distributions on, or the acquisition
of, the Common Stock or any other class of stock which does not rank senior to
the shares of the series; and
<PAGE> 2
(8) The voting rights, if any, to be provided for shares of the series."
2. The forgoing amendment to the Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 222 and 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment on July ___, 1996.
AIR-CURE TECHNOLOGIES, INC.
/s/ Lawrance W. McAfee
-------------------------------
Lawrance W. McAfee
Executive Vice President
ATTEST:
/s/ David Crays
- --------------------------------
David Crays, Assistant Secretary
2
<PAGE> 1
EXHIBIT 4.3
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE SUBJECT TO CERTAIN RESTRICTIONS,
CONTAINED IN PARAGRAPH 5 HEREOF, WITH
RESPECT TO THEIR TRANSFER.
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF
AIR-CURE TECHNOLOGIES, INC.
33,675 WARRANTS
April 24, 1996
This Warrant certifies that, for value received, SANDERS MORRIS MUNDY INC.
(the "Holder") is the registered holder of 33,675 Warrants (the "Warrants") to
purchase from Air-Cure Technologies, Inc., a Delaware corporation (the
"Company"), one share (for each such Warrant) of the Company's common stock,
par value $.001 per share (the common stock, including any stock into which it
may be changed, reclassified or converted, is herein referred to as the "Common
Stock"), at the purchase price of $4.72 (the "Exercise Price") (subject to
adjustment as provided herein).
This Warrant is subject to the following provisions, terms and conditions:
1. EXERCISE OF WARRANTS
This Warrant may be exercised by the Holder, in whole or in part, subject
to the provisions hereof (but not as to a fractional share of Common Stock), by
(a) surrender of this Warrant at the principal office of the Company located at
2828 Clinton Drive, Houston, Texas 77020 (or such other office or agency of
the Company as may be designated by notice in writing to the Holder at the
address of such Holder appearing on the books of the Company) with the
appropriate form attached hereto duly executed, at any time within the period
beginning on the date hereof and expiring at 5:00 p.m. Houston, Texas time on
April 24, 1998 (the "Exercise Period") and (b) payment to the Company by
certified check or bank draft of the Exercise Price for such shares.
The Company agrees that the shares of Common Stock so purchased shall be
and are deemed to be issued to the Holder as the record owner of such shares of
Common Stock as of the close of business on the date on which the Warrant shall
have been surrendered and payment made for such shares of Common Stock.
Certificates representing the shares of Common Stock so purchased, together
with any cash for fractional shares of Common Stock paid pursuant to Section
<PAGE> 2
2D, shall be delivered to the Holder promptly and in no event later than five
business days after the Warrants shall have been so exercised, and, unless the
Warrants have expired, a new Warrant representing the number of shares of
Common Stock, if any, in respect of which this Warrant shall not have been
exercised also shall be delivered to the Holder within such time.
2. ADJUSTMENTS
A. ADJUSTMENT OF EXERCISE PRICE. In case (i) the outstanding shares of
the Common Stock shall be subdivided into a greater number of shares, (ii) a
dividend in Common Stock shall be paid in respect of Common Stock, (iii) the
outstanding shares of Common Stock shall be combined into a smaller number of
shares thereof, or (iv) any shares of the Company's capital stock are issued by
reclassification of the Common Stock, the Exercise Price per share in effect
immediately prior to such subdivision, combination or reclassification or at
the record date of such dividend or distribution shall simultaneously with the
effectiveness of such subdivision, combination or reclassification or
immediately after the record date of such dividend or distribution be
proportionately adjusted to equal the product obtained by multiplying the
Exercise Price by a fraction, the numerator of which is the number of
outstanding shares of Common Stock prior to such combination, subdivision,
reclassification or dividend, and the denominator of which is that number of
outstanding shares of Common Stock after giving effect to such combination,
subdivision, reclassification or dividend. Any dividend paid or distributed on
the Common Stock in stock or any other securities convertible into shares of
Common Stock shall be treated as a dividend paid in Common Stock to the extent
that shares of Common Stock are issuable upon the conversion thereof.
Whenever the Exercise Price per share is adjusted as provided in the
immediately preceding paragraph, the number of shares of the Common Stock
purchasable upon exercise of the Warrant immediately prior to such Exercise
Price adjustment shall be adjusted, effective simultaneously with such Exercise
Price adjustment, to equal the product obtained (calculated to the nearest full
share) by multiplying such number of shares of the Common Stock by a fraction,
the numerator of which is the Exercise Price per share in effect immediately
prior to such Exercise Price adjustment and the denominator of which is the
Exercise Price per share in effect upon such Exercise Price adjustment, which
adjusted number of shares of the Common Stock shall thereupon be the number of
shares of the Common Stock purchasable upon exercise of the Warrant until
further adjusted as provided herein.
B. NOTICE OF ADJUSTMENTS OF EXERCISE PRICE. Whenever the Exercise Price
is adjusted as herein provided, the Company shall deliver to Holder, within 30
days after such adjustment, a notice setting forth (1) the adjusted Exercise
Price and the adjusted number of shares of Common Stock that may be acquired on
the exercise of this Warrant, (2) the calculation of such adjustment and
(3) the facts upon which such calculation is based.
C. STATEMENT ON WARRANT CERTIFICATES. This Warrant need not be amended or
modified because of any change in the Exercise Price or in the number or kind
of shares
2
<PAGE> 3
purchasable upon the exercise of this Warrant; however, the Company may, at any
time and in its sole discretion, amend or modify this Warrant in any manner it
may deem appropriate and that does not affect the substance thereof. Any
Warrant Certificate thereafter issued, whether in exchange or substitution for
any outstanding Warrant Certificate or otherwise, may be in the form so amended
or modified.
D. FRACTIONAL INTEREST. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. The number
of full shares of Common Stock which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of whole shares of Common
Stock purchasable on exercise of the Warrant so presented. If any fraction of
a share of Common Stock would, except for the provisions of this Section 2D, be
issuable on the exercise of this Warrant, the Company shall, in lieu of issuing
such fractional share of Common Stock, pay an amount in cash equal to the
Closing Price (as defined below), multiplied by the fraction of a share of
Common Stock otherwise issuable. For the purposes hereof, "Closing Price" on
any Trading Day (as determined below) with respect to any security means the
average of the highest reported bid price and the lowest reported asked price
on a Trading Day, on the Nasdaq National Market System or any other recognized
securities exchange on which the security is traded; if on any Trading Day the
security is not quoted by any such organization, the fair value of such
security on such day, as determined by the Board of Directors of the Company.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable securities
exchange.
3. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company covenants and agrees (a) that all shares of Common Stock which
may be issued upon the exercise or conversion of this Warrant will, upon
issuance, be validly issued, fully paid and nonassessable and free of all
transfer taxes, liens and charges with respect to the issue thereof, (b) that
during the Exercise Period, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise or conversion of
this Warrant, sufficient shares of Common Stock to provide for the exercise or
conversion of this Warrant and (c) that the Company will take all such action
as may be necessary to ensure that the shares of Common Stock issuable upon the
exercise or conversion of this Warrant may be so issued without violation of
any applicable law or regulation, or any requirement of any securities exchange
upon which any capital stock of the Company may be listed.
4. NO VOTING RIGHTS
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company.
3
<PAGE> 4
5. RESTRICTIONS ON TRANSFER
This Warrant and the shares of Common Stock issuable upon the exercise or
conversion of this Warrant are not transferable directly or indirectly, in
whole or in part, except in the case of any such transfer (a) which is in
compliance with applicable federal and state securities laws, including but not
limited to, the Securities Act of 1933 ("Securities Act") and (b) for which the
Company is provided with an opinion of counsel to the Holder, reasonably
satisfactory to the Company, to the effect that such transfer is not in
violation of any of said securities laws. The certificates representing the
shares of Common Stock issuable upon the exercise or conversion of this Warrant
will bear restrictive legends evidencing such restrictions.
6. CLOSING OF BOOKS
The Company will at no time close its transfer books against the transfer
of any Warrant or of any shares of Common Stock or other securities issuable
upon the exercise or conversion of any Warrant in any manner which interferes
with the timely exercise or conversion of the Warrants.
7. WARRANTS EXCHANGEABLE; LOSS, THEFT
This Warrant is exchangeable, upon the surrender hereof by any Holder at
the office or agency of the Company referred to in Section 1, for a new Warrant
or Warrants of like tenor representing in the aggregate the right to subscribe
for and purchase the number of shares of Common Stock which may be subscribed
for and purchased hereunder, each such new Warrant to represent the right to
subscribe and purchase such number of shares of Common Stock as shall be
designated by said holder hereof at the time of such surrender. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation, or upon surrender or cancellation of this Warrant, the Company will
issue to the holder hereof a new Warrant of like tenor, in lieu of this
Warrant, representing the right to subscribe for and purchase the number of
shares of Common Stock which may be subscribed for and purchased hereunder.
8. MERGERS, CONSOLIDATIONS
If at any time while this Warrant, or any portion thereof, is outstanding
and unexpired there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation of the Company with or into another
corporation or entity in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in
the form of securities, cash, or otherwise, or (iii) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person or entity, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Warrant shall thereafter be
4
<PAGE> 5
entitled to receive upon exercise of this Warrant, during the period specified
herein and upon payment of the Exercise Price then in effect, the number of
shares of stock or other securities or property of the successor corporation or
entity resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided herein. The foregoing provisions of this
Section 8 shall similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any other
corporation or entity that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end
that the provisions of this Warrant shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
9. RIGHT TO CONVERT WARRANTS.
A. The Holder shall have the right to convert this Warrant (the
"Conversion Right"), in whole but not in part, at any time prior to the
expiration of the Exercise Period, into shares of Common Stock as provided for
in this Section 9. Upon exercise of the Conversion Right, the Company shall
deliver to the Holder (without payment by the Holder of any Exercise Price)
that number of shares of Common Stock equal to the quotient obtained by
dividing (x) the value of this Warrant at the time the Conversion Right is
exercised (determined by subtracting the aggregate Exercise Price for this
Warrant in effect immediately prior to the exercise of the Conversion Right
from the amount obtained by multiplying the number of shares of Common Stock
issuable upon the exercise of this Warrant by the Closing Price on the Trading
Day immediately preceding the exercise of the Conversion Right) by (y) the
Closing Price of one share of Common Stock on the Trading Day immediately
preceding the exercise of the Conversion Right.
B. The Conversion Right may be exercised by the Holder, at any time or
from time to time, during the Exercise Period, on any business day by
delivering a written notice in the form attached hereto (the "Conversion
Notice") to the Company at the offices of the Company designated in Section 1
hereof, exercising the Conversion Right and specifying (i) the total number of
shares of Common Stock the Holder will purchase pursuant to such conversion and
(ii) a place and date not less than one nor more than 20 business days from the
date of the Conversion Notice for the closing of such purchase.
5
<PAGE> 6
C. At any closing under Section 9B hereof, (i) the Holder will surrender
this Warrant and (ii) the Company will deliver to the Holder a certificate or
certificates for the number of shares of Common Stock issuable upon such
conversion, together with cash, in lieu of any fraction of a share, as provided
in Section 2D above.
10. WARRANT ISSUED IN EXCHANGE. This Warrant is issued in exchange for
the surrender to the Company by Holder of that certain warrant to purchase
25,000 shares of Common Stock (the "1992 Warrant") (which pursuant to
adjustments represented the right to purchase 33,675 shares of Common Stock
prior to the date hereof), issued pursuant to that certain Warrant Agreement
dated June 15, 1992, as amended by Amendment Agreement dated January 28, 1993,
between Holder and the Company (the "Warrant Agreement"). Upon such exchange,
the 1992 Warrant shall be cancelled and the Warrant Agreement terminated
without further action by Holder or the Company.
Dated effective this 24th day of April, 1996.
AIR-CURE TECHNOLOGIES, INC.
By: /s/ Mark E. Johnson
-------------------------
Name: Mark E. Johnson
-----------------------
Title: President
----------------------
ATTEST:
By: /s/ Lawrance W. McAfee
-----------------------------
Name: Lawrance W. McAfee
---------------------------
Title: Executive Vice President
--------------------------
6
<PAGE> 7
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant.)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ shares of Common
Stock and herewith tenders in payment for such shares a certified check or bank
draft payable to the order of Air-Cure Technologies, Inc. in the amount of
$__________, all in accordance with the terms hereof. The undersigned requests
that a certificate for such shares be registered in the name of _______________
whose address is ________________________________________.
Dated:____________________ _______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant.)
[FORM OF CONVERSION NOTICE]
(To be executed upon conversion of Warrant.)
The undersigned hereby irrevocably elects to exercise the Conversion
Right, represented by this Warrant Certificate, to purchase _____ shares of
Common Stock and herewith tenders in payment for such shares this Warrant
Certificate, all in accordance with the terms hereof. The undersigned requests
that a certificate for such shares be registered in the name of
______________________________________________________________ whose address is
______________________________________________________ and that such
certificate (or any payment in lieu thereof) be delivered to
________________________ whose address is ____________________________________.
Dated:____________________ _______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant.)
<PAGE> 8
[FORM OF ASSIGNMENT]
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the right represented by the enclosed
Warrant to purchase _______________ shares of Common Stock of Air-Cure
Technologies, Inc. to which the enclosed Warrant relates, and appoints
_________________________ Attorney to transfer such right on the books of
Air-Cure Technologies, Inc. with full power of substitution in the premises.
Dated:____________________ _______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant.)
_______________________________________
(Address)
Signed in the presence of:
__________________________________
<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is effective as of the 1st day of
March, 1996 (the "Effective Date"), by and between Air-Cure Technologies, Inc.,
a Delaware corporation (the "Corporation"), and Lawrance W. McAfee (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Corporation and the Employee have entered into that certain
Employment Agreement, dated as of January 1, 1996;
WHEREAS, the Corporation desires to continue the employment of the
Employee upon the terms and conditions herein set forth;
WHEREAS, the Employee desires to continue to be so employed upon such
terms and conditions; and
WHEREAS, the Corporation and the Employee desire for this Agreement to
replace the January 1, 1996 Employment Agreement between the parties.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. EMPLOYMENT AND RESPONSIBILITIES.
1.1 The Corporation shall employ the Employee, and the Employee shall
serve, as Chief Financial Officer and an Executive Vice President of the
Corporation on the terms set forth herein. In such capacity, the Employee
shall have overall responsibility for management of the Corporation's financial
affairs. The Employee shall report to the Chief Executive Officer of the
Corporation and shall perform such duties as the Chief Executive Officer may
direct and as are commensurate with his position as Chief Financial Officer and
an Executive Vice President, provided that the Employee shall not be required
to perform any duty which would constitute Cause within the meaning of Section
2.3 hereof.
1.2 The Employee shall devote all of his business time to the business and
affairs of the Corporation and its subsidiaries and to the promotion of their
interests. Notwithstanding the foregoing, the Employee may engage in other
activities, if such activities do not materially interfere with the Employee's
performance of his duties and obligations hereunder, and may make and manage
his personal investments, provided that such activities and investments are not
prohibited hereby and do not violate the terms hereof. The Employee's place of
employment shall be relocated to the Houston, Texas metropolitan area, subject
to travel necessary for the performance of his duties hereunder. The
Corporation shall provide to the Employee adequate office facilities and staff
commensurate with his position to enable him to perform his duties hereunder.
<PAGE> 2
2. TERM OF EMPLOYMENT.
2.1 The term of the Employee's employment hereunder shall be three (3)
years, commencing on the Effective Date, and as of each one-year anniversary
date hereof, the term of this Agreement shall automatically be extended for a
successive one-year period of time, unless more than ninety (90) days prior to
the occurrence of any one-year anniversary date hereof, either party gives
notice that such term shall not thereafter be so extended. If any such notice
is given, then the term hereof shall not be automatically extended upon the
future occurrence of any one-year anniversary date hereof.
2.2 Notwithstanding the provisions of Section 2.1 hereof, the Corporation
shall have the right, on written notice to the Employee, to terminate the
Employee's employment for Cause, such termination to be effective as of the
date on which notice is given or as of such later date otherwise specified in
the notice. If the Corporation terminates the Employee's employment other than
(i) for Cause or (ii) due to the Employee's death ("Death") or illness or
incapacity as defined in Section 4.1 ("Disability"), the Corporation, until the
earlier of (x) the expiration of the term (as it may be extended) of employment
under Section 2.1 hereof, (y) the Employee's Death, or (z) sixty (60) days
after the Employee's Disability, shall continue to pay to the Employee an
amount equal to 75% of the Employee's then current salary hereunder at the
times set forth in Section 3.1 hereof, and shall to the extent permitted by the
applicable benefit plan or arrangement permit the Employee to retain the
benefit plans referred to in Section 3.3 hereof to which he is entitled as of
the date of such termination, and shall pay all amounts and issue such
securities to the Employee as would otherwise be paid and issued to the
Employee pursuant to the incentive compensation plans referred to in Sections
3.4(a) and 3.8 hereof.
2.3 For purposes of this Agreement, the term "Cause" shall mean any of the
following actions by the Employee: (a) failure to comply with any of the
material terms of this Agreement, which failure is curable and is not cured by
the Employee within thirty (30) days after the Employee has written notice of
such failure, (b) deliberate and intentional refusal to perform his duties,
responsibilities or obligations under this Agreement, which refusal continues
for not less than thirty (30) days after written notice thereof is given to the
Employee, (c) engagement in misconduct injurious to the business or reputation
of the Corporation, or (d) Employee's conviction of a felony involving moral
turpitude or which is otherwise injurious to the business or reputation of the
Corporation.
3. COMPENSATION.
3.1 The Corporation shall pay to the Employee for the services to be
rendered by the Employee hereunder a base salary at the rate of $200,000 per
annum, payable in equal installments (subject to withholding tax) in accordance
with the Corporation's regular payroll schedule, which as of the date of this
Agreement is on the 15th day and the 30th day of each calendar month. Such
base salary as in effect from time to time may be increased annually on the
anniversary date of the Effective
2
<PAGE> 3
Date as determined by the board of directors of the Corporation in its sole
discretion. The salary payable to the Employee from time to time hereunder
shall not be decreased.
3.2 The Corporation has previously granted to the Employee options
("Previous Options") entitling the Employee to purchase 150,000 aggregate
shares of the Corporation's Common Stock. The Previous Options and all terms
relating to the grant and exercise of such Previous Options as set forth in (i)
that certain Amended and Restated Incentive Stock Option Agreement, effective
as of December 17, 1992, (ii) that certain Incentive Stock Option Agreement,
effective as of June 28, 1994, (iii) that certain Incentive Stock Option
Agreement, effective as of June 29, 1995; and (iv) that certain Incentive Stock
Option Agreement, effective as of December 28, 1995, in each case between the
Corporation and the Employee, are hereby affirmed and ratified. Effective as
of the date hereof, the Corporation shall grant to the Employee options (the
"Additional Options") to purchase an additional 100,000 shares of the
Corporation's Common Stock at a price per share of $3.875. The Additional
Options shall expire at the close of business on February 28, 2006. The
Additional Options shall vest and may be exercised in accordance with the
following schedule:
<TABLE>
<CAPTION>
NUMBER OF SHARES FIRST SUBJECT
ON OR AFTER THIS DATE TO EXERCISE
- --------------------- -------------------------------
<S> <C>
March 1, 1996 25,000
March 1, 1997 25,000
March 1, 1998 25,000
March 1, 1999 25,000
</TABLE>
The Additional Options shall be granted under the Corporation's Amended and
Restated 1990 Stock Option Plan (the "Plan") and, except as otherwise provided
herein, the terms and conditions applicable to the Additional Options shall be
those contained in the Plan. The Previous Options and the Additional Options
are hereinafter collectively referred to as the "Options."
3.3 The Employee shall be entitled to participate in, and receive benefits
from, any insurance, medical, dental, health and accident, hospitalization,
disability, or other employee benefit plan of the Corporation which may be in
effect at any time during the course of his employment by the Corporation and
which is generally available to executives of the Corporation.
3.4 (a) The Employee shall be entitled to participate in and receive
payments or other benefits from any stock purchase, pension, 401(k) (to the
extent permitted by applicable law), profit sharing, stock bonus, stock option,
cash bonus or other incentive compensation plan or plans which may be in effect
from time to time during the course of his employment by the Corporation and
which are generally available to the executives of the Corporation.
3
<PAGE> 4
(b) If, and at such time, that it becomes the policy of the Corporation to
provide automobiles to the Corporation's senior executives for their use in
connection with the Corporation's business, the Corporation shall provide such
an automobile to the Employee in accordance with such policy.
3.5 The Corporation shall reimburse the Employee for all reasonable and
necessary business expenses incurred by him on behalf of the Corporation in the
course of his duties hereunder upon the presentation by the Employee of
appropriate documentation substantiating the amount of and purpose for which
such expenses were incurred.
3.6 The Employee shall be entitled to four (4) weeks paid vacation in each
calendar year, which vacation shall be taken at times consistent with the
performance by the Employee of his obligations hereunder. Any vacation time
not fully used by the Employee in any one (1) calendar year may be carried over
for one (1) additional calendar year. If any such vacation time is carried
over to a subsequent calendar year, then any vacation time taken in the
subsequent calendar year shall be applied first against the carryover vacation
time from the prior calendar year.
3.7 (a) This Section 3.7 shall be effective, but not operative,
immediately upon the Effective Date and shall remain in effect so long as the
Employee remains employed hereunder by the Corporation, but shall not be
operative unless and until there has been a Change in Control, as defined in
Section 6.4 hereof. Upon such a Change in Control, this Section 3.7 shall
become operative immediately.
(b)(i) If a Change in Control (as defined in Section 6.4) occurs while the
Employee is employed by the Corporation hereunder, the Employee may, in his
sole discretion, within 12 months after the date of such Change in Control,
give 30 days prior written notice to the Corporation that he intends to
voluntarily terminate his employment with the Corporation. Within 30 days
after the Corporation's receipt of such notice by the Employee, the Corporation
shall pay to the Employee by cashier's check the amount payable pursuant to
Section 3.7(c) hereof, and at such time the Employee shall deliver to the
Corporation his resignation as a director and from all offices held with the
Corporation or any subsidiary. The payment of such amount shall terminate the
Employee's rights to receive any and all other payments, rights or benefits
under this Agreement, other than the payments, rights or benefits arising
pursuant to Section 3.5 or from any other agreement, plan or policy which by
its terms or by operation of law provides for the continuation of payments,
rights or benefits after the termination of the Employee's relationship with
the Corporation.
(ii) If a Change of Control occurs subsequent to the termination of the
Employee's employment hereunder by the Employer other than for Cause, Death or
Disability and prior to the first anniversary of such termination, the
Corporation shall, within 30 days after the date of such Change in Control,
deliver to the Employee a cashier's check in the amount payable pursuant to
Section 3.7(c), and payment of such amount shall terminate the Employee's
rights to receive any and all other payments, rights or benefits under this
Agreement, other than any payments, rights or benefits arising pursuant to
Section 3.5 or from any other agreement, plan or policy which by its
4
<PAGE> 5
terms or by operation of law provides for the continuation of payments, rights
or benefits after the termination of the Employee's relationship with the
Corporation.
(iii) If within 12 months after the date a Change of Control occurs, the
Employee's employment hereunder is terminated other than for Cause, Death or
Disability, the Corporation shall, within 30 days after the date of such
termination, deliver to the Employee a cashier's check in an amount which shall
be the greater of (a) the amount payable pursuant to Section 3.7(c) hereof, or
(b) the aggregate amount of base salary which would have been paid (at the
then-current rate) for the remainder of the term of this Agreement, and the
payment of such amount under either item (a) or (b) above shall terminate the
Employee's rights to receive any and all other payments, rights or benefits
under this Agreement, other than any payments, rights or benefits arising
pursuant to Section 3.5 or from any other agreement, plan or policy which by
its terms or by operation of law provides for the continuation of payments,
rights or benefits after the termination of the Employee's relationship with
the Corporation.
(c) In the event the Corporation is obligated to make a payment to the
Employee as a result of a Change of Control, the amount of such payment shall
be a lump sum amount equal to two (2) times the Employee's base amount (as
defined by Section 280(G), Part IX, Subchapter B, Chapter 1 of the Internal
Revenue Code of 1986, as amended).
(d) Such lump sum payment shall be in addition to and shall not be offset
or reduced by (i) any other amounts that have accrued or have otherwise become
payable to the Employee, but have not been paid by the Corporation at the time
Employee receives the payment resulting from a Change of Control, including but
not limited to, salary, severance pay, consulting fees, disability benefits,
termination benefits or any other compensation or benefit payment that is part
of any plan or agreement, written or oral, and (ii) any indemnification
payments that may have accrued but have not been paid or that may thereafter
become payable to the Employee pursuant to the provisions of the Company's
Certificate of Incorporation, Bylaws or similar policy, plan or agreement
relating to the indemnification of directors or officers of the Corporation
under certain circumstances.
3.8 The Employee may be entitled to receive an annual bonus from the
Corporation pursuant to a corporate incentive bonus plan mutually agreed to by
the Employee and the Corporation prior to the beginning of the year with
respect to which the annual bonus may be paid. Notwithstanding anything to the
contrary herein, the parties hereby agree that the Employee's annual bonus for
the 1996 calendar year shall not be less than $50,000. The Employee
acknowledges that, beginning with the 1997 calendar year, the Corporation is
under no obligation to pay him an annual bonus if the Employee is not entitled
to receive a bonus under the terms of the applicable corporate incentive bonus
plan. The Corporation acknowledges that the potential receipt of an annual
bonus by the Employee is a material factor to the Employee in entering into
this Agreement.
5
<PAGE> 6
3.9 In connection with the relocation of the Employee from Annapolis,
Maryland, to Houston, Texas, the Corporation shall pay and/or reimburse the
Employee on a fully tax-adjusted basis for all reasonable costs and expenses
paid or incurred for the following:
(a) Real estate commissions and other closing costs associated with the
sale of the Employee's current residence;
(b) Loan application and closing costs (excluding "points and prepaid
items") associated with the Employee's purchase of a new residence in the
Houston, Texas metropolitan area;
(c) Moving the personal effects and household goods of the Employee and
the Employee's family to the Employee's new residence in the Houston, Texas
metropolitan area;
(d) Three trips to be made by the Employee and the Employee's family from
Annapolis, Maryland, to Houston, Texas in connection with the Employee's
relocation; and
(e) All other reasonable out-of-pocket costs of relocating the Employee
and the Employee's family that are mutually agreed upon in advance between the
Employee and the Chief Executive Officer of the Corporation, it being the
intent that the Employee not incur any unreimbursed costs or expenses that
result directly from his relocation or commuting between Annapolis, Maryland,
and Houston, Texas prior to his permanent relocation.
4. DISABILITY OR DEATH.
4.1 If, during the period of employment hereunder, because of illness or
other physical or mental incapacity, the Employee shall fail for a period of
sixty (60) consecutive days to render the services required hereunder, then the
Corporation, at its option, may terminate the term of employment hereunder by
notice from the Corporation to the Employee, effective on the giving of such
notice. In the event of such termination, the Corporation shall continue to
pay to the Employee his then current salary for a period of sixty (60) days
after such termination and, to the extent permitted by the applicable benefit
arrangement or plan, shall permit the Employee to retain for such period the
benefit arrangements, and to continue to participate for such period in the
benefit plans, referred to in Section 3 hereof in which he is participating at
the time of such termination. However, the Corporation shall not have the
right to terminate the employment of the Employee hereunder if, at the time the
Corporation gives notice of termination to the Employee, the Employee has then
again begun to render services for the Corporation as required hereunder.
4.2 In the event of the Death of the Employee during the term hereof, his
employment hereunder shall terminate on the date of Death.
5. OTHER ACTIVITIES DURING EMPLOYMENT
6
<PAGE> 7
5.1 During the term of his employment by the Corporation, neither the
Employee nor any entity in which he may be interested as a partner, trustee,
director, officer, employee, shareholder, option holder, lender of money or
guarantor, shall engage directly or indirectly in any business competitive with
that of the Corporation; provided, however, that the foregoing shall not be
deemed to prevent the Employee from investing in securities of any company
having a class of securities which is publicly traded, so long as such
investment holdings do not, in the aggregate, constitute more than 5% of any
class of such company's securities. Without limiting the generality of the
foregoing, a business or a company may be deemed to be competitive with the
Corporation if 10% or more of its gross revenues are derived, directly or
indirectly, from the design, marketing, sale, fabrication, construction or
servicing of (a) equipment or systems, or component parts thereof, intended to
(i) control or limit the concentration of dust, fly ash or other particulates
in ambient air or combustion exhaust streams by filtration through fabric
filter systems, or (ii) remove, reduce, limit or control the concentration or
emission of chemicals, particulates, mists or gases in process gas streams or
combustion exhaust gas streams by combining or mixing such chemicals,
particulates, mists or gases with other liquids, gases or solids, or (b) air
separation equipment, process vessels, reactors, blenders, trayed columns or
other types of custom process and containment equipment.
5.2 The Employee shall not at any time during the term of this Agreement
or after the termination hereof directly or indirectly divulge, furnish, use,
publish or make accessible to any person or entity any Confidential Information
(as hereinafter defined). Any records of Confidential Information prepared by
the Employee or which come into Employee's possession during this Agreement are
and remain the property of the Corporation and upon termination of Employee's
employment all such records and copies thereof shall be either left with or
returned to the Corporation.
5.3 The term "Confidential Information" shall mean information disclosed
to the Employee or known, learned, created or observed by him as a consequence
of or through his employment by the Corporation, not generally known in the
relevant trade or industry, about the Corporation's business activities,
products, customers, suppliers, services and procedures, including, but not
limited to, information concerning costs, product performance, customer
requirements, advertising, sales promotion, publicity, sales data, research,
finances, accounting, methods, procedures, trade secrets, business plans,
client or supplier lists and records, potential client or supplier lists, and
client or supplier billing. Notwithstanding the foregoing, "Confidential
Information" shall not include information publicly disclosed by the
Corporation or known by the Employee prior to the inception of the Corporation.
6. POST-EMPLOYMENT ACTIVITIES.
6.1 For a period of two (2) years after termination of his employment with
the Corporation, regardless of the reason for such termination, neither the
Employee nor any entity in which he may be interested as a partner, trustee,
director, officer, employee, shareholder, option holder, lender of money or
guarantor, shall engage directly or indirectly in any business competitive
with that of the Corporation (as defined above); provided, however, that the
foregoing shall not be
7
<PAGE> 8
deemed to prevent the Employee from investing in securities which are publicly
traded, so long as such investment holdings do not, in the aggregate,
constitute more than 5% of any class of such company's securities.
6.2 The Employee acknowledges that he has been employed for his special
talents and that his leaving the employ of the Corporation would seriously and
adversely affect the business of the Corporation. In addition to all remedies
permitted by law or in equity and without limiting any injunctive or other
relief to which the Corporation may be entitled in respect of any obligation of
the Employee, the Corporation shall be entitled to injunctive relief to enforce
the provisions of Sections 5 and 6 hereof; provided, that the Corporation shall
not be entitled to injunctive relief with respect to Section 6.1 hereof if at
the time such relief is sought the Corporation is failing to make payments to
the Employee which it is required to make pursuant to the terms of Section 2.2
or Section 4.1 hereof.
6.3 The Employee will not, during the period of two (2) years after
termination of his employment by the Corporation, regardless of the reason of
such termination, either in the Employee's individual capacity or as agent for
another, hire or offer to hire or entice away any person who has been an
officer, employee, or agent of the Corporation at any time during the
immediately preceding year or in any other manner persuade or attempt to
persuade any of such persons to discontinue their relationship with the
Corporation or any of its subsidiaries nor divert or attempt to divert from the
Corporation or any of its subsidiaries any business whatsoever by influencing
or attempting to influence any customer or supplier of the Corporation or any
of its subsidiaries to diminish or discontinue its business with the
Corporation or such subsidiary.
6.4 For the purposes of this Agreement, "Change in Control" shall mean (i)
a reportable change in control under the proxy rules of the Securities and
Exchange Commission including, without limitation, a transaction or series of
transactions, the result of which would cause the power to vote or direct the
voting of shares of common stock of the Corporation sufficient to elect a
majority of the Board of Directors of the Corporation to not be held by a
majority of the current stockholders of the Corporation (other than such
transaction (a) resulting, in the Employee or an affiliate of the Employee
acquiring such voting power), or (ii) a change in any calendar year of such
number of directors as constitutes a majority of the board of directors of the
Corporation, unless the election, or the nomination for election by the
Corporation's shareholders, of each new director was approved by a vote of at
least two-thirds (2/3) of the directors then in office who were directors at
the beginning of the calendar year. In addition, a Change in Control shall be
deemed to have occurred if, prior to March 1, 1999, Mark E. Johnson should
cease for any reason other than death or permanent disability to be the Chief
Executive Officer of the Corporation.
7. ASSIGNMENT. This Agreement shall not be assignable by the Corporation
except (i) to a corporation or other entity controlling, controlled by or under
common control with the Corporation, or (ii) to a successor to all or
substantially all of the business of the Corporation. This Agreement shall
inure to the benefit of and be binding upon the Corporation, its permitted
successors
8
<PAGE> 9
and permitted assigns, and upon the Employee and his heirs, executors,
administrators and legal representatives. This Agreement shall not be
assignable by the Employee.
8. NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been given at the time which mailed by registered or
certified mail, addressed to the address below stated of the party to which
notice is given, or to such changed address as such party may have fixed by
notice:
TO THE CORPORATION: Air-Cure Technologies, Inc.
2828 Clinton Drive
Houston, Texas 77020-8402
ATTN: Chief Executive Officer
TO THE EMPLOYEE: Lawrance W. McAfee
2828 Clinton Drive
Houston, Texas 77020-8402
9. ENTIRE AGREEMENT. This instrument contains and constitutes the entire
agreement between and among the parties herein and supersedes all prior
agreements and understandings between the parties hereto relating to the
subject matter hereof, including but not limited to, that certain Employment
Agreement, dated January 1, 1996; the Employee agrees that he has no further
rights thereunder including, but not limited to, any rights triggered by a
"change in control" of the Corporation occurring prior to the date upon which
this Agreement is effective.
10. APPLICABLE LAW. This Agreement shall be construed, enforced and
governed in accordance with the laws of the State of Texas.
11. INVALIDITY. If any provision contained in this Agreement shall for
any reason be held to be invalid, illegal, void or unenforceable in any
respect, such provision shall be deemed modified so as to constitute a
provision conforming as nearly as possible to such invalid, illegal, void or
unenforceable provision while still remaining valid and enforceable, and the
remaining terms or provisions contained herein shall not be affected thereby.
12. DISPUTE RESOLUTION. Except with respect to the rights of the
Corporation to obtain equitable relief under Section 6 hereof, any dispute
arising in any way out of this Agreement and which cannot be resolved by good
faith negotiations between the parties within thirty (30) days after either
party shall have notified the other party in writing of its desire to arbitrate
the dispute shall be submitted to and settled through binding arbitration in
accordance with the rules of the American Arbitration Association as from time
to time in effect. The arbitration proceedings shall be conducted by a sole
arbitrator who shall be an attorney with not less than ten (10) years
experience in commercial law. All disputes or claims of the parties subject to
arbitration shall be consolidated into a single arbitration proceeding. The
arbitration proceedings shall be conducted in Houston, Texas.
9
<PAGE> 10
The award or determination of the arbitrator shall be final and binding upon
all parties and shall be subject to enforcement in any court of competent
jurisdiction. The arbitrator shall have the authority to award costs and
expenses of arbitration to either party as the arbitrator sees fit.
13. BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective heirs,
executors, personal representatives, successors and assigns.
14. APPROVALS AND CONSENTS MUST BE IN WRITING. Whenever this Agreement
calls for the consent, vote, or approval of any person, such consent, vote, or
approval shall be effective only if it is in writing and signed by or on behalf
of the party who is granting such consent, vote, or approval unless the
circumstances clearly indicate that a writing is not required to evidence such
consent, vote, or approval.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the _____ day of ________, 1996.
AIR-CURE TECHNOLOGIES, INC.
By: /s/ Mark E. Johnson
------------------------------
Mark E. Johnson
Chief Executive Officer
/s/ Lawrance W. McAfee
---------------------------------
Lawrance W. McAfee
10
<PAGE> 1
EXHIBIT 10.25
AMENDMENT OF
AIR-CURE TECHNOLOGIES, INC.
DIRECTORS' STOCK OPTION PLAN
THIS AMENDMENT (the "Amendment") to the AIR-CURE TECHNOLOGIES, INC. (the
"Company") Directors' Stock Option Plan (the "Director Plan") is dated July
___, 1996. Capitalized terms used herein and not otherwise defined shall have
the respective meanings ascribed to such terms in the Director Plan.
WHEREAS, the Company desires to make certain clarifying amendments to the
Director Plan; and
WHEREAS, pursuant to Article XI of the Director Plan, the Company is
authorized by action of its board of directors to so amend the Director Plan.
NOW, THEREFORE, the Company hereby amends the Director Plan as follows:
1. The final sentence of paragraph (a) of Article VI is deleted in
its entirety and replaced with the following:
"Notwithstanding any provision contained herein to the
contrary, in the event an Outside Director is elected or appointed
to the Board at any time other than at an annual meeting of
stockholders, the number of shares subject to the Option required
to be granted to such Outside Director on such election or
appointment shall be reduced based on the ratio that the number of
days that have elapsed since the last annual stockholders meeting
to the date of such Outside Director's election or appointment
bears to 365 days (such calculation to be rounded to the next
higher 1,000 shares).
2. Except as amended by this Amendment, the Director Plan remains in
full force and effect.
EXECUTED THIS ____ day of July, 1996.
AIR-CURE TECHNOLOGIES, INC.
By: /s/ Mark E. Johnson
-----------------------
Mark E. Johnson, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) Air-Cure
Technologies, Inc. Consolidated Balance Sheets and Consolidated Statements of
Operations AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) Form 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,501
<SECURITIES> 0
<RECEIVABLES> 15,310
<ALLOWANCES> 194
<INVENTORY> 3,791
<CURRENT-ASSETS> 50,490
<PP&E> 7,964
<DEPRECIATION> 2,793
<TOTAL-ASSETS> 71,979
<CURRENT-LIABILITIES> 28,612
<BONDS> 0
<COMMON> 11
0
0
<OTHER-SE> 21,890
<TOTAL-LIABILITY-AND-EQUITY> 71,979
<SALES> 49,192
<TOTAL-REVENUES> 49,192
<CGS> 39,058
<TOTAL-COSTS> 39,058
<OTHER-EXPENSES> 10,623
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 853
<INCOME-PRETAX> (1,352)
<INCOME-TAX> (504)
<INCOME-CONTINUING> (848)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (848)
<EPS-PRIMARY> ($0.07)
<EPS-DILUTED> ($0.07)
</TABLE>
